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Soaring prospects for East Africa’s gas with new discoveries

Two new gas discoveries off Tanzania and Mozambique should cement East Africa’s future as a world-scale exporter of liquefied natural gas (LNG)

In mid-June, Statoil announced its second substantial find off southern Tanzania, while Anadarko firmed-up a second multi-field gas complex nearby off northern Mozambique.

Statoil made its discovery with only its second well in Block 2, which lies less than 90 km north of the border with Mozambique. The Lavani-1 well, drilled in 2,400 metres of water by the Ocean Rig Poseidon drillship, found 95 metres of “excellent quality reservoir sandstone with high porosity and high permeability”, Statoil said.

The company gave an initial estimate for resources at Lavani of 85 billion cubic metres (cm) of gas-in-place, while also raising its estimate for the first discovery, Zafarani, after having completed a sidetrack. The sidetrack found 28bn cm in-place, the firm said, additional to the 142bn cm found with the main well. The two discoveries are only 16 km apart, raising the possibility of a joint development.

Statoil operates Block 2 with a 65% interest, with ExxonMobil holding 35%. The state’s Tanzania Petroleum Development Corporation has the right to take 10% in a development project.

Meanwhile, Anadarko appears to have confirmed a second gas complex adjacent to its four-field Prosperidade complex, in Area 1 off the northern part of the Mozambique coast.

The company said its Atum well found a net 92 metres of gas zones and showed “apparent connectivity” with its recent Golfinho discovery, 16 km to the north. The new complex could hold 283bn-850bn cm recoverable and “has the potential to underpin a large LNG development”, the firm said.

Significantly, the Golfinho-Atum complex is contained entirely within Anadarko’s Area 1 – while the Prosperidade fields appear to extend into the unlicensed area to the east, raising the possibility that Prosperidade might have to be shared.

Another bonus is that Golfinho-Atum is only about 15 km offshore and the water-depth is shallower – 1,000 metres at the Atum well and 1,027 metres at Golfinho – than at the Prosperidade fields, where depths are in excess of 1,400 metres. Anadarko is to start a four-well appraisal programme at Golfinho-Atum immediately, and will carry out flow-tests.

Following the discovery, Anadarko lifted its estimate for recoverable resources in Area 1 to the range 850bn-1,700bn cm, with upside potential for the discovered reservoirs approaching 2,830bn cm – a vast volume, equivalent to over half of the total reserves of Algeria.

The company is planning an initial two-train LNG export facility – with production capacity of a standard train usually around 3.5m tonnes a year – but envisages “significant future expansions”.  A final investment decision is due to be taken next year, with first exports targeted in 2018.

The latest discovery raises the stakes in the take-over battle for Cove Energy, the UK-Irish company which holds an 8.5% interest in Area 1 but has put itself up for sale. Thailand’s PTT was the leading bidder at presstime but analysts were expecting Shell, which bid earlier, to return with a new bid.

Interests in Area 1 are Anadarko (36.5%), Mitsui (20.0%), BPRL Ventures - part of India’s Bharat Petroleum (10.0%), India’s Videocon (10.0%), Cove Energy (8.5%) and the state’s ENH (15.0%).

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