* East African natural gas reserves are over 250 tcf
* Will make the region a top LNG exporter
* Small companies lack capital for such big projects
* Asian national energy companies lack know-how
By Henning Gloystein
LONDON, July 20 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 metres) 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
"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.
British exploring company Ophir Energy and its
partner BG Group announced a major discovery off Tanzania
in May, and U.S. explorer Anadarko Petroleum and Italian
oil group Eni announced even bigger finds off
Anadarko estimates its reserves off northern Mozambique at
50 trillion cubic feet - almost as much as Libya's proven gas
reserves. It is planning production from 2018.
Eni says its neighbouring exploration block may have 52
trillion cubic feet of gas. BG, Ophir, Exxon Mobil and Statoil
say they may have 20 trillion cubic feet.
Exxon Mobil has made discoveries off the coast of
Tanzania, and Royal Dutch Shell - although dropping out of a bid
for Cove Energy that would have given it access to East
African gas - is also expected to move into the region.