Nigerian Troubles Benefit Sub-Saharan Natural Gas Development; Zeus Survey Explores

Monday, August 4th 2008

Violence, corruption and unrealistic demands from foreign investors have benefited natural gas development across Sub-Saharan Africa by driving investment from Nigeria into many other competing countries. A study by Zeus Development Corp. finds that 29 of 47 countries that comprise the subcontinent are now improving gas-development policies and advancing projects.

“From Senegal around the Cape of Good Hope to Tanzania, investors are developing reserves to supply power producers in need of cheaper fuel as well as international LNG and chemical markets suffering from supply shortages,” said Bob Nimocks, chief executive of Zeus.

Small independents, such as Foxtrot International, Afren and Artumas, and majors, like Chevron and Marathon, are using new concepts and technologies to help coastal Sub-Saharan countries benefit from reserves that only a few years ago were considered worthless.

Zeus researchers found that states such as the Republic of Congo, Tanzania, Ghana, Namibia, Equatorial Guinea, and Gabon offer better terms to its investors than Nigeria. Of 260 gas fields surveyed, Nigeria on average has withheld more than half of the ownership, leaving foreigners relatively little to warrant their investment risk. These other countries, however, have sold investors on average more than 80%, providing a greater incentive.

“Ownership is just one of the measures of success,” Nimocks said. “There is little doubt that Nigeria is demanding too much from its investors, given the country’s precarious state. As a consequence, exploration and development has accelerated in other SSA countries.”

Equatorial Guinea, for example, last year became the fourteenth country to export LNG. EG’s gross domestic product has soared as a result. A second train is now in the works. Zeus researchers identified several other LNG projects in varying stages of development on both sides of the subcontinent.

On Sept. 3-4, Zeus will host a conference in Houston to discuss how gas development in Sub-Saharan Africa is unfolding. Speakers include senior executives from E&P companies, who will discuss projects, lessons learned and new approaches, as well Zeus analysts, who will present conclusions from their nine month’s of research. Registration is $1,297 ($3,497 for the conference and Zeus report as well as 12 month’s access to the online databank and project-alert service).

Full details and registration are available online at www.ZeusLibrary.com/Upstream/SSA.