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IEA Sees $90 Crude Ahead Of Oil’s Downfall

IEA Sees $90 Crude Ahead Of Oil’s Downfall

IEA’s latest report does not…

Texas Firm Strikes Natural Gas in Mozambique

Sometimes it seems that the only thing that you have to do to find hydrocarbons in Africa is poke a stick in the ground – or offshore waters.

On 17 January Houston-based Anadarko Petroleum Corp. announced that it had discovered yet more natural gas off Mozambique’s northern coast in the Rovuma Basin.

Mozambique lies at the southern tip of a fault line running along the east African coast to Somalia, forming a geologically promising region for natural gas that has become the focus of an intensive exploration boom in recent years.

Anadarko’s Lagosta-2 appraisal well was drilled to a depth of approximately 2.7 miles in water depths of approximately 4,813 feet in the Rovuma Basin’s Offshore Area 1.

Anadarko Petroleum Corp. is the operator of the massive 4,060 square mile Offshore Area 1 concession bloc and has a 36.5 percent working interest. The other Area 1 concession bloc owners in the area are Japan’s Mitsui E&P Mozambique Area 1 Ltd. with 20 percent, Indian companies BPRL Ventures Mozambique B.V. and Videocon Mozambique Rovuma 1 Ltd. with 10 percent apiece and Britain’s Cove Energy Mozambique Rovuma Offshore Ltd. with 8.5 percent. The Mozambican government is represented by Empresa Nacional de Hidrocarbonetos, S.A. (ENH), which holds the remaining 15 percent.

Anadarko Petroleum Corp. CEO James T. Hackett called the Offshore Area 1 concession bloc discoveries one of the most important natural gas fields discovered in the last decade, while Anadarko Petroleum Corp. Sr. Vice President, Worldwide Exploration Bob Daniels gushed about the discovery, "This is the largest pay count of any well in the complex to date, and it seems fitting that our seventh successful well in the discovery area would encounter 777 net feet of pay. "These excellent results continue to support our recoverable resource estimates of 15 to 30 plus trillion cubic feet of natural gas in the discovery area on our block, as well as provide additional information that will be incorporated into our models to help determine the optimal sub-sea development plans for the complex. In addition, a second deepwater drill ship, the Deepwater Millennium, has arrived in Mozambique to begin an accelerated testing program that will include installing observation gauges and conducting several drill stem tests, as we remain on track to reach a final investment decision for this project in 2013."

The discovery confirms an earlier Anadarko Petroleum Corp. natural gas strike last October at its Camarao exploration and appraisal well, which led the company to announce that it believed that the Windjammer, Barquentine, Lagosta and complex in its Offshore Area 1 concession bloc held at least 10 trillion cubic feet of recoverable natural gas resources. The new strike at the Lagosta-2 well has allowed Anadarko Petroleum Corp. to upgrade its estimates of the area’s total reserves by 150-300 percent.

And Anadarko Petroleum Corp. has big plans for its Mozambique operations. In August 2011 the company awarded a contract to the U.S. based KBR, (formerly Kellogg, Brown and Root) engineering and construction company to design a liquefied natural gas (LNG) plant for its Mozambique operations. Anadarko Petroleum Corp. is projecting that it will have invested $3 billion in its Rovuma Basin Offshore Area 1 concession bloc by the end of 2013, but if the company decides to proceed with the LNG processing facility, its total investment could reach $18 billion by 2018, the earliest possible date for the complex coming onstream.

To put these figures in context, on 19 January Leslie Rowe, the United States ambassador to Mozambique, said in Maputo at the opening of a meeting between the Mozambican Ministry of Industry and Trade and an American delegation led by Deputy U.S. Trade Representative Demetrios Marantis that the U.S.- Mozambican bilateral trade had grown from $120 million dollars in 2007 to $318 million in 2010.

But Anadarko Petroleum Corp. is not without competitors. In October 2011 Italy’s Ente Nazionale Idrocarburi S.p.A., better known by the acronym ENI, announced the discovery of huge natural gas deposits at its Mozambique offshore Mamba South 1 Area 4, estimated at 22 trillion cubic feet - the largest find in the company's history. The following month ENI CEO Paolo Scaroni said that his company would invest $50 billion developing its massive Mozambique natural gas concessions with a view to exporting the natural gas to Asian markets.

But, given Italy’s present economic trauma, its fiscal edge over its Houston-based competitors has narrowed. The one certainty is that no matter whoever develops the reserves, Mozambique’s days of remaining dependent upon foreign assistance for more than half of its annual budget with the majority of its population below the poverty line seem numbered.

By. John C.K. Daly of Oilprice.com

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