Silently over the past year East Africa, and specifically Mozambique, has emerged as an energy giant. Some are calling it “the world’s hottest oil and natural gas zone” with a future as a major natural gas exporter to Asia. So much natural gas is being found that this could transform global energy flows along with the economies of some of the world’s poorest countries.

Since 2006 major crude oil fields were discovered in the 3,500-square-mile Lake Albert rift basin which extends into Uganda and the Democratic Republic of Congo and touches Kenya and Ethiopia.

The Lake Albert field contains an estimated 1 billion barrels of oil, making it the biggest onshore field found in sub-Saharan Africa in two decades. — UPI

Then in 2011 the world was caught by surprise when Anadarko Petroleum Corp., one of the world’s largest independent oil and gas firms, and its partner Cove Energy hit natural gas in the Indian Ocean off Mozambique. Two other strikes quickly followed, giving them an estimated 12 trillion cubic feet (tcf) of gas, or 2.1 billion barrels of oil equivalent. The field could contain up to 50 tcf of natural gas. Anadarko is planning production for 2018.

In March of this year Italy’s Eni, lead partner in Mozambique’s offshore Mamba Northeast field, announced a new giant gas discovery of at least 10 tcf. Eni says the field holds a potential 50 tcf of gas while others think it could contain up to 60 tcf.

Meanwhile, Norway’s Statoil made a major gas find off Tanzania in February, with reserves estimated at 5 tcf.  The country now plans to auction off 16 offshore oil exploration blocks in September.  Currently its gas reserves stand at 10 tcf and are expected to grow.

The 253 tcf that the U.S. Geological Survey now estimates may lie off Kenya, Tanzania and Mozambique compares to 186 tcf for Nigeria, Africa’s largest energy producer. Some project that Mozambique could be vying with Algeria as the world’s sixth largest exporter of gas by the middle of the next decade.

Given the continent’s low internal demand, most expect 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. India and China are obvious potential markets.

The implications for the East African economies are enormous – both positive and negative:
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.

“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. Business Report

East Africa hits it big in oil, gas boom

Energy potential brings rich promise for eastern Africa

Mozambique gas find hikes East Africa boom

 

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