East Africa basks in big gas strikes

[Somalina]

Thursday, February 17, 2011

 

DAR ES SALAAM, Tanzania, Feb. 17 (UPI) -- A string of natural gas strikes along Africa's east coast, with reserves currently estimated at 21 billion cubic feet, is transforming the region into a world-class energy producer after years of being in the shadow of the oil boom in West Africa.

Most of the gas discoveries are off Mozambique and Tanzania but exploration is also under way in Kenya, Ethiopia and the breakaway Somali state of Puntland.

 

The Indian Ocean island of Madagascar is believed to hold "enormous reserves" of gas, industry sources say.

 

Seismic data suggest that there are massive offshore oil and gas deposits along East Africa's coastline, centered largely on a fault line running from war-ravaged Somalia south to Madagascar, making it one of the last great frontiers in the hunt for hydrocarbons.

 

Major energy companies such as Italy's ENI, Malaysia's state-owned Petronas and the giant China National Offshore Oil Corp. have all moved into the region in the last few years.

 

Plans are afoot to construct a liquefied natural gas export terminal, the region's first, to supply ever-rising energy demand in Asia by tanker across the Indian Ocean.

 

The gas reserves are expected to feed a proposed regional pipeline network to meet energy demands in the five-nation East African Community, which are forecast to increase considerably.

 

"East African offshore oil and gas exploration, long eclipsed by … by activities in West Africa, is now gathering pace," a Feb. 3 assessment by global strategic analysts Oxford Analytica observed.

 

"The discovery of hydrocarbon reserves along Africa's eastern seaboard remains dwarfed by those on the Atlantic coast. They have also taken longer to locate than the early pioneers had hoped.

 

"However, the oil industry majors -- stung by the discoveries in Ghana and Uganda in areas they had long discounted -- are reluctant to repeat the error, which is likely to help sustain interest in exploration in the east."

 

In Tanzania, the main operator of the offshore Songo Songo gas field is the Toronto-listed Orca Exploration through its subsidiary PanAfrica Energy, in cooperation with the state-run Tanzania Petroleum Development Corp. and Bermuda's Globeleq.

 

Orca plans to boost production by 60 percent by next year to meet Tanzania's burgeoning demand for energy. The country has a generating capacity of 1,300 megawatts but can only produce 850MW, which entails power rationing.

 

Ophir Energy of London operating with BG International, also London-listed, says it made two significant gas strikes in the northern Rovuma Basin in 2010. France's Maurel and Prom is exploring in that region, too.

 

To the south in the former Portuguese colony of Mozambique, production is limited to a pair of onshore fields.

 

But the state-owned oil and gas company, Empresa Nacional de Hidrocarburos, is to start drilling in central Mozambique's Buzi field soon.

 

The Andarko Petroleum Corp., of The Woodlands, Texas, reported making three strikes in 2010 on the Mozambique sector of the Rovuma Basin. These are still being evaluated but Oxford Analytica noted that they "have changed the profile of East African natural gas potential."

 

It concluded: "Combining Mozambique and Tanzania's natural gas potential to supply a new regional gas pipeline network will take many years and require substantial investment.

 

"However, the precedent set by the West African Gas Pipeline demonstrates that such a project is politically and technically feasible.

 

"Construction of a new LNG export terminal to supply rising Asian energy demand -- while significantly more ambitious -- is likely to be tempting due to the region's relatively shorter transshipment routes to eastern energy markets."

 

In Uganda, the big Lake Albert oil field, discovered in 2006 by London's Tullow Oil, is expected to start production later this year. It's slated to reach 150,000-350,000 barrels per day.

 

Lake Albert, which lies in the center of Africa between Uganda and the Democratic Republic of Congo, is estimated to contain up to 6 billion barrels of oil but wars and political instability in the region could crimp exploration efforts, particularly in Somalia, the DRC and insurgency-ridden Ethiopia.

 

However, the prizes to be had may make the risk of operating in these zones irresistible.

 

Somalia, which has been wracked by war since the fall of dictator Mohammed Siad Barre in 1991, could contain as much as 10 billion barrels of oil.

 

Source: UPI