By Lauren Barrett
WOODSIDE Petroleum chief executive Peter Coleman is well aware of the risks that come with developing projects in a region with the potential to be an energy superpower.
The industry has witnessed the company’s recent acquisition spree into East Africa, which has included building an exploration portfolio in Tanzania as well as Gabon.
Mr Coleman has described Woodside’s recent f lurry of deals in East Africa as one that reflected its “disciplined and strategic approach to studying regional petroleum systems” and a move that complements its capabilities in deepwater exploration.
Speaking at the inaugural East Africa Oil & Gas Conference in Perth recently, Mr Coleman said region was once largely bypassed by companies.
“However the last few years have changed and it’s been one of the hottest exploration provinces in the world and we’ve seen some of the largest gas finds in decades off the coast of Mozambique and Tanzania and of course there’s been very significant onshore discoveries in Kenya and Uganda,” he said.
As a result, Mr Coleman said countries that were previously overlooked were now garnering interest.
“Expectations for the industry across the region are high,” he said.
East Africa’s gas rich economy means the continent is shaping up to be a formidable LNG export competitor to established LNG project operating nations, such as Australia.
In Tanzania alone, it is estimated that 35 trillion cubic feet of gas has been discovered.
As Woodside, the largest exploration and development company traded in Asia, firmly sets its sights on building a portfolio that Mr Coleman described as “truly international”, it seems East Africa is taking precedence for the company.
The company was originally an early mover into East Africa, but pulled out in 2005 to focus on developing its Pluto project.
“I’m very glad that we’re back in Tanzania again and I look forward to renewing some of relationships in Kenya as well,” Mr Coleman said.
However, Mr Coleman cautioned it was early days.
“It’s the hope and promise phase. It’s the phase that we all like because we all like to dream.”
“We’re looking for that unique opportunity.”
Mr Coleman is aware of the many challenges East Africa poses when it comes to developing projects and didn’t shy away from highlighting them.
“Some of the challenges faced by operators in East Africa include application and evolution of new technologies…there’s the obvious lack of infrastructure, the remoteness and environmental sensitivities and very importantly managing community expectations,” he said.
According to Mr Coleman, the challenges can only be overcome through collaborative efforts.
“Industry and government will need to work together to make sure there are stable investment frameworks that enable long-term capital investments,” he said.
Coleman urges policy makers to tread with caution
With East Africa only in the early stages of resource development, and with the path from discovery to generating revenue a long one, Mr Coleman said it was essential for countries rich in oil and gas to not make policy decisions in haste.
“My only counsel to those in the room who are at that point of writing legislation, advising governments and so forth please don’t scare us away. Don’t scare us away before we’ve actually found something.”
“And there are many examples globally of where people…start changing legislation, start changing terms and so forth.
“We only need a few positive signs to really invest quite strongly,” he said.
“Once we start to see the sand starting to shift and things starting turn we pause and we pause very, very quickly.”
Mr Coleman said there were many examples of this occurring globally, whereby initial discoveries would lay dormant for many years as the host nations worked through regulations.
“I would just encourage you to offer real stability…and if those discoveries are made, rejoice in those discoveries, reward those who took the risk,” he said.
During question time, Mr Coleman said East Africa was competitive, adding that an entry price for smaller capped companies wanting to participate would be difficult.
“That’s [East Africa] going to be a difficult entry at this point in the life cycle,” he said.
“But there are certainly onshore opportunities that still exist. I see there’s real opportunity there.
“The miners have been doing it for a long time. There’s no reason oil and gas can’t learn from the miners of West Perth and take that across.”