EA overtakes West Africa as frontier for gas exploration

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East Africa is set to become the next epicentre for global natural gas activities as discoveries indicate the region could be home to significant deposits.

A new report by Ernst & Young dubbed, ‘Natural gas in Africa – The frontiers of the Golden Age’ reveals that the future for African gas lies in the East Africa region, following massive offshore gas discoveries in countries like Tanzania and Mozambique.

Besides, the high interests by oil and gas multinationals that are jostling for exploration fields in other countries like Kenya, Uganda and South Sudan is a clear indication the region is the newest ‘new frontier’.

“The most dynamic recent developments in the African natural gas sector have been in East Africa. Ten years ago, East Africa was a “non-story” as far as oil and gas were concerned.  No longer a non-story, the region is now seen as the new promised land or the next epicenter for global natural gas, the newest  frontier,” says the just released report.

The report notes that with traditional natural gas regions on the continent like North Africa and West Africa assuming the tag of ‘old guards’ on the resource, global companies are looking for opportunities in the East Africa region where exploration activities are still in the infant stages.

So far, Tanzania and Mozambique lead the pack in natural gas discoveries. In Tanzania, total natural gas reserves have more than doubled from six billion cubic this year, following the discovery of the new deposits.

The country is already targeting to become a net natural gas exporter to in the region and the government has already awarded Danish firm COWI Consulting a contract to conduct a feasibility study into a major gas pipeline to Kenya. In Mozambique the proved natural gas reserves are estimated to be 127.4 billion cubic feet.

In Kenya, Australian firm Pancontinental Oil and Gas Ltd elicited excitement two months ago after it announced it had struck natural gas at L8 block along the Lamu Basin.

Commercially viable

The excitement was however short-lived after it emerged the deposits were not commercially viable. According to the report, East Africa has become a beehive of exploration activities with global gas companies’ pitching tent in several prospective blocks.

Besides Pancontinental Oil & Gas, the regional gas boom has attracted a long list of other players including ExxonMobil, Total, Royal Dutch Shell, Anadarko, BG Group, Statoil, Petrobras and Galp Energia, Tullow Oil, Ophir Energy, Dominion, Cove Energy, Premier Oil among others.

“Natural gas development holds tremendous opportunity for Africa. It can be a primary driver of economic growth and broader social development, as well as a major spur for local employment growth and infrastructure development,” observes Elias Pungong, Ernst & Young’s Oil & Gas Leader for Africa.
By The Standard
Posted 2nd November 2012

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