East Africa Set for Major Gas, Oil Transformation

By Jacinta Moran in Cape Town; Edited by Jeremy Lovell, Platts, Jul 12, 2012
Oil and gas activity has started rolling in East Africa, as drilling activity ramps up, long-awaited deals are sealed and oil companies scramble to get a slice of what could be an energy goldmine. (see related map: East Africa oil and gas resources) [or right here below

click on map to enlarge -- D.R.]

In Uganda, Tullow Oil has resolved a long-standing dispute with the government for the development of a number of oil-rich blocks, and the UK-listed explorer has also made Kenya's first ever major oil discovery.

Significant gas reserves have been found in Mozambique and Tanzania, where LNG facilities are now been planned. Drilling will kick off in Ethiopia later this year, while Madagascar is believed to hold significant reserves of gas and the Puntland region of Somalia is also showing positive signs. [Read more]

(Also, please see my posts "East African Oil & Gas" and "Third Tanzanian Gas Discovery for Ophir-BG. For gas reserves, please see "Wood Mackenzie: East Africa’s Yet-to-Find Reserves Hold 95 tcf of Gas," OffshoreEnergy Today.com, Aug 22, 2012---Recent discoveries and high profile M&A activity in Mozambique and Tanzania are attracting attention and Martin Kelly, Wood Mackenzie’s Head of Sub-Sahara Upstream Research, says the interest is justified: “100 tcf of gas has been discovered to date in East Africa and we estimate yet-to-find reserves could be as much as 80 tcf in Mozambique and 15 tcf in Tanzania. There is clearly plenty of gas to supply the likely commercialization route of LNG – theoretically enough to support up to 16 LNG trains. “The Rovuma basin is the most prolific in the region, and one of the hottest conventional gas plays in the world, with 85 tcf discovered so far. Globally in 2011, it yielded the third most hydrocarbons, and we expect it to top the list in 2012 if the first half of the year is anything to go by,” Kelly continues. Update:  East Africa may be the new hotspot for explorers but the region will first need to invest in infrastructure to develop and transport the products for domestic and international consumption. The region's regulatory and infrastructure gaps could hinder the transition from gas exploration to production in the medium term, while governments need to be more realistic about timeframes for revenue flows, delegates heard at an industry conference in London on October 2, 2012. [...] Total now expects first commercial oil in Uganda in 2017, a year later than originally expected. The French major entered Uganda's nascent industry early this year after it and China's CNOOC took a third of Tullow's assets for $2.9 billion---please see Jacinta Moran "East Africa Faces Energy Infrastructure Issue," Platts, Oct 4, 2012 -- D.R.)
 

World Watch -- Comment & Interpretation on Today's News [Third Tanzanian Gas Discovery for Ophir-BG]

by Daniel O'Sullivan, London, EI
Hopes for a first LNG scheme in East Africa have risen following a third gas strike offshore Tanzania by Ophir Energy and BG Group. The discovery adds further weight to the idea that the three blocks the two partners share there will form the basis for a new Asian-facing LNG export project, which despite a lack of hard volumetric figures is already being talked up by Ophir as a “multi-train” venture. The pricing and marketing prospects for new supplies of LNG improved overnight with the earthquake and tsunami that knocked out a significant chunk of Japanese nuclear power generating capacity in early March. Privately held Ophir -- which ranks Mittal Holdings, South African black empowerment vehicle Mvelaphanda, hedge fund Och-Ziff and Polish industrial group Kulczyk as its major owners, accounting for 70% between them -- is riding this momentum, with reports saying it is now preparing to float 25% of the company in a stock market listing to raise some $500 million.

(Ophir announced on April 4 it has made a third Tanzanian gas discovery with the Chaza-1 well, located in Block 1 about 11 miles (18 kilometers) offshore southern Tanzania in a water depth of about 3,117 feet (950 meters). Drilled by the Deepsea Stavanger semisub, the discovery is situated nearly 124 miles (200 kilometers) south of the Pweza and Chewa discoveries---please see Rigzone, here---and closer to the Mozambique border where Anadarko Petroleum has made four gas discoveries. An estimated 40 miles separates Chaza-1 from Windjammer, the Anadarko group’s northernmost discovery to date in Offshore Area 1. Also, for East Africa's oil and gas, please see my post here. -- D.R.)

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.)