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This Under-Developed Coast is Energy's Next Thing

Very interesting farm-out deal on the international oil front this week. One that tells of a big shift in focus underway for energy markets.

The move happened in Ethiopia. Where Marathon Oil announced it will take a 50% interest in a block held by Canada's Africa Oil.

Marathon will pay Africa Oil $3 million cash for the consideration, and fund $15 million in work on the projects here.

This isn't a major deal by Marathon's standards. But it is significant. Illustrating the increasing focus being brought by the energy world to a relatively new corner of the planet: East Africa.

Ethiopia is just one of the spots along the East African coast seeing petroleum exploration taking off of late. Companies like Africa Oil and Tullow have been making sizeable discoveries in Kenya. And there's been a significant amount of drilling going on in Mozambique.

But the importance of this area goes beyond just good petroleum geology. It's also one of the most sought-after locations in the resource world right now.

That's because it's the lowest-hanging fruit for Asian nations looking to expand their supply networks. For a massive consuming nation like India, East Africa is one of the closest geographies at hand. And even buyers in China and Japan have been increasingly drawn to this part of the world for new projects.

And it's not just oil and gas. In December, the government of Kenya said it will sign concession agreements for large coal fields with China's Fenxi Mining. Japan has also been pushing to get a hold in Kenya--which is the number one destination for Japanese aid spending in all of Sub-Saharan Africa.

This is an under-explored frontier that's perfectly positioned to feed the world's biggest energy and minerals consumers. Watch for a lot more news from this emerging hotspot.

Here's to the right place at the right time,

By Dave Forest

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