East Africa might one day challenge West Africa in oil production

Apr 27, 2004 02:00 AM

West Africa, long the dominant region in Africa for oil exploration and production, may soon have competition from the rapidly developing new oil exploration frontier of East Africa. Chris Machette-Downes, director of new ventures and marketing for JEBCO Seismic, a US corporation, made that prediction on April 22.
"All the ingredients are there" for both oil and gas, Machette-Downes said as he discussed his company's recently commissioned satellite data and geological review of the East Africa margin, which surveyed the eastern part of the continent from the Kenya-Somalia border in the north to the Durban Basin off South Africa. For years, oil experts came away with the understanding that the East Coast of Africa was just good for natural gas production at best. Since there was no market for gas, it was just left alone for 20-30 years," he said.
That has now changed, he said, confidently predicting that "East Africa is very likely to become one of the hottest oil exploration frontiers in the next few years."

Machette-Downes said a host of companies are now exploring throughout East Africa: Shell, Maurel et Prom (French), Petrobras (Brazilian) and Aminex (UK/USA) are searching off the coast of Tanzania; the Malaysian oil company Petronas and the Danish company DONG are exploring in Mozambique; and US-based Vanco Energy, which specializes in state-of-the-art offshore drilling and exploration, is working off the east coast of Madagascar.
Oil production also has been ongoing in Sudan, and Canada's Heritage Oil has recently drilled exploration wells in Lake Albert on the border between Uganda and the Democratic Republic of Congo. Offshore exploration is now under way off the coast of Kenya as well, with Woodside Petroleum (Australian) securing most of the offshore action there.

Asked how soon major results could be expected, Machette-Downes cautioned that successful oil discovery as a follow-up to exploration takes both time and patience.
"These days, there are few people left with any concept of the length of cycle time involved and work it takes to locate, understand, evaluate and then fully develop an oil field," he said. Exploration in East Africa, like West, he said, must be focused on key areas.
"I would not say the whole of the East African coast is going to be oil-prone necessarily. There will be pockets (sweet spots) along the coast like in West Africa (the Atlantic margin).

There is potential in the interior, too. "If you pull the continent apart and look at the rifts that run through Africa today, you can find fractures, rifts that go into Africa which contain rocks that that are capable of generating oil. The rich source rocks found in Sudan extend into Kenya, for instance." But "it does not work everywhere," he cautioned.
Machette-Downes predicts that any major finds of oil in East Africa will be exported largely to oil-short nations in Asia.
"Parts of East Africa -- if they became major petroleum provinces -- could, in fact, begin exporting oil across the Indian Ocean to Asia, much like West Africa now ships much of its oil across the Atlantic to US East Coast cities," he said. "It makes a lot of sense, and that is why you get the feeling that some Asian countries [like India and China] are looking closely at the East Africa region. Those nations would save a lot of money by having oil in the Indian Ocean. I think they are waking up to that," he added.

Much of Asia's oil presently comes from the Middle East and from some Asian nations with limited supplies, such as Indonesia, he said. "China needs a lot of oil and it is growing very fast," so it is starting to look toward possible supplies coming from East Africa.
Asked if new technology has played a special role in helping to increase oil and gas exploration worldwide, and especially across East Africa, Machette-Downes answered, "Absolutely!"
"With the many direct flights to virtually all parts of East Africa, greatly improved communications and new geo-chemical exploration and processing methods, I would say on every front things have advanced," he added.

Significant oil production also will have a positive effect on the countries themselves by increasing their revenues and cutting their outlays, Machette-Downes said.
"All of this exploration and the possibility of finding hydrocarbons on the east coast are going to significantly help these countries with their energy bills. At the moment, they just import oil," which erodes their national budgets dearly. For that reason, Machette-Downes expressed the hope that the US government and the World Bank would become more closely involved in the oil exploration and development process.
"If these countries can get their own oil," he said, "they will be protected from these [price] fluctuations" that so adversely impact their national budgets.

A major reason the World Bank in particular has been sensitive to getting too involved in helping oil exploration in developing countries has been environmental concerns, Machette-Downes explained, but he said the oil companies operate in an environmentally sound manner. The biggest problem for them seems to be in transporting oil, so the less transport the better, he said.
"I really feel the oil industry has never presented itself properly in terms of its environmental credentials. There are some bad boys out there for sure, but drilling a hole in the ground and finding oil that is natural and burning it to produce electricity" is good. "It is a 'win-win' situation if done properly," he maintained.
He cited Tanzania as an excellent example of what could be: "Just a little oil there would solve so many problems. Tanzanians would not have to chop down the rest of their trees just to burn to produce energy. I think that is quite important."

Source: United States Department of State
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