Senegal's Big LNG Gamble
Unpacking the risks
Senegal faces difficult decisions as it navigates a transition to becoming an exporter of liquefied natural gas (LNG) with a pipeline of new projects, largely targeting Europe. The need to develop new sources of government revenues must be balanced with meeting domestic energy needs and avoiding locking in an economically unsustainable energy pathway.
-
Senegal's LNG expansion plans are a "gamble" & may result in stranded assets. Its LNG projects likely won't be operational until the mid-2030s, even though Europe's demand for LNG is forecast to drop in 2025.
-
Senegal is banking on LNG to boost its economy & bolster domestic energy supply, but new research warns revenues may never reach government budgets, plans will entrench fossil fuel dependency, & there will be increased exposure to volatile international markets.
-
Senegal has committed to increasing renewable energy & LNG. With renewables already boosting Senegal's economy, IISD research warns new LNG investments are not needed to hit energy targets as they also carry social, economic, & environmental risks.
Senegal's plan to boost its economy by expanding liquefied natural gas (LNG) production comes as European demand is forecast to fall and market competition is on track to intensify.
A new IISD report warns that ramping up investment in LNG will entrench fossil fuel dependency, risks stranded assets, and would leave the economy more vulnerable to international price shocks.
Meanwhile, bringing more LNG online will come at a high cost requiring significant infrastructure investment, yet much of the revenue may never reach government budgets if LNG profits are reinvested into further deployment. With global LNG demand set to decline, and revenues uncertain, the government must consider a scenario where revenues are negligible.
Senegal already faces a range of climate-related challenges, including heat stress, shifting malaria patterns, and rising sea levels, while existing LNG exploration work has already reduced coastal communities' access to fertile fishing waters.
Renewable energy investments do not face the same risks as LNG and are already having a positive impact on Senegal's economy with costs falling rapidly. Prioritizing clean energy deployment, managing environmental and socio-economic risks, and re-evaluating LNG deployment should be key priorities for the Senegal government.
Participating experts
You might also be interested in
Border Carbon Adjustment Mechanisms and Impacts on Vietnam
This report consolidates, analyzes, and presents views and perspectives of stakeholders from Vietnam on border carbon adjustment (BCA) schemes to contribute to the global debate on BCA good practices.
Model Inter Se Agreement to Neutralize the Survival Clause of the Energy Charter Treaty Between the EU and Other non-EU Contracting Parties
An analysis of how the European Union (EU) and other contracting parties of the Energy Charter Treaty (ECT) could modify the treaty among themselves to neutralize the survival clause and prevent future fossil fuel investment arbitrations.
Understanding the United Nations’ New Principles for Resourcing the Energy Transition
Greg Radford explains new principles and recommendations developed by the UN Secretary-General’s Panel on Critical Energy Transition Minerals and designed to advance equity and justice.
September 2024 | Carbon Minefields Oil and Gas Exploration Monitor
Last month, 11 oil and gas exploration licences were awarded across three countries. Among these countries, Australia awarded licences with the largest volume of embodied emissions.