Italian oil group Eni said on Thursday it had made a giant natural gas discovery off Mozambique, the biggest in its history, confirming expectations that East Africa is set to emerge as a major gas exporter after recent finds.
Eni said the discovery of gas at a first exploration well in Mozambique's offshore Area 4 exceeded pre-drill expectations and would help it strengthen its position in Africa.
This is a new stage in our conquest of Africa and a strong impulse for our business in the Pacific and Indian ocean area, Chief Executive Paolo Scaroni told a conference call on the discovery.
The find came at the Mamba South 1 well, Eni said in a statement, adding the Mamba South area could contain some 425 bcm of gas.
A further four wells in the area will be drilled in the next 12 to 18 months, Eni's E&P head Claudio Descalzi said. The project is expected to add 2 billion barrels of oil equivalent to reserves and boost production by around 300,000 barrels of oil equivalent per day (boepd).
Eni is the operator of Area 4 with a 70 percent stake. Co-owners are Portugal's Galp Energia, South Korea's KOGAS and Mozambique state-owned energy company ENH.
Shares in Eni and Galp ended 0.64 percent and 2.8 percent higher respectively, while the European oil and gas index closed down 0.98 percent.
EAST AFRICA BOOM
Mozambique, one of the poorest countries in the world with little heavy industry, looks set to cash in on a gas bonanza as oil and gas companies flock to East Africa to tap the area's potential.
Earlier this month U.S. explorer Anadarko Petroleum Corp raised its estimate of the amount of natural gas it has discovered offshore Mozambique by two thirds, lifting hopes East Africa could become a major gas exporter.
Drilling is progressing in Tanzania, Madagascar and Kenya, and explorers expect more big gas finds which could make the area a major exporter of gas to Asia.
The exploration success in Mozambique expands the leadership of Eni in Africa by opening a new eastern front of activities, Eni said.
Eni is one of the largest operators in Africa where it produces some 1 million of the firm's 1.8 million boepd. It expects production on the continent to grow by 2 percent per year to 2014.
The sheer size of Mozambique discovery is expected to lead to large-scale gas development with exports of liquefied natural gas (LNG) to regional and international markets and supply to the domestic market, Eni said.
Scaroni said the group will build an LNG plant in the country, adding it had the resources to build it alone.
The Mozambique discovery, part of Eni's strategy to identify new areas with a high mining potential, is in the north of the country near the Anadarko finds.