East Africa has long been the next big play for oil companies. For years, it has been the domain of smaller, more intrepid players. Bigger companies, such as ExxonMobil in the Malagasy straits, have dipped their toes into the region’s waters but results have been mixed, with the oil fields on Uganda’s Lake Albert proving the brightest success story. Recently a handful of deals in the region shows that far from giving up on East Africa’s potential, companies, big and small, are hoping they will discover the next Uganda.
Petroleum Intelligence Weekly has called East Africa the “next exploration hotspot.” Here is why:
A trickle of transactions over the past couple of months is elevating East Africa’s status as a new exploration hotspot. Exxon Mobil was the first to wade in, joining Statoil in a deepwater license offshore Tanzania. BG has followed suit, taking a majority stake in three other Tanzanian deepwater blocks, working with Ophir Energy. West Africa-focused Afren has now snapped up Black Marlin Energy, which boasts acreage in Ethiopia, Kenya, Madagascar and the Seychelles. The truly intrepid have even ventured into Somalia. East Africa has attractive geology and has proven its worth in Uganda, where close to 1 billion barrels of oil has been proven since 2006. With so many doors closed elsewhere, East Africa is wide open and has low entry costs. It is almost the last easy-access frontier and, at long last, is commanding corporate attention. But it still has to demonstrate that Uganda is not a one-off success and that the region’s rift systems — long dismissed as too gas-prone for explorers’ tastes — are also rich in oil.