Anadarko has Made it Even Bigger
Anirban is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
So a new kid on the block, a new apple of everyone’s eye. You didn’t get what I am talking about? I am talking about the series of discoveries that have taken place on the eastern coast of Africa, discoveries that are in the process of changing the economic condition of some African countries. And the latest in the series is the latest discovery of natural gas by Anadarko (NYSE: APC) offshore Mozambique.
In my last blog on Anadarko, Anadarko is Making it Big, I discussed how the company could benefit from its discovery on the eastern shores of Africa. In its latest discovery within the Offshore Area 1 of the Rovuma Basin, Anadarko has increased the estimated recoverable natural gas resources from the Atum and Golfinho area to 10 to 30-plus trillion cubic feet (Tcf). The company also believes its total Mozambique natural gas prospect to be about 30 to 60 Tcf, almost double its estimates from November. This boosts the previous findings and also underpins Anadarko’s plan to go on building an LNG export plant off the eastern African shores.
Anadarko isn't alone. Other biggies are also moving to capture a share of the riches. Eni (NYSE: E) already has a strong foothold in the area and its latest discovery of 10 Tcf of recoverable natural gas only strengthens its position. UK's BG Group and ExxonMobil (NYSE: XOM) have already made significant discoveries on the north of Tanzania. Shell (NYSE: RDS-A) also doesn’t want to miss out on the opportunity and is fighting a bidding war with Thailand’s PTT Exploration to acquire Cove Energy, a partner of Anadarko in the findings. Shell is also in talks with Tanzania and Zanzibar to open a 10-year deadlock to explore in the area.
What’s The Fuss Is All About
The prospect of the area in terms of availability of reserves and proximity to the growing Asian markets of Japan, China, India and Korea are the main reasons of attraction for these big oil and natural gas players from all over the world. All the biggies are vying to have a share to supply to the Asian countries, where demand for LNG is higher than any other part of the world. And they also want to take advantage of the premium available in the Asian markets in terms of the price of LNG compared to that prevalent in the European and American markets. The price of LNG in Asia is almost double to that of Europe. The discovery of the offshore of Mozambique is also just across the Indian Ocean and is very near the Asian markets.
The Bottom Line
The more the discovery, the more the amount of natural gas extracted and the more can be exported to the LNG-hungry Asian economies. These discoveries would not only help the Asian countries meet their LNG requirements, it will also help the companies supplying LNG to these countries to increase their top line and will help the African countries to experience development in the process. Keep an eye on the stock.
anirbandutta has no positions in the stocks mentioned above. The Motley Fool owns shares of ExxonMobil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.