Sunday, February 13, 2011

World Watch [East African Oil & Gas]

by Peter Kemp, EI
East Africa is a hot frontier and a top investment story for 2011. The talk is of big gas finds offshore Mozambique and Tanzania, which is launching a new deepwater licensing round. BG Group is angling for blocks off Kenya, and explorers are excited by the first signs of elusive oil offshore as well. But landlocked Uganda, where the first oil in East Africa was discovered barely five years ago, is rattling investors. With reserve estimates at 2.5 billion barrels [please see below] and counting, the country's potential is huge. Yet exploration has stalled. Disputes have arisen over taxes, seized licenses and conflicting views on the pace and shape of development. ... The government [recently] outlined plans for a domestic refinery that it considers to be a higher priority and more profitable than crude oil exports. Unsurprisingly, incumbent explorers are dismayed that their export plans may not get the green light. As Tullow Oil's sunny optimism fades amid the endless discussions, the patience of the prospective incomers, Total and China's CNOOC, is also being put to the test.

(So far, one billion barrels of oil reserves have been confirmed in a quarter of the Albertine Graben of Uganda, a figure that is projected to reach 2.5 billion. Uganda is included in the OGJ's latest annual survey of world oil & gas reserves---see OGJ, Dec 6, 2010---for the first time with 1 billion bbl of proved oil reserves and 500 bcf of gas reserves. Britain's Tullow Oil PLC reports another 1.5 billion bbl in prospective resources in the East African nation in addition to these totals. Uganda does not yet have any oil or gas production. In contrast, new oil province in West African Ghana, being developed by Tullow and its partners, has already begun to bear fruit. 15 December 2010 celebrated the delivery of First Oil from the offshore Jubilee field---please see my post here. -- D.R.)

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