Oil and Gas in East Africa - Boom

Share On Facebook
share on Linkedin

Since the turn of the millennium, Companies have been gradually placing their bets along East Africa, in the rift margins and coastal areas – and so far it has turned out to be a high payout roulette wheel. The Chinese started to dominate Kenyan exploration after Kibaki’s turn to the East in 2004, but their lack of exploration expertise meant they did not discover much, and this led to their eventual exit prior to Tullow’s and Heritage Oil’s discoveries in neighbouring Uganda – Just as Shell exited Morocco before the Ghanaian Jubilee finds. Considering only 500 wells have been drilled in East Africa, compared to West Africa’s 14,500, there is a clear disparity of unlocked potential. Geological trends are being followed up and down the rift valley in terms of oil, and up and down the coast for gas. This has pushed most of the East African Countries to redesign their energy policies, most of which are still in the works. In fact the lead explorers are western specialists or majors, with the Chinese building and operating the infrastructure.

Onshore Trends – Riding the Rifts

Tullow’s string of successes in the Uganda and the Lake Albertine rift sequence brought in CNOOC & Total for development and an eventual 200,000 barrels per day fed through to a local jointly built refinery. At roughly the same time, CNOOC were rebuffed from entering the less proved Kenyan Lake Turkana acreage, obviously trying to lower the entry price after realising they had to piggy back on western exploration expertise. Tullow firmly objected the offer, and it looks like they’re playing the same strategy as in Uganda – prove up the assets, then bring in a wealthy development partner and farm down – which after recent drilling successes, with hindsight, seems to have been prudent.

After Uganda and Kenya comes the South Omo block in Ethiopia, which is yet another continuation of the same trend. Even to the South there has been talk of opening up Malawi and Lake Nyasa, where bellicose rumblings have been flaring up with its bolshier neighbour Tanzania over redefining national borders on the lake. At present Mozambique has the south eastern quadrant and Malawi the rest, whilst Tanzania is claiming the North Eastern quarter of the lake. A UK based Company, Surestream Petroleum, is at the heart of the matter having been awarded exploration rights to the northern half of the lake by the Malawian Government.

Lake Tanganyika is also being prospected by the Australian firm Beach, in the South, and Total, in the North. They see the Congolese side as having the most potential, due to the presence of the large natural Cape Kalumba oil seep, so some form of proven hydrocarbon system, and they have detected potential traps on their Tanzanian side. The DRC Government refused to allow seismic on their half of the lake.

Offshore Trends – Coasting the Clastics

The discoveries of gas in offshore Mozambique have opened up the entire eastern coastline of Africa for exploration. In Mozambique Eni has farmed down a 20% stake of its 75Tcf in offshore block 4 to CNPC – with the majority of the gas reaching across through the Mamba complex into Anadarko’s Area 1 – who are themselves looking to farm out 10% of the blocks 32-55Tcf recoverable resources (likely bidders are expected to be ONGC and Shell). Alongside Indian billionaire backed Videocon is looking to sell their 10% stake.

On the coast, the most exciting buyout was of Cove and its Mozambique offshore acreage after a bidding war with Shell and the Thai Corporation PTTP. PTTP won, with the premium bet being that the un-risked prospects were likely to translate positively to risked.

Just across the border in Tanzania you are into BG and Ophir territory, who themselves have been racking up the recoverable resources. Although not as significant as Mozambique so far, there is the potential, with clear seismic anomalies throughout their blocks up to Kenyan offshore Shell territory – which itself is in the data acquisition stage of continuing the trend of East African Coastal gas.

To date 13.5-21Tcf has been de-risked in the Ophir BG Tanzanian partnership, with 75 Tcf of prospects to go stretching across their three licences: Block 1 bordering the Mozambique finds in the Rovuma delta, and block 3 &4 south East of Mafia island.

Ophir, BG and the whole gang are looking for oil in the coastal regions too, where they have noted the presence of oil seeps and the varying qualities of the gas discovered so far (biogenic gas in Mnanzi bay vs Songo Singo island dry gas) – suggesting multiple potential source rocks of varying age, and for some to be potentially oil generative i.e. less mature and lying in the oil window (the correct temperature for kerogen to be converted by catagenesis to hydrocarbons, and not so hot it is cracked completely into gas). Ophir believe that the oil window is on the upper slope/shelf edge and are particularly keen on their East Pande block to give up the goods. Finding Oil in the onshore and offshore coastal blocks would be another game changer and at the moment is the holy grail.

The theme of chasing East African sedimentary fans is continuing even further South. Impact Energy have shot 3-D seismic over their holdings offshore Durban in South Africa, and believe their Bredarsdorp basin, near Cape Agulhas has potential too, but through linking it to the Falklands islands gas finds. Exxon have farmed in for 75% of their acreage.


As the Konigsberg was trapped in the Rufuji delta in WW1, most of the gas and oil is trapped in East Africa, held back by a lack of clear policy from Governments and infrastructure – but this is expected to change soon, especially as the continued peeling back of East Africa’s subterranean layers will spur the incentive to be first to market. The Chinese own downstream pipeline infrastructure and is only being allowed to move into western Companies exploration patches when resources have been de-risked – netting them the value added of their exploration superiority. With three parties at the table, there are going to be difficulties with varied vested interests, but the clear benefits of collusion and willingness shown so far implies a soft landing for navigating these issues. Although being Africa, nothing is ever certain.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20220925 15:11:07