East Africa's Energy Boom
24 September 2012
AllAfrica.com: Gas discoveries in Mozambique and Tanzania, and rising estimates for oil in Uganda, Kenya, Ethiopia and Puntland, are attracting global energy companies.
In July, European Commission president José Manuel Barroso and Andris Piebalgs, European development commissioner, visited Mozambique and Tanzania to bolster financing in a region where European companies including Royal Dutch Shell, Cove Energy, ENI, Galp Energia and BG Group are making inroads.
The same month, Brian Dames, CEO of South Africa's Eskom, pledged to pursue more cross-border electricity projects with Electricidade de Moçambique. "East Africais a very exciting place to be, which is very positive for the region as a whole," says Paul McDade, COO of Tullow Oil, an Irish company with a run of successes across the continent.
Attention now turns to the speed and ease with which East Africa's oil and gas can be brought to market. Coastal countries have strong prospects, with direct links to Asia. Plans to build a liquefied natural gas terminal in Mozambique mean exports to the Asian market could begin by 2018. The upside estimates for discovered gas are around 100 trillion cubic feet, provoking energy behemoth Royal Dutch Shell to negotiate a $2bn takeover of Cove Energy, currently the main player in Mozambique, although it lost the bidding war to PTT of Thailand.
Mozambique is also positioned to be a regional power exporter, providing gas to southern African countries as well as converting gas into electricity and selling across borders. Scottish firm Aggreko recently signed a $250m deal to provide a 107MV power plant to supply Mozambique and South Africa, making it the first private firm to supply power cross-border to utilities in southern Africa, and underscoring Mozambique's importance as a regional energy hub. Infrastructure constraints remain huge, however, with Mozambique's government estimating that $50bn will be required to develop export infrastructure.