Nearly 13 billion CFA francs in insurance premiums have been slipping through Senegal's fingers each year since the GTA and Sangomar oil and gas fields began operating. A strategic pillar of local content, whose main objective is to ensure that the national private sector captures a portion of the benefits from oil and gas production, the Senegalese insurance sector receives very little of this colossal financial windfall.

Indeed, despite the early creation (in 2024) of the Oil & Gas Risk Insurance Pool by the approved insurance companies in Senegal in order to have sufficient coverage capacity with the support of SEN-RE (Senegalese Reinsurance Company) and the international reinsurance market, Senegalese insurers only benefit from 5% of the premiums.

Petrosen intends to reverse this trend in synergy with the Technical Secretariat of the National Committee for Monitoring Local Content (ST-CNSCL) and the Senegalese Federation of Insurance Companies (FSSA).

During a consultation workshop on the insurance system in the extractive sector this Thursday, the Director General of Petrosen, Alioune Guèye, announced the upcoming creation of a subsidiary which will allow Senegal to capture 100% of the premiums in accordance with the provisions of the law on local content and the CIMA Code which prohibits, in its article 308, "any direct insurance subscription abroad for risks located in a member state".

“The annual insurance premiums for each field are around US$12 to US$13 million. As you know, we are currently developing two fields: GTA and Sangomar. So, that amounts to at least US$26 million (13 billion CFA francs) in insurance premiums paid by the companies, including Petrosen. We are in the process of creating a captive insurance company to collect these premiums,” emphasizes the director of the Senegalese oil company. This company will be operational by next July.

While the aim is to ensure local stakeholders benefit from this windfall, the private insurance sector faces legal constraints related to its technical and financial capacity to cover large-scale risks, which are often reinsured internationally. This limits the local retention of these premiums, according to Dr. Mor Bakhoum, technical secretary of the CNSCL.

“There is a technical and legal consideration that needs to be addressed. Because in the local content law, the insurance sector is part of what is called the exclusive regime which is reserved exclusively for local companies. But what we are seeing is that most of the companies that are active at the national level are companies under Senegalese law, but which do not fully meet this criterion of local company which requires that 51% of the capital be held by nationals,” he confides.

This constraint will also be one of the main points to be discussed during this workshop in order to see how to adapt "the notion of local business" to the current context.