Fin24

Huge finds make Africa next gas source

2012-05-16 15:52

WESTERN companies announced finds of huge additional quantities of gas off the coast of Mozambique and Tanzania, cementing the future of East Africa as a major new supplier exporting liquefied natural gas (LNG) to energy-hungry Asia.

Italian oil group Eni said on Wednesday it had discovered a vast new field at its exploration block in Mozambique, while Britain's BG Group and explorer Ophir Energy said they had made a big find at their Mzia well in Tanzanian waters.

The size of these discoveries, coming on top of earlier finds, will more than justify the billions of dollars it will cost to build at least two LNG projects to cool the gas into liquid form for shipment on tankers.

Calling its gas find "important", Eni said it estimated that, with the latest discovery made in Mozambique, its block could potentially hold up to 52 trillion cubic feet of gas.

Around 10 trillion cubic feet would be enough to meet an entire year's gas consumption by France, Germany, Britain and Italy.

"The success at Mzia-1 is a major step towards a Tanzanian LNG hub development in Block 1," said chief executive Nick Cooper of Ophir Energy, whose shares jumped 12%.

Oil and gas companies have flocked to East Africa in recent years, spurred by advances in deep-water drilling and problems in securing access to reserves in areas historically seen as more promising, such as the Middle East.

The resources discoveries have boosted prospects for the region's development, paving the way for energy-intensive industries to emerge there if some of the gas is made available for domestic use.

Gas rush

Analysts said oil majors without a presence in the region would rush to gain exposure to such huge new reserves, meaning more merger and acquisition activity could be possible after Royal Dutch Shell's move to try to buy British explorer Cove Energy.

"We believe that it can only be a matter of time before Ophir Energy comes to the attention of the oil majors in the same way that Cove Energy did with Shell," Westhouse Securities analysts said.

Cove is partnered with US explorer Anadarko Petroleum Corp in Mozambique, and the two said on Tuesday they also discovered a major new gas field off the country's coast, in an area neighbouring ENI's block.

Eni, which has Portugal's Galp Energia as its partner in Mozambique, has said it will consider selling a stake in its Mozambican block but does not expect to make a decision on any deal before the end of the year.

Shares in Eni traded up 0.1% while BG's shares added 0.2%, broadly in line with the European oil and gas index which was 0.2% higher.

Comments
  • yvette.meyer2 - 2012-05-16 16:04

    Lord help us as will pillage another part of Africa!

      Rajesh - 2012-05-16 17:23

      So do you have an alternative to growing the economies of those countries?

  • ghettochyld - 2012-05-16 16:33

    'next gas source' hah? literally saying next bombing target

  • Cape - 2012-05-16 16:48

    The next western invasion - giddy up! Has Africa learnt nothing from the past?

  • fred.fraser.12 - 2012-05-16 16:56

    Pseudo victims unite. Everyone knows the real problem in Africa is corruption and violence. Unfortunately there's an oversupply of natural gas. Otherwise the continent would be looking at substantial short-term gains. The future may hold better possibilities for these resources, assuming the move will be away from oil to gas. However, it appears that battery and electric power are the future in this regard.

  • zaakiro - 2012-05-16 17:11

    Africa has always been blessed with "virtually" unlimited natural resources, but sadly we remain the victims of our own crimes. In terms of what the earth has given us, we have very little to show for it.... Almost every country on this continent has something precious (or had) before it was exploited by Western & European regimes to fill their own bellies.... Now the East is coming calling together with the West...how can Africa feed it's own kids when everything that belongs to the people is taken away. In the same tone, corrupt leaders..filled with greed have let their people to suffer while they enjoy the "spoils". Like many have said, like how Iraq, Afghanistan, Syria, Libya and many other Oil Rich countries (or countries withing the pipeline) have suffered so that the American can fill their tanks, Africa will have it's day. Most will say Africa is already suffering, but when their is more money to be made, there is more to fight for.... If only the people who live on the land can enjoy the goodness that these resources provide, if only...

      bfvillet - 2012-05-16 17:22

      it is a damn shame the report talks about how these european companies stand to gain saying nothing about the people of Tanzania or mozambique I hope that these governments nationalise those fields and use the revenue to feed their people we cannot forever allow them to exploit our resources so that europe can live in luxury

      Jason - 2012-05-16 17:31

      No one is stopping these African countries from mining their own resources, unfortunately though they dont have the technology or know how to do so. Maybe if they stopped throwing stones and concentrated on education they would find themselves in a better position.

      fred.fraser.12 - 2012-05-16 21:37

      Europe live in luxury? Have you been there? And nationalize the industries? Only Cuba and Zimbabwe still practice that policy. Even China is moving away from it.

      Steward Regenald De Bruin - 2013-05-02 14:30

      With good professional governance, nationalization is not an issue. Just look at Norway. Unfortunately most politicians are basically just oxygen thieves who already have their spots picked out in hell.

  • Kevin Stoffberg - 2012-05-16 17:23

    "Major supplier to Asia" "Enouh for France, Britain, Germany.." "Partner to Us explorer" Does anything of value belong to Africa!? Why are we selling ourselves to these corporates? Many will say there are endless job opportunities here, thats a load of BS! Pathetic underpaying jobs. While the companies on the receiving end of our resources pocket the big monies. We should stop settling for the easy buck and make our energy resources work for us, not be worked by Europe, Asia and America.

      Jason - 2012-05-16 17:32

      How many diamonds can you dig up with a spade?

      fred.fraser.12 - 2012-05-16 21:38

      The problem is the corruption. Beneficiation can't occur to a meaningful extent while this is present.

      Steward Regenald De Bruin - 2013-05-02 14:33

      @Jason Davidson, you make it sound as if these African countries are poor. Not in the least. The only thing they are poor in is leadership. If you have the political will you can change any situation around. Unfortunately there are interests that benefit from the misfortune of others, and people(namely politicians) that won't hesitate in selling their own mothers for a quick buck.

  • Dooie - 2012-05-16 19:47

    And to whose advantage will that go? A year from now these companies will be making billions but because the Zim dollar fell by a quarter of a millionth of a percent, the price of fuel will increase with R2.50 by Easter and again by the December holidays.

  • siliziwem - 2012-05-18 02:09

    Mbeki had or still has a dream of African Renaissence! Until that is practical, we will suffer

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