Mauritania: Global demand puts spring in step of Greater Tortue Ahmeyim offshore gas project

By Julien Clémençot, Justine Spiegel

Posted on Friday, 18 November 2022 13:33
Illustration shows natural gas pipeline in front of word EU and Russia flag colours
Illustration shows natural gas pipeline in front of word EU and Russia flag colours. REUTERS/Dado Ruvic

Mauritania is set to become a major natural gas producer in late 2023 thanks to the Greater Tortue Ahmeyim offshore project with Senegal. Wary of the dangers such a promise can bring, President Mohamed Ould Ghazouani is trying to manage expectations

The third quarter of 2023 is set to bring the launch of BP and its partners’ huge Greater Tortue Ahmeyim (GTA) offshore gas field.

Straddling the border between Mauritania and Senegal promises a big boost to government revenue, but also brings worries about whether the two governments will manage and spend the money effectively.

Elected in June of 2019, President Mohamed Ould Ghazouani of Mauritania is under pressure to deliver.

He is facing his first criticism after a long honeymoon, having replaced strongman Mohamed Ould Abdel Aziz.

So far, Mauritania’s iron ore deposits and modest oil reserves have not led to a sea change in the country’s economic performance.

The government is wary about raising too many hopes about a gas boom that would benefit from high international energy prices due to the conflict in Ukraine.

The gas field holds an estimated 15trn cubic feet (tcf) of natural gas, and its $4.8bn development programme includes a floating liquefied natural gas (LNG) plant that will supply international buyers.

It is set to produce 2.5m tonnes per annum. The Mauritanian authorities have not provided detailed figures about how much revenue the GTA project will create, but Senegal estimates that it will bring its own government annual revenue of about $605m by 2030.

Further exploration

The Mauritanian and Senegalese authorities are planning other GTA phases, and BP has discovered an estimated 13 trillion cubic feet (Tcf) of natural gas at the BirAllah field on the Mauritania side of the border.

Energy majors like TotalEnergies and Shell are also exploring oil and gas in Mauritania.

Ghazouani has communicated little about the project. A retired general, it is likely he is mindful of the coup d’état that ousted President Maaouiya Ould Taya in 2005 after a period of euphoria over the promises of the Chinguetti oil field development. Chinguetti brought as much disappointment as it had brought hope.

Economy minister Ousmane Mamadou Kane outlines the risks: “In the years 2003-2005, there were high expectations for the Chinguetti deposit. After a few years, the disappointment was total.

“All the measures are being taken, with our various partners, to make this project a real success. However, we are dependent on the good relations we must continue to have with BP. Their priorities will not necessarily always be ours.

“These resources are also intended for export, to countries where an unfavourable opinion of fossil fuels is developing.”

Gas boom

Recent criticism of the Mauritanian President’s management style provides some insight into how the gas boom could play out.

Ghazouani, a measured and very discreet 65-year-old from a large and influential Sufi brotherhood, is now being called to account for his first three years in the presidential palace.

Some accuse him of having locked himself in an ivory tower, not bringing in fresh political leadership and lacking ambition.

“His predecessor was omnipresent,” says Yahya Ould Ahmed El Waghef, the secretary general of the presidency. “He has a different method, a different culture. His achievements are numerous, and we are aware that we need to communicate more about them.”

Ghazouani’s backers say he has had some early successes: an effective response to the Covid-19 pandemic; an increase in the number of classrooms and the recruitment of 8,000 civil servants; new roads; and the improvement of basic infrastructure.

The trial of Aziz

Aziz continues to cast a long shadow over the government in Nouakchott, and his fate will be a test of its commitment to good governance.

The authorities are prosecuting him for – among other things – corruption and money laundering. His trial, along with those of his 11 co-accused, is set to start in the coming months. He faces between 10 and 20 years in prison.

Ghazouani, who insists that he is not involved in the case, will continue to manage the political fallout of this extremely sensitive judicial case. It is especially so since his predecessor promised a full testimony of what he knows.

Aziz, who continues to wield a media presence through the statements of his lawyers, says there is a political dimension to his case and claims to be the regime’s number one opponent.

All the measures are being taken, with our various partners, to make this project a real success.”

Recently, leaders of the traditional opposition parties have been quieter. They had requested a national dialogue to discuss wide-ranging reforms.

Ghazouani was at first opposed to the idea, but finally said he accepted it. Since then, the dialogue has been postponed indefinitely.

Social policies

Politically cautious, Ghazouani also appears to be in retreat on the economic front. The strategy of accelerated growth and prosperity adopted in 2016 still serves as his road map, and a new three-year plan is being developed.

But, in a statement, Kane, the economic affairs minister, acknowledged that more than half of development projects are behind schedule.

While the problem is not new, the current government has clearly not found a remedy for this chronic challenge.

Amidst the Covid crisis, Ghazouani’s government has focused on the poorest segments of the population: 100,000 Mauritanians have signed up for state health insurance and 200,000 people have received cash transfers.

These social measures, perhaps because they represent an unexpected break from the past, but, above all, because they mainly affect families living outside Nouakchott, have not been enough to defuse the criticism of the key economic players in the capital.

Budget queries

They point to the lack of structural projects. For example, the country still lacks sufficient storage capacity for refined fuel products, which complicates the country’s hydrocarbon supplies.

In difficult conditions, the government is pleased to have preserved the budget balance for the moment.

According to economic affairs minister Kane, “a 5% deficit in the current circumstances is acceptable”. But critics of the government are also concerned about the increase in the budget, which rose from 50bn to 88bn ouguiyas ($2.4bn) between 2019 and 2022.

Moreover, the head of state has decided that necessary measures will be taken to cancel cash handouts decided on at the height of the health crisis and to reduce fuel subsidies.

For the executive, it is a question of keeping a small margin of manoeuvre to manage the effects of the Ukrainian crisis, which is pushing up the prices of fertiliser, wheat and fuel, and causing inflation to approach 10%.

The decision by the oil minister, Abdessalam Ould Mohamed Saleh, to renegotiate the country’s supply of refined products after the Ukraine conflict broke out is weighing on public finances.

Despite these difficulties, the executive is not giving up the optimism it displayed at the beginning of the year, counting on 5% growth for 2022.

Debt restructuring

In the short term, the country is out of danger since the government reached an agreement with Kuwait last year, and with Saudi Arabia in April, to restructure debts owed to these two countries.

This should allow Nouakchott to sign an aid programme with the International Monetary Fund and give Ghazouani the hope of becoming the first president of the country to raise funds on the international markets.

In these conditions, will Ghazouani manage to convince his fellow citizens that he is still the man for the job? It is whispered in the corridors of the palace that he is already preparing his candidacy for the 2024 presidential vote.

But the next test will be the legislative and municipal elections, scheduled for 2023, and the successful launch of the GTA project, which policymakers in Nouakchott hope will provide enough funds to build a stronger social safety net.

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