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- Energy giants Statoil and Exxon target East African gas
- Significant gas discoveries put East Africa on the map
- India, Africa launch business council to further trade ties
Energy giants Statoil and Exxon target East African gas
18 March 2012
The balmy waters of the Indian Ocean, close to East Africa, are a long way from the cold and notoriously stormy North Sea, but Tanzania could soon be profitable territory for Statoil of Norway.
Statoil and its American partner Exxon Mobil have made the biggest offshore discovery yet of gas reserves off the coast of Tanzania.
The Zafarani field, which both companies hope will be bigger than first estimates suggest, is close to the region off the coast of Mozambique, where even bigger deposits of gas are being developed by Anadarko and ENI.
"This is the biggest discovery made outside Norway by Statoil ever," a delighted Statoil vice president, Tim Dodson, tells the BBC.
But beyond the impact on Statoil itself, Mr Dodson recognises how the discovery could transform the fortunes of an East African country that has in the past focused more on safari tourism than oil and gas.
"This is [also] the biggest discovery that has been made offshore Tanzania and in that respect it's extremely important for [both] Statoil and Tanzania," he says.
Significant reserves
The world's major energy companies are paying more attention to the waters of the Indian Ocean, off East Africa.
"Statoil thinks this is a new reservoir, different to the others found in the broad geographical region, and therefore [it] might well have very significant reserves," according to Nick McGregor, an oil and gas analyst with Redmayne Bentley.
Making a major discovery of gas under the ocean floor is only the beginning, however.
The discovery then produces the next challenge of pumping the commodity out and making it profitable.
"The big problem with gas is its relatively lower margin than oil, so it needs to be large discoveries to make it worthwhile," says Mr McGregor, noting that Statoil's find off Tanzania 's coast "certainly isn't as large as some of the stuff that's been found off Mozambique recently, where it's now expected [to be] 60 trillion cubic feet of gas".
Mozambique gas
In offshore drilling industry terms, Statoil's Tanzania discovery is a stone's throw from the lucrative gas fields off the coast of Mozambique, which are being developed by Italy's ENI and Anadarko of the US.
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Asia gas
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The main markets for East Africa's natural gas are likely to be in Asia, and that might explain why Thailand's PTT Exploration & Production has trumped Shell's takeover offer for Cove. Anadarko has a long history of exploration but little experience of taking an LNG project to its next stage. |
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Transforming economies
East African countries, especially Mozambique, are hoping their economies will be transformed by the growth of the gas industry.
But it will take significant investment to build infrastructure to support a vibrant energy industry in East Africa.
Billions will have to be invested pumping the gas from below the ocean floor of the Indian Ocean to terminals from where it will be transported on ships as LNG.
That is why the next phase of the developing the industry will need the involvement of the major players in the world's energy industry.
The big boys will also be attracted by the positive attitude from governments in East Africa. Dealing with the governments of countries such as Tanzania or Mozambique is probably a refreshing change from the confrontational challenge presented by national leaders such as Hugo Chavez in Venezuela.
Significant gas discoveries put East Africa on the map
17 March 2012
By The Citizen Reporter
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The threat of piracy might loom large, but it has not prevented a new scramble for east Africa, led by some of the world’s biggest oil companies. Suddenly Mozambique and Tanzania, which until recently did not even feature on the world energy map, have become some of the gas industry’s hottest real estate.
The interest was underscored last month when Royal Dutch Shell and PTT Exploration, the state-controlled Thai energy group, launched rival offers for Cove Energy, a small Africa-focused oil and gas explorer with an 8.5 per cent stake in a big gas field in Mozambique.
Two state-owned Indian groups, GAIL and ONGC, have also expressed an interest in bidding for Cove, although an announcement by the Mozambique authorities last week that they might impose a capital gains tax on the sale of the London-based group could deter potential bidders.
Even the threat of tax hits, however, cannot diminish the appeal of an area that has yielded a series of huge discoveries over the past couple of years, of which Cove’s field is one. “With gas exploration you have to find an elephant field to make it worthwhile,” says Simon Ashby-Rudd, an oil investment banker at Standard Bank. “They didn’t just find one elephant – they found a herd of them.”
The biggest finds were offshore Mozambique, by Anadarko Petroleum and Cove, and Eni of Italy. Their two fields combined could contain up to 60 trillion cubic feet (tcf) of recoverable resources of gas – nearly as much as Kuwait’s entire reserves. That should be enough to turn Mozambique into a key exporter of liquefied natural gas, or LNG, to China and India.
And with the region still relatively unexplored, there could be plenty more where that came from, analysts say. Less than 500 wells have been drilled in east Africa, compared with some 20,000 in the north and nearly 15,000 in the west of the continent, according to explorer Afren.
Eni’s gas discovery was “one of the most important we’ve had in our history, in terms of the quality of the reservoir, its dimensions and the markets it’s close to,” says Claudio Descalzi, chief operating officer of Eni’s exploration and production division. “It’s transformational for us.”
It could also be transformational for Mozambique. The massive LNG plant that Anadarko has proposed building there will cost around $25-billion (U.S.) – more than twice the country’s gross domestic product. The country ranks 204 out of 215 nations in terms of per capita income, according to the World Bank.
“Mozambique is one of the poorest countries in Africa, and if it gets this right, it could be one of the richest,” says at Standard Bank’s Mr. Ashby-Rudd. Few expected a country such as Mozambique to ever become a big natural gas player. “Three years ago, when we were discussing where the future sources of LNG supply would be, east Africa wasn’t even on the list,” says Frank Harris, head of LNG at energy consultancy Wood Mackenzie.
Statoil, Shell, Petrobras and Exxon Mobil are now in Tanzania, while Eni is firmly established in Mozambique. Analysts expect others to follow as smaller players sell out, deterred by the huge expense of financing big gas liquefaction and export projects.
Anadarko has already announced it is looking to sell some of its stake in the Mozambique field, and Cove put itself up for sale in January. (Agencies)
India, Africa launch business council to further trade ties
17-Mar-12
India and Africa have agreed to raise their bilateral trade target to $90 billion by 2015 from $70 billion set earlier.
This follows bilateral trade reaching $60 billion last year.
“A 20-fold growth within a decade is indeed an achievement worth applauding. I propose that given the current growth rate, we may agree to revise the trade target to $90 billion by 2015,” said the Union Commerce, Industry and
Textiles Minister, Mr Anand Sharma, during the second meeting of the India-Africa Trade Ministers here.
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They also launched the India-Africa Business Council (IABC), which will be co-chaired by Mr Sunil Bharti Mittal, Chairman, Bharti Group, from India side and Mr Alhaji Aliko Dangote, President and Chief Executive, Dangote Group, Nigeria, from African side.
The core sectors of co-operation will be agriculture, manufacturing, pharmaceuticals, textiles, mining, petroleum and natural gas, IT/ITeS, gems and jewellery, financial services (including microfinance), energy, roads and railways.
Oil Search in Kenya Shifts to Top Gear As Gas Deposits Found
25th Feb. 2011 | By NATION reporter
In the plains of Isiolo - a wide stretch of arid waste in Kenya - the sun bakes the gangs of oil hunters that have pitched tent here as the scouting for the first successfully oil well in the country continues.
It is now remaining about 500 metres to go in search of the elusive black gold and the explorers appear guided by Duncan Clarke's book, Crude Continent, in which he talks of East Africa as a forgotten frontier that is once again, alive with corporate entrants, acreage pick up and the new promise.
Kenya has not made any commercial discoveries of either oil or gas yet, but expectations have been heightened, as news trickled in that the Chinese state-owned company - China National Offshore Oil Company (CNOOC) currently exploring oil in Northern Kenya hit high concentrations of natural gas deposits.
CNOOC is about to complete the deepest well ever in Kenya's exploration history since independence and it has found gas deposits in four zones having dug 5,085 metres deep out of the 5,600 metres target, reaching a depth described as the "secondary target."
"There are strong shows of gas. We will drill the well for the next one month to establish whether the quantities are of commercial quantities," Kiraitu Murungi told delegates at the Eastern Africa Energy Conference.
Such bubbling optimism is now influencing the renewed confidence in the search for oil in Kenya which shares the same latent rocks - with its neighbours who struck oil.
CNOOC, along with its three Joint Venture (JV) partners - Africa Oil, Lion Energy and the China Petroleum Corporation (CPC), ordered testing equipment from China to determine the extent of the commercial quantities of the hydrocarbons .
"Following evaluation of the test results, the JV partners will meet to discuss the plan for potential Bogal 1-1-Well appraisal work in addition to exploring marketing scenarios to best commercialise gas in East Africa." said Mr Keith Hill, president and CEO for Africa Oil.
Test results are expected to be available over the next 60 days.
The gas finds development at the Bhogal Well in Isiolo's Merti area also fuels optimism of a major discovery.
Geologists say the presence of significant amounts of gas is usually taken as a sign that there is oil.
"Gas shows and petrophysical analysis of wire line logs indicate multiple gas pay zones totalling approximately 91 metres in Lower Cretaceous sandstones," said Mr Hill in a statement to investors.