March 31, 2012

Transnational companies flock to East Africa in search of oil

Stiff competition is already emerging among international companies to enter East Africa’s energy sector buoyed by Kenya’s discovery of oil and Tanzania’s abundant deposits of natural gas. Africa-focused oil and gas firm Ophir Energy Plc predicts East Africa is on the path to becoming a major hydrocarbons (oil and gas) province; the discovery of more resources will spur the arrival of international firms who want a foothold in the region. East Africa is also receiving interest from Royal Dutch Shell Plc, state-owned Petrobras of Brazil, Statoil of Norway and Exxon Mobil.

Tanzania has already agreed on an oil exploration licensing round for 16 offshore blocks starting in September 2012. Norwegian oil firm Statoil has said its Tanzanian gas discovery announced last month, the biggest ever made in the country, held up to 5 trillion cubic feet of gas, or about 891 million barrels of oil equivalent (boe) in proven reserves.

Last September, Tanzania got a $1 billion loan from China to build a major natural gas pipeline from Mnazi Bay in the Mtwara region in the country's south to Dar es Salaam, and processing plants in Mnazi Bay.

Ophir Energy Plc and its partner BG Group have made significant gas finds. The pair said on Monday they had discovered more gas than estimated off the coast of Tanzania, adding an estimated 3.4 trillion cubic feet (TCF) in recoverable reserves from the Jordari-1 well in block 1, 55 percent more than initially expected. Tanzania already uses some of its gas to produce electricity and supplies the gas to 37 institutions and industries. (sadocc)

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