East African potential hots up

There's increased speculation that the economic fortunes of Tanzania, Mozambique and, potentially, the wider East African region are being transformed by regional energy developments. After years of focus on West Africa, East Africa is now attracting considerable attention following a wave of huge conventional oil and gas discoveries.

BG Group and Ophir Energy came to the party this week when the joint venture announced its fourth Tanzanian gas discovery from the Jodari-1 offshore exploration well. Preliminary evaluation of the well results indicates that gross recoverable resources are in the range of 2.5 to 4.4 trillion cubic feet (tcf) of gas, bringing the total resource to about 7 tcf. The rapid growth of the resource provides the incentive for large-scale development. And, while BG obviously has deep pockets, Ophir has opted to raise approximately £150m via a placing to fund the next phase, which could eventually lead to a two-train LNG plant.

Earlier this month, Cove Energy and its operator-partner Anadarko Petroleum released details of a highly encouraging flow test on a major gas discovery in the Rovuma Basin Area 1 block, offshore Mozambique. Royal Dutch Shell has expressed an interest in buying Cove, along with PTT of Thailand and ONGC and GAIL of India.

Onshore, Tullow Oil this week announced an oil find in northern Kenya, which could open up a new frontier in Kenya and Ethiopia, where Tullow is planning further exploratory drilling. This could indirectly benefit tiny Aim-traded agricultural firm, Agriterra . It owns a legacy 20 per cent interest in the South Omo field, Ethiopia, which is on Tullow's drilling schedule.

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