More mergers, acquisitions coming to East Africa in 2013

It was an incredible year for East Africa where significant gas discoveries catapulted the region into a major energy player, bringing billions of dollars in investment that could transform entire economies.

Gas finds by Eni and Anadarko in Mozambique and BG, Ophir and Statoil in Tanzania will lead to the construction of several LNG plants with first shipments as soon as 2018.

The discoveries may not only see oil majors scale back on investments to build LNG plants in Australia but could also threaten its market share in energy-thirsty Asia.

Mozambique expects that within five years, the nascent energy industry will account for 13% of the economy, already one of the fastest-growing in the world at 7% last year.

The size and scope of the region’s reserves have whetted oil executives’ appetite for business opportunities where capital invested in offshore exploration is expected to increase to $994 million in the next 12 months.

In July, Thailand’s PTT beat back a bid from Shell to buy Cove Energy, an Irish company with an 8.5% stake in Mozambique’s area 1 block for $1.9 billion.

Looking to cash in, India’s Videocon Industries which owns a 10% interest in the same block is now seeking a buyer. Eni is also looking for a partner in its 70% stake in the Rovuma Basin area 4 block.

Though there have been significant transactions in 2012, the next 12 months could see a fresh round of acquisitions and mergers with multinationals likely to be the main buyers.

Shell and BP are tipped to be actively looking for positions in East Africa’s gas market. UK Independents, Afren, Ophir Energy, and US independents, Kosmos Energy and Aminex with material acreage positions in the region are likely to become targets for big companies.

Companies eager to develop the first wave of costly LNG projects will drive deal making in the year ahead.

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