Rush for East African gas just starting

The Rovuma discovery owes its existence to a geological formation called a turbidite. When rivers washed away their sediment millions of years ago, the sand formed in big pancakes at the bottom of slopes. These formations often contain huge deposits of oil and gas.

Many turbidites around the world have yet to be explored, particularly those in deep water. But the technology exists to tap them and geologists believe that more giant fields like Rovuma could be found on Mozambique's 1,000km-long coastline.

The potential for huge finds elsewhere in Mozambique, and in nearby Tanzania and Kenya, is one reason why Shell let the Thais run off with the Cove Energy prize. Many analysts believe that PTTEP paid too much. Besides, the Anglo-Dutch giant has other options to buy into Rovuma. Anadarko, which owns 36.5 per cent, could sell down some of its stake, while other minority investors would be delighted to make a return approaching that of Cove Energy.

It will cost tens billions of dollars to develop the Rovuma field and build the liquefied natural gas terminals necessary to ship the gas east to energy hungry Asia. Shell is the world leader in LNG and it would make sense for it to come on board at some stage to provide the technical expertise as well as the financial firepower required.

The huge strides being made in East Africa are attracting jealous glances from rival LNG project developers in Australia. Labour and equipment costs Down Under are soaring and companies such as Shell are already talking about delaying their projects because of the expense. East Africa's enticing turbidites could be their next destination.


From The Times