Tuesday, May 1, 2012

Peak Oil Off: Great Game On

Peak oilers have had a pretty hard time lately. Not only have global unconventional finds flattened Hubbard’s ‘peak’, more and more conventional plays are cropping up. ‘Running out’? We have more than enough of the black stuff to incinerate ourselves several times over.

Such supply side bounty has been well documented in the Americas – not just in the US and Canada, but across Latin America, offering a second pass at resource riches. Head all the way over to Australia, and you’ll see a dazzling display of unconventional technologies rapidly increasing kangaroo LNG production. The North Sea can squeeze out a few more drops; Europe can finally get it’s ‘energy sovereignty’ back from shale plays, all while the Arctic offers Russia untold oil riches. Anywhere you look, the narrative is the same. But just when we thought the global hydrocarbon map was complete, another serious player has cropped up, and it comes in the form of East Africa. This is the new African oil rush, and the race to secure regional riches between East and West is on. Nobody wants to lose: Peak oil is dead, the Great Game is back.

What’s particularly interesting about East Africa finds in Kenya, Tanzania, Mozambique, Madagascar, Ethiopia and more established fields in Uganda and Sudan, isn’t just the size of the finds, but the fact that European players have been leading the charge to secure concessions. Looking at the map, you’d think this would become a pure play ‘Chindian’ affair between China and India; sign upstream deals, load tankers, ship hydrocarbons directly across the Indian Ocean to home markets. Both Beijing and Delhi have been busy bidding for assets, but European players aren’t taking this lying down. Having lost the Middle East, seen North Africa take a turn for the worse, Latin America slip, and Russia on edge, East Africa is fast becoming a key priority for European boardrooms. Forget wildcat minnows, if East Africa is going to feed Asian markets, it’s European ‘super-majors’ that want to control the terms, taps and prices entailed. Read More