East Africa has emerged as the new frontier for natural gas production, boosted by offshore discoveries in Mozambique, Tanzania and Madagascar, a report by Ernst & Young shows.
The report released on Tuesday says “the most dynamic recent developments in the African natural gas sector have been in East Africa,” despite most of the major players coming from further north.
In the last five years, energy firms including Italy’s ENI and US group Anadarko Petroleum have reported several large-scale offshore gas finds in northern Mozambique’s Rovuma basin and Mamba fields.
Recoverable gas reserves in Rovuma is estimated at three trillion cubic meters, the report said.
Leading global oil groups are getting in on the act as discoveries in Madagascar and Kenya have upped the ante.
In Tanzania, BG Group, Ophir Energy, Statoil and ExxonMobil have all found “major gas deposits.”
The report described east Africa as the “next epicentre” for global natural gas, something which was “non-story” ten years ago.
“With the huge recent discoveries in offshore East Africa (in particular, Mozambique and Tanzania), the future of African gas is, however, expected to shift eastward,” said the report.
Gas production in Africa since 2000 has been growing by about four percent per year, with exports destined for the Asian market.
“African gas production reached about 203 bcm (billion cubic metres) in 2011, with production led by Algeria, Egypt and Nigeria, collectively accounting for more than 88 percent of the continent’s total,” it said.
The report also noted untapped shale gas resources in South Africa which have been the subject of a controversial debate.
Environmentalists opposed exploration in the vast semi-arid region of Karoo, in the northern Cape, prompting the government to impose a moratorium on the technique known as fracking. The freeze was lifted last month however.
According to consultants Wood Mackenzie, the ease of access to Asian markets and a break-even point that is substantially lower than rival Australia could help natural gas exports.