SkyscraperCity Forum banner

East Africa to join world gas giants

2240 Views 6 Replies 5 Participants Last post by  bantugbro
East Africa to join world gas giants

London - To East Africa's assets of spectacular wildlife, abundant land and shimmering beaches you can now add gas - so much gas it could transform global energy flows along with some of the world's poorest countries.

Finds announced just last week off Tanzania and Mozambique are estimated to hold enough gas to supply France, Germany, Britain and Italy for at least a year - possibly much more.

These and other discoveries in eastern Africa in the past year have sent shares in small explorers soaring, prompted takeover battles and rattled gas producers in other regions.

They are already starting debate about how the resource wealth can bring better living standards rather than exacerbating corruption and distoring eastern Africa's relatively diverse economies just as they are taking off.

East Africa has been emerging as an oil-producing region in recent years, although discoveries in Uganda and most recently Kenya have so far been smaller than in West Africa's giants.

The excitement over oil has been overtaken by the largely offshore gas discoveries streching along eastern Africa's Indian Ocean coast from Kenya to Mozambique.

“It's a thrill a minute. The news is coming hard and fast,” said Nick Cooper, CEO of explorer Ophir Energy, whose share price has more than doubled in four months.

Ophir's partner, British gas producer BG Group, announced a major discovery off Tanzania this week. U.S. explorer Anadarko Petroleum and Italian oil group Eni announced even bigger finds off Mozambique.

Anadarko estimates its reserves off northern Mozambique at 50 trillion cubic feet (1.4 trillion cubic metres) - almost as much as Libya's proven gas reserves. It is planning production from 2018.

Eni says its neighbouring exploration block may have 52 trillion cubic feet of gas. Across the border, BG, Ophir, Exxon Mobil and Statoil say they may have 20 trillion cubic feet.

The 253 trillion cubic feet that the U.S. Geological Survey now estimates may lie off Kenya, Tanzania and Mozambique compares to 186 trillion cubic feet for Nigeria, Africa's biggest energy producer.

Demand is low from eastern Africa's small, if fast-growing, economies so the vast majority of the gas would be available for freezing into liquefied natural gas (LNG) to supply an expanding global market for a fuel that burns more cleanly than coal.

“We can help vault Mozambique into being one of the world's three largest LNG exporters,” Anadarko Chief Executive Jim Hackett told an Eni company magazine.

According to Reuters calculations, Mozambique could be vying with Algeria as the world's sixth largest exporter of gas by any means by the middle of next decade.

“There could be 12 trains and still gas left over for GTL,” Philip Wolfe, head of oil and gas at investment bank UBS, said. GTL, or gas-to-liquids, technology converts gas to motor fuels.

Twelve trains - the term for the facilities that turn natural gas into freezing liquid - could pump 60 million tonnes a year. Japan, the world's biggest importer of the fuel, used about 78 million tonnes last year.

In eastern Africa's favour are the lower costs of building the multi-billion dollar plants needed than in countries such as Australia. Eastern Africa is seen as politically stable compared to much of the Middle East and many other parts of Africa - although the Somali pirates haunting the Indian Ocean could be a worry for large shipments of explosive fuel.

The small explorers are immediate beneficiaries of the boom.

Cove Energy, a shareholder in Anadarko's block, has accepted a $2 billion bid from Royal Dutch Shell. Its share price has more than tripled in eight months.

Ophir Energy bought Dominion Petroleum this year and is the subject of frequent takeover rumours - with Indian, Thai and Chinese state oil firms all linked to bids for regional players.

At today's prices, the 30-40 million tonnes a year of LNG which Mozambique may produce would mean revenues of around $30 billion dollars - more than three times the country's current gross domestic product.

While Mozambique is already one of the fastest growing countries in one of the world's fastest growing regions, average income is still little over $400 a year.

Some shiny buildings stand out in the shabby, bustling port capital Maputo, where Anadarko is building a new regional headquarters, and high-end tourist resorts dot the coast. But much of Mozambique is a sprawl of villages connected by rough tracks.

Cash is already flowing in. Eni said it expects to spend 3.1 billion euros ($3.9 billion) in Mozambique between 2012 and 2015. Anadarko and its partners will likely spend more.

The question is how much this will really benefit the region.

Current contracts do not have the kind of clauses demanding the use of local content set by countries such as Brazil, meaning domestic firms could be relegated to bit players. Quick construction means bringing workers and equipment from abroad.

Longer term benefits may be just as uncertain.

“Africans need to have this discussion early on as to how to develop the resources for our own benefit,” Brian Dames, the head of South African state power company Eskom, told Reuters.

“Some of these must be exported but it should not be a recolonization of Africa,” said Dames, who hopes Africa's biggest economy might ease some of its power shortages with links to generating stations using the newfound gas.

Eastern African governments can expect a big lift to revenues.

If regional states got even half the share of Qatar - seen as particularly savvy in managing its gas income - they could together expect $10 billion a year in tax. That compares to annual budgets of around $13 billion in Kenya, $8 billion in Tanzania and just $4 billion in Mozambique.

“The problem is that once a government relies on oil and gas revenues there is no incentive to develop other areas of the economy,” said Markus Weimer, Africa Programme Research Fellow at Chatham House in London.

That is the lesson from countries on the western side of the continent such as Nigeria and Angola, where strong governance does not exist and finding a way to grab a share of oil and gas money has become the main game in town.

Resource money can entrench elites and worsen corruption. That is already a problem in eastern African countries, whose strength has often been their diversity, with tourism, mining and agricultural commodities all among sources of income.

The term “Dutch Disease” was coined to describe the damaging economic impact of resource wealth following a natural gas boom in the Netherlands. Eastern Africa's countries are far less prepared for the change gas promises to bring. - Reuters
1 - 7 of 7 Posts
Looking at the recent history of slow poverty reduction in Tanzania and Mozambique I remain sceptical. This is just more commodity-fuelled growth owned by foreign companies.

But if anyone wants to make a LOT of money, start buying property in Maputo. You are bound to get a massive boom in property prices. All these foreign engineers and executives will need somewhere to live. And I guess all the upper class restaurants, malls, hotels, resorts etc will make a lot of money too.
I remain skeptical but I'm looking on the bright side, especially for Mozambique. I hardly see it changing into another Angola or Nigeria, we defiantly don't need another one of those in the world. But these countries are generally well run and like the report said very stable. Plus some of these economies are already diversified and are making big money, so I wouldnt see them getting neglected. Although povery is a big problem. But remember the poverty is mainly caused by innefficiant services to many people such as power and the rise in staple goods to many. Although I suppose some of it is also down to courruption, I don't know.
Great news!

Someone posted it some time ago in the Oasis.It's nice to see all the natural resources being discovered in the East, there is bright future ahead.
Great news!

Someone posted it some time ago in the Oasis.It's nice to see all the natural resources being discovered in the East, there is bright future ahead.
:cheers: :banana:
Great news!

Someone posted it some time ago in the Oasis.It's nice to see all the natural resources being discovered in the East, there is bright future ahead.
Look like people don't have anything new to post these days...:lol:
Ok let me give you something new from the United Republic of Gas...:)

Hope out of Relative Frustrations

Yesterday in the company of my fellow parliamentarians Hon. Nasir from Korogwe, Hon. David Kafulila from Kigoma South and Hon. Sarah Msafiri Special seats Morogoro we started our study tour to The Kingdom of Netherlands to learn more on their oil and gas sector and what best practices we can draw from them.

Our first briefing of the day on the Dutch Oil and Gas sector was how licensing is done and how revenue is collected and managed. We were informed that the Dutch government receives a total of 11bn Euros as state revenue from the sector as of last year. They collect 85% of the total revenue from Oil and Gas from Groningen field (the biggest field in Europe). Out of this 45% is from taxes collected from Oil and Gas Companies (largely Shell and ExxonMobil) and 40% from taxes and dividend from the State Oil and Gas company EBN. For other fields the state receives between 40% and 65% of the total revenue. In all licences except in old ones the state has shares and participates in companies. The Dutch don’t use Production Sharing System (PSA) as is the case in Tanzania whereby companies are largely contractors. The biggest advantage of a PSA system is that the State remains the owner of the resource. However, the revenue implications of either system, Dutch or Tanzanian, are minimum and largely semantic. It is all about GOVERNANCE – Transparency and Accountability of the whole sector.

We also had the pleasure of meeting the Deputy Prime Minister Mr. Maxime Verhagen. Took the opportunity to extend sincere greetings from the people of Tanzania and reiterate that our Cooperation shall be sustainable and mature – a partnership of equals, unlike the donor-recipient status quo.

I reminded him about our proven natural gas reserves so far nears 19 Trillion Cubic Feet(TCF) with the recent discoveries from five wells owned by the BritishGas/Ophir partnership (11 TCF), StatOil discoveries from one well (5.3 TCF) and the remaining smaller discoveries at Songosongo, MnaziBay, Mkuranga and Nyuni in Kilwa district.

I expressed to the Deputy Prime Minister about our desire to see Tanzania as a country in Africa whereby resource wealth goes hand in hand with democracy and development of the people of Tanzania. Echoing the vigor and desires of many of the up and coming young leaders in Tanzania who are committed to creating a new kind of leadership that is people centered and gives hope to the masses. That it is possible for an African country to be rich in Oil and Gas and still be properly governed and is democratic. And that it is possible to use the country’s vast resource wealth in the development of the people of Tanzania. That we don’t want to repeat mistakes of others (including Nigeria which lost billions of Petrodollars and the Dutch on ‘dutch disease’) and not repeating the same mistakes as we did in Mining sector.

The Deputy Prime Minister assured us of the readiness on his government to support us in developing our Natural gas sub-sector especially through human resources development. This agenda was further discussed at the foreign ministry and it was generally agreed to establish a Scholarship Program for Tanzanians on Oil and Gas in order to increase our pool of experts in the sector.

He suggested that Tanzania uses its natural gas reserves towards infrastructure development and cutting down on the national debt for the benefit of the future generation. He explained to us the desire of the Netherlands to be a “Gas Hub” of Europe through developing Ports for LNG like the one in Amsterdam.

The delegation continues with the visit on Tuesday by visiting various natural gas facilities. We are determined to learn and transfer the knowledge into our new policy for Natural gas, Gas Master plan and Petroleum Revenue management legislations and strategies.

I am optimistic out of existing relatively murky frustrations. Tanzania has a great FUTURE ahead. We must build the future we want. Our preparedness and building oversight institutions are fundamental for proper managing of these resources.

Committed to working towards a democratic and prosperous United Republic of Tanzania that is endowed with massive gas reserves Natural Gas (United republic of Natural Gas).

1 - 7 of 7 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.