Exploring the opportunities for Australian energy companies in East Africa’s gas discoveries

Energy resources Business Africa Australia


Decades of exploration in East Africa, have produced few large discoveries of oil and gas. Past exploration has also been hampered by political uncertainty and regional conflict. Things look set to change, however. Attention is now focusing on East Africa’s offshore natural gas discoveries and this process escalated in 2012. The discoveries have garnered the attention of large international oil companies, which has led to investments in large exploration projects in the region. The gas finds have generated a marked interest, due not only to their size but also their placement in proximity to Asia. The discoveries have placed East Africa in the running to supply major Asian Liquefied Natural Gas (LNG) importers, putting them in competition with the USA and Australia. The question that arises is what LNG opportunities exist in the East African offshore region, for commercial exploitation by Australian energy companies? Australian companies interested in investing in the region will need to consider the long-term geopolitical outlook for these countries, particularly Tanzania and Mozambique, where the biggest gas discoveries are located. In addition, it is important that they assess the investment and market options available. Traditional entry is proving increasingly costly, with Asian national oil companies, in particular, proving to be highly competitive. As a result Australian interests may need to look to alternative markets in the region, where interest has also been high; i.e.: Madagascar, Kenya and even further south toward South Africa. Alternatively, Australian companies could possibly consider investment through technology entries.

Key points:

  • Following large discoveries of natural gas off the coasts of Tanzania and Mozambique, equated by some to those on the North West Shelf of Western Australia, East Africa has received much attention and has been labelled as the newest energy hotspot.
  • East Africa is a region that is still relatively underexplored and thus represents a frontier market.
  • The discoveries allow numerous opportunities for investment by Australian companies.
  • Although Australian energy companies have shown interest in investing in East Africa, the process has proved to be expensive, especially as Asian state-backed National Oil Companies (NOCs) become increasingly competitive. This may deter future investment interests.
  • As an emerging energy hotspot, the stability of the East African region will remain a key factor in whether or not Australian companies choose to invest
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