Oil majors to gain most from East Africa gas boom
By Henning Gloystein
LONDON (Reuters) - Large western energy companies stand to gain most from a boom in East African natural gas exports as their technical know-how and capital power gives them an advantage over smaller competitors or Asian national firms, consultants Bain and Company said.
The U.S. Geological Survey estimates that over 250 trillion cubic feet (7.1 trillion cubic meters) of natural gas may lie off Kenya, Tanzania and Mozambique, compared to 186 trillion cubic feet for Nigeria, Africa's biggest energy producer.
Just the gas findings announced earlier this year in the region are estimated to hold enough gas to supply France, Germany, Britain and Italy for at least a year - possibly much more.
"Mozambique in particular is in a place to become one of the world's largest exporters of LNG (liquefied natural gas), and large international oil companies are the natural players in this region as they have the technical know-how and scale to develop, operate and maintain these massive gas fields in deep waters," Juan Carlos Gay, partner at business consultancy Bain and Company said on Friday.
"Some NOCs (national oil companies), in particular from Asia, and mid-sized independents may gain access to get assets onshore and in shallow coastal waters but most of the reserves are in deep and complex waters and that's good news for major European and North American IOCs (international oil companies)."
Gay added that European and American energy companies would have to make efforts to stay on the cutting edge of technological developments as Asian NOCs were fast catching up.
With such vast reserves and limited domestic demand, East Africa was set to become one of the world's leading exporters of LNG, a market that is booming as Asian demand continually rises and domestic natural gas reserves in Europe dwindle.
Bain's Gay said that although Asian NOCs would be interested in buying large amounts of East African gas to meet booming demand, their lack of technological know-how to operate in deep waters would benefit the established major players from Europe and North America, while small independent companies would lack the capital to develop such large fields. Continued...