Senegal: Faye Reshuffles Cabinet, Likely Improving Relations With Oil and Gas Sector

What happened: President Faye reshuffled his cabinet, removing major allies of former Prime Minister Sonko — including the former petroleum minister — and replacing them with technocrats and loyalists.

Why it matters: The new oil and gas minister is much closer to Faye and more of a technocrat; we expect he will seek to reduce resource nationalism in the sector.

What happens next: Faye will likely instruct the new minister to adopt a more conciliatory tone toward oil and gas investors, though resource nationalism is unlikely to be completely eradicated.

On 1 June, President Diomaye Faye reshuffled his cabinet, appointing several loyalists and technocrats and removing close allies of former Prime Minister Ousmane Sonko, who was unceremoniously dismissed in May. The new government still includes five Pastef members, notably Defense Minister Yankoba Dieme — a crucial decision, likely an attempt to prevent a Pastef coup.

Still, Sonko has said Pastef will not participate in the new government, making the future of the party’s ministers who have agreed to stay in government uncertain. This is primarily driven by Sonko’s fury over his sacking, though there are also ideological tensions between him and Faye. Those include the country’s debt crisis, the punishment of former President Macky Sall’s allies and disagreements over managing the oil and gas sector and potential contract renegotiations.

This reshuffle shows where Faye stands: He has removed the ministers of justice and interior, both staunch Sonko allies and proponents of mass arrests and prosecutions for Sall’s allies. In a peculiar move, given his eagerness to reach a deal with the IMF, Faye has retained Minister of Budget and Finance Chiekh Diba, apparently believing that his extensive experience dealing with the IMF team makes him better placed to reach a deal.

Fresh Start for Oil and Gas?

The most notable part of the reshuffle for oil and gas investors is the change in the petroleum minister. Despite former Minister Birame Souleye Diop’s attempts to keep his cards close to his chest and maintain ties with both Faye and Sonko, he was seen as one of Sonko’s loyalists. His removal suggests that Faye is eager to tighten his grip over the sector.

Diop’s replacement, Dr. El Hadji Abdourahmane Diouf, is one of Faye’s most outspoken supporters, having been one of the first people to side with him after his split with Sonko. His appointment is a clear reward for that loyalty.

We have heard from members of the petroleum ministry that Faye and Sonko’s diverging views on managing the oil and gas sector have hindered its governance. Our contacts say that many experienced technocrats have been much more favorable to Faye’s pragmatic perspective, while the more radical figures favored Sonko’s nationalist approach. The two clashed over how far to take contract renegotiations and reviews, with Sonko particularly passionate about the topic.

The change is therefore good news for oil and gas investors: Through Diouf, Faye will likely seek to open up the oil and gas sector over the coming months. This would entail attempts to engage more positively with foreign businesses in the sector, while also slowing and reconsidering contract renegotiations. Diouf will also likely tone down the public shaming of foreign companies, a recurrent feature of Sonko’s government, in an attempt to rebuild relations.

No End in Sight for Resource Nationalism

We do not, however, expect this change to bring resource nationalism to an end. Faye is by no means a centrist, and his new government will not revert to Sall’s ways overnight. There will still be attempts to ensure better deals for the Senegalese state and greater local ownership of jobs. The difference will be that foreign companies will be treated with respect, and aggression for the sake of aggression will be far less common.

Faye will likely seek deals that improve Senegal’s stake in contracts without alienating investment. He will push ahead with contract reviews, but will not announce results in a public or embarrassing way for foreign companies, and he is unlikely to take any extreme actions as a result of their findings.

Even so, he will likely try to push through a more aggressive petroleum code over the remainder of his term in office, including an increased share of contracts for Senegal. However, Faye would probably refrain from including any attempts at retrospective application for existing investors, which Sonko would have insisted upon.

Faye’s biggest obstacle, however, is that a vindictive Sonko still controls the national assembly and will jump at any opportunity to obstruct his efforts. This could benefit oil and gas investors, as more aggressive policymaking and a new petroleum code will be slowed over at least the next six months; the latter is unlikely to be unveiled until next year.