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Johannesburg, South Africa (UPI) Dec 21, 2012
Exxon Mobil's plan to begin exploring for oil and natural gas in 2.8 million acres off South Africa's east coast greatly expands the energy boom along Africa's Indian Ocean flank.
Exxon, the biggest U.S. oil company, will be operating in the Tugela South zone off Durban, which lies south of the vast gas fields, dubbed "an embarrassment of riches" by one executive, found over the last year off Tanzania and Mozambique.
The waters off those two countries, for years written off as economic basket cases, are believed to contain 150 trillion cubic feet of natural gas, more than Iraq's gas reserves, and that's expected to double.
Most of this lies in the Rovuma Basin off Mozambique.
"It's now considered to be one of the most prolific conventional gas plays in the world, with enough to support huge liquefied natural gas plants aimed at energy-hungry Asia" across the other side of the Indian Ocean, the Financial Times observed.
Anadarko Petroleum Corp. of Texas and Eni of Italy, two of the biggest operators in Mozambique, are talking about pooling their assets into a single project with a joint LNG plant to ship gas to China, India and Japan.
Companies are lining up to get some of the action.
In August, Thailand's state-owned PTT Exploration and Production beat a bid by Shell to buy Cove Energy, an Irish wildcatter with an 8.5 percent stake in Mozambique's Rovuma Block 1, for $1.9 billion.
One field off Mozambique is said to hold 15-30 tcf, more than Norway's entire North Sea reserves.
Exxon acquired a 75 percent interest in the Tugela blocks from a subsidiary of South Africa's Impact Oil and Gas and has the right to buy a 75 percent stake in three other offshore blocks held by Impact.
The U.S. titan also has signed a technical cooperation agreement with the Pretoria government to study oil and gas potential in the deep-water Durban Basin, which covers about 12 million acres of seabed.
It has exclusive rights to prospect in the sector for a year and can seek a license if it wants to explore further.
South Africa hasn't figured in the energy boom on the continent's eastern edge and the waters of the Indian Ocean but Exxon says there are considerable opportunities there. Besides that, the company is eager to discover new fields to expand its reserves as its production level declines.
It's currently lagging behind its rivals in finding new reserves.
Anglo-Dutch Shell Oil and Anadarko are active in South Africa but their focus is in the western region.
Indeed, the only proven reserves discovered in the republic, Africa's largest economy, lie offshore in the Bredasdorp Basin and off the west coast near the border with Namibia, the U.S. Energy Information Administration says.
These total 15 million barrels, a trifle in energy terms, but the betting is the geological strata running on land and under the sea southward from Uganda and the Great Lakes extend to South African territory.
The EIA estimates South Africa also has up to 485 tcf of technically recoverable shale gas resources, mainly in the Karoo Basin, 100,000 square miles of semi-desert in Cape province.
These are the fifth largest reserves in the world and could solve the country's acute power crisis and reduce its dependence on coal.
Uganda discovered oil in the Albertine rift basin along its border with the Democratic Republic of Congo in 2006.
Current estimates put reserves as high as 6 billion barrels but only 40 percent of the basin around Lake Albert has been explored. The Kampala government is expected to invite bids for hundreds of square miles of new exploration blocks soon.
Major oil strikes have also been made in Kenya and the Democratic Republic of Congo. Exploration is under way in Somaliland, which declared its independence from Somalia in 1991, and Ethiopia in the Horn of Africa.
Brazil's state oil company Petroleo Brasiliero SA plans to start exploratory drilling in impoverished Ethiopia early next year.
London's Tullow Oil, which made some of the first strikes in East Africa, and Marathon Oil Corp. are also set to begin work in Ethiopia.
Early estimates say the island of Madagascar holds 20 billion barrels of oil. It has 225 offshore exploration blocks and the prospects look good.
Powering The World in the 21st Century at Energy-Daily.com
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