Source: Eduard Gismatullin, Bloomberg Businessweek, January 25, 2012
The economies of the poor nations of Eastern Africa will feel a change from the development that is taking its claim their land and waters. Off the coast of Mozambique, Eni SpA and Anadarko Petroleum Corporation found a gas field 36 times more valuable than the nation’s current economy. Neighboring countries are hosting their own drilling surges in order to supply fuel to the rapidly growing economies of India and China. LNG prices in Asia are being sold at $16 and $17 per million btu’s, over six times as much as in the U.S.
Eastern Africa is fairly uncharted territory in regards to drilling. Only 500 wells have been drilled in the region, compared to the 33,000 that populate the rest of the continent. Now that big names like BP and Shell are talking about projects in the area, independent companies are likely to be bought and the drilling consolidated.
Statoil ASA, Norway’s largest oil company plans to partner with Exxon Mobil and drill in Tanzania this year. CEO of Statoil, Helge Lund remarks, “The geographic location is almost perfect for LNG” exports to the east. Investec’s Joyner claims that Mozambique and Tanzania could rival Qatar and and Australia as the largest suppliers of LNG in the world.
This could open the door for the U.S. to export infrastructure for the developing sites. Investors around the world are in eager anticipation of a construction surge and America’s role has yet to be decided.