Salient to Investors:
Asian state-owned oil companies are making inroads in the contest for East Africa’s energy reserves.
Fields off Mozambique are estimated to hold enough gas to meet global demand for 2 years.
Brett Olsher at Goldman Sachs said state producers have a national interest initiative to secure significant gas reserves and they cannot ignore a reserve of this size, and in Mozambique there is not one dominant supermajor, an opportunity for national oil companies.
Mozambique, Tanzania and Uganda are the stage where power over natural resources in developing nations is shifting from traditional managers like Shell and Exxon toward state oil companies like CNPC and PTT Production & Exploration who answer to Asian governments that need to fuel economies growing at least twice the Western average.
LNG plants need billions of dollars in investment before they can chill gas into a liquid for export. Western competitors like Shell are now operating in a more crowded gas market.
Western investor-owned companies have proved a better investment in the past year because they are less likely to sell fuels at a loss in their home markets – The Dow Jones Oil & Gas Titans index is down 1.5 percent for the period versus a 8.5 percent loss for the Dow Jones Emerging Markets Titans Oil & Gas 30 Index.
Laura Loppacher at Jefferies said just being commercial buyers is seen as expensive, and the national companies can pay more for the fields because of their lower cost of capital and higher strategic benefits. Loppacher said owning the producing assets is a natural hedge against rising LNG prices for energy importers.
Jon Clark at Ernst & Young said projects like the one in Mozambique are likely to feature more collaboration between the independents and the national oil companies than has been the norm in past LNG efforts.
Jason Kenney at Banco Santander said the gas project is still an infant.
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