Shell to add firepower to BG assets in East Africa LNG race

Posted on : Monday , 25th May 2015

Royal Dutch Shell’s $70 billion takeover of BG Group Plc will put Europe’s largest energy company in the middle of East Africa’s race to export natural gas and is set to boost the chances of Tanzania becoming a major supplier.

The acquisition would include stakes in three blocks off the coast that contain one-third of Tanzania’s estimated resource. This may give the East African nation an edge in the race to first exports of liquefied natural gas from the region over neighboring Mozambique, where discoveries could make it the world’s biggest producer of LNG after Qatar and Australia.

Shell has “strong expertise in working with governments and has also displayed strong appetite for risk, deploying new technologies and making cuts when necessary,” said Dolapo Oni, head of energy research for Ecobank Group. “These attributes could benefit the Tanzania LNG project and give Mozambique much- needed competition for the limited investment dollars available globally for these sort of projects.”

Statoil ASA and partner Exxon Mobil Corp. have blocks in Tanzania, while Eni SpA and Anadarko Petroleum Corp. plan developments in Mozambique.

The Tanzanian assets present a second chance for Shell to prove itself in the region. The major lost a 2012 bidding war for Cove Energy Plc and its prized 8.5 percent stake in Mozambique’s Rovuma Area 1 to PTT Exploration & Production Pcl, which paid 1.2 billion pounds ($1.9 billion) for the explorer. Two offshore areas in the Rovuma Basin hold reserves of about 120 trillion cubic feet of gas, according to consultants Wood Mackenzie.