East Africa oil boom builds excitement

[N.O.R.F]

East Africa oil boom builds excitement

 

NAIROBI // The north and west African states of Nigeria, Angola, Algeria and Libya have long enjoyed the benefits of being the continent’s biggest oil producers. But in recent years, oil companies have turned their attention on east Africa, scouring the previously untapped region for more of the precious resource.

 

Oil finds in Sudan and Uganda as well as natural gas deposits in Tanzania and Mozambique have oil companies excited about east Africa for the first time. As firms from around the world, including the Middle East and China, rush to prospect for oil in the region, experts have urged governments to astutely manage their newfound resources.

 

Kenya is close to becoming the next oil-producing country. Thirteen companies have divided the country’s north and east and are drilling exploratory wells, according to Kiraitu Murungi, Kenya’s energy minister.

 

“There is a lot of interest in oil exploration in our northern frontier region,” Mr Murungi said last week at a conference on east African oil in Nairobi. “We Kenyans are praying for a commercial discovery within the coming months. We are very encouraged by the results we have seen.”

 

The China National Offshore Oil Corporation drilled a 5000-metre well in northern Kenya, the deepest well in the country, and has hit natural gas deposits. The company hopes that oil is also in the vicinity. Africa now provides China with 30 per cent of its oil needs.

 

As the Chinese have scrambled to extract Africa’s mineral wealth to fuel its booming industrial complex, they usually offer governments more than money in return for resources. In Kenya, China is building hundreds of kilometres of new roads.

 

“It’s a win-win situation for everyone,” said Shi Jicheng, east Africa manager of BGP, a subsidiary of China National Petroleum Corporation. “They get roads here and we get some benefit back in China.”

 

Uganda, Kenya’s neighbour to the west, found oil along Lake Albert in 2006. London-based Tullow Oil estimates that there are more than 2 billion barrels of oil in the Lake Albert basin.

 

“Lake Albert is a proven petroleum province,” said Fred Kabanda, the principal geologist in the Ugandan energy ministry. “It has opened the whole east African rift system to oil exploration.”

 

Since Uganda is landlocked, development of its oil resources will require construction of a 1,200-kilometre pipeline to the coast of Kenya. Such a massive project has not been undertaken in Africa since the oil pipeline between Chad and Cameroon was launched in 2000.

 

Tanzania is using natural gas found off its coast to provide half of its energy needs and drive the growing east African economy. Industries from beer bottlers to cement factories are powered with Tanzanian gas.

 

“This has been a huge benefit,” said Peter Clutterbuck, deputy chairman of Orca Exploration, which is extracting gas in Tanzania. “Without the gas it would be a huge economic disaster for Tanzania.”

 

Companies are also prospecting for oil in Ethiopia, Democratic Republic of Congo, Eritrea and parts of Somalia. East Africa is the new west Africa in terms of oil exploration, according to industry leaders.

 

“Why is everyone in east Africa? Because it’s underdeveloped,” said Rob Shepherd, finance director of Dominion Petroleum. “What we find exciting is that people are moving away from the traditional areas like Angola and Nigeria and they are chasing the geology in east Africa.”

 

But as east African countries come to terms with their newfound wealth, experts warn that the resource could be a curse if not managed properly. Nigeria, Africa’s biggest oil producer, is dealing with an armed rebellion in its oil-rich Niger Delta. Other African oil states, such as Gabon and Equatorial Guinea, are plagued with corruption.

 

Uganda and DR Congo have already clashed over the oil reserves in Lake Albert, which both countries share. The border region remains militarised and tense as the two countries try to delineate the border.

 

“It is very important for the African continent that the energy industry is done properly,” said Duncan Clarke, chief executive of Global Pacific & Partners, an oil consulting firm. “Is there an oil curse? I think it’s a myth. The oil curse is a curse of politics, not one of oil. It’s up to governments to correct those themselves.”

 

Kenya has already begun reviewing its energy regulatory regime in anticipation of potential oil finds. The review will involve putting in place oil and gas management policies aimed at ensuring equitable distribution of oil revenues while taking into account the interests of the communities in oil-producing regions, Mr Murungi said.

 

“We don’t want to get caught up in the resource trap,” the minister said. “It is my belief that oil and gas should not be a curse. We will take into account the host communities and give the host communities their share.”

 

The National

[NASSIR]

“There is a lot of interest in oil exploration in our northern frontier region,” Mr Murungi said last week at a conference

Isn't that the Somali region a.k.a NFD he is refering to?

[N.O.R.F]

^It is. So the NFD and OG both have oil.

[Hales]

Nassir i was gonna post the exact same thing.

If they do find oil it should benefit the impoverished Nomads in the region; Northern tip of the NFD is one the poorest regions and undeveloped regions in Kenya.

Kenya should not commit the same robbery the Nigerians do.

Norfsky OGD reportedly has gas i never heard of any oil though.

[N.O.R.F]

^Gas/Oil same thing = $$$$

[ElPunto]

^I heard the same about OG - gas only. Which isn't quite as valuable as oil deposits. If any resources in significant quantities are found - the colonization and occupation will increase significantly. And the money will be siphoned off to the corrupt elites in the capital cities.

 

Somalia is still the jewel in the crown - hopefully nothing happens till we get a semblance of decent and competent people in power.

 

 

According to local lore, Portuguese travelers as far back as the late 19th century suspected that oil might lie beneath parts of East Africa after noticing a thick, greasy sediment wash up on the shores of Mozambique. More interested in finding cheap labor, though, the explorers had little use for oil.

 

A century later, it turns out that the Portuguese were right. Seismic tests over the past 50 years have shown that countries up the coast of East Africa have natural gas in abundance. Early data compiled by industry consultants also suggest the presence of massive offshore oil deposits. Those finds have spurred oil explorers to start dropping more wells in East Africa, a region they say is an oil and gas bonanza just waiting to be tapped, one of the last great frontiers in the hunt for hydrocarbons. "I and a lot of other people in oil companies working in East Africa have long been convinced that it's the last real high-potential area in the world that hasn't been fully explored," says Richard Schmitt, chief executive of Black Marlin Energy, a Dubai-based East Africa oil prospector. "It seems, for a variety of geopolitical reasons, that more than anything else, it's been neglected over the last several decades. Most of those barriers are currently being lowered or [have] disappeared altogether."

(See pictures of oil in Africa.)

 

 

Few have wanted to pay the cost of searching for oil or gas in the region, or risk drilling wells in volatile countries such as Uganda, Mozambique or Somalia. But better technology, lower risk in some of the countries and higher oil prices in recent years have changed the equation. Wildcatters and majors such as Italy's Eni, Petronas of Malaysia and China National Offshore Oil Corporation (CNOOC) have all moved on East Africa in the past few years.

 

They're hoping to mimic London-based Tullow Oil, which discovered some 2 billion bbl. of oil in landlocked Uganda over the past four years. Last month, Texas-based oil company Anadarko Petroleum Corp. announced that it had tapped a giant reservoir of natural gas off the coast of Mozambique. "Anadarko's find went off like a bomb here in Houston," says Robert Bertagne, a Texas-based oil wildcatter. "It was, 'Wow, we are finding large quantities of gas, and that means we have hydrocarbons in the area.' Once you have a discovery, more people are going to go in there."

(See pictures of oil fires.)

 

 

Much of East Africa's hopes are focused on a fault line running from Somalia to Madagascar known as the Davie Fracture Zone. It's there that Bertagne's analysis — using Cold War–era sea-floor mapping originally intended for use by Soviet submarines — has prompted speculation about oil deposits rivaling those of the North Sea or Middle East. There's still a lot that's unknown: North Africa has seen 20,000 wells sunk over the past few decades, while drillers have sunk 14,000 wells in and off West Africa. In East Africa, the total is about 500 wells.

 

That's changing. Kenya issued six exploration licenses between 2000 and 2002 and two more to CNOOC in the next four years. In 2008 and 2009, it issued 18 new licenses. "Despite a long history of unsuccessful exploration, the oil companies are investing in Kenya," says Mwendia Nyaga, managing director of the National Oil Corporation of Kenya. "The question is not if any hydrocarbon deposits exist, but where they are."

(See "Borders of Sudan's Oil-Rich Region Shrink.")

 

 

It doesn't help that the region is so geologically complex — with lots of fractures and offshore oil deposits likely deep underground. Or that many of the countries likely to have deposits have seen wars and unrest. Somalia remains a no-go zone, and Ethiopia's eastern ****** region is beset by a violent rebel insurgency. And while Mozambique's civil war may have ended in 1992, it has taken years for the country to fully recover

 

Explorers salivate in particular at the prospect of peace in Somalia. Oil reserves in the blocks licensed to two small oil companies, Africa Oil and Range Resources, could contain as much as 10 billion bbl. Nobody is talking about producing oil in Somalia anytime soon, but analysts say oil companies are less likely to be intimidated by political risk than they were in the past. They point to oil production in south Sudan, where a 20-year civil war that ended in 2005 threatens to reignite. "Definitely, there is a sense that there are discoveries to be had," says Aly-Khan Satchu, a financial adviser who runs Rich Management in Nairobi. "The reality and the perception of risk are narrowing."

 

http://www.time.com/time/business/article/0,8599,1970726,00.html

[General Duke]

Its Somalia lad, Puntland all the way...

[Haatu]

10 billion bbl? And in just P/land alone? Imagine how much the whole country has, both onshore and ofshore.

[Che -Guevara]

Oil is bad news for Somali nation in the horn.

[Haatu]

^How come?

[Che -Guevara]

We don't have established government that will protect our interests, people and land. We will be at mercy of big corporations, warlords and scavenging neighbors.

[Haatu]

You have a point there. The Kenyans are getting quiet desperate

[Amistad]

Che is right. Someone will sell it too cheap, and not realize its full potential.

 

When is Puntland going to start drilling?

[SeeKer]

Speaking of oil, since Uganda found oil in Lake Albert's basin has there been significant increases in GDP? Whats the average cost of living? Is there a pipeline of foreign investment into the country's infrastructure?

[General Duke]

Oil is good news, a strong Somalia state will emerege when Puntland gets its oil out. The rest is just pure fear, envy and hate.

 

The status quo of begging westerners and UN, is not acceptable anymore.

 

Thats a fact.