After finding one of the biggest natural-gas discoveries in the Rovuma Basin on the east coast of Africa, Anadarko Petroleum Corporation (NYSE:APC) made a wise decision to take advantage of the strategic location of its findings. The company is planning to build the second-largest LNG export terminal in the world to serve the energy-hungry Asian countries.
The discovery made
Anadarko Petroleum Corporation (NYSE:APC) has discovered more than 100 trillion cubic feet of natural gas in the Rovuma Basin area, offshore Mozambique. The area is touted to contain around 250 trillion cubic feet of natural gas, a volume sufficient enough to meet global natural-gas demand for two years.
Anadarko Petroleum Corporation (NYSE:APC) is not the only company to have struck gold in the area. Statoil ASA(ADR) (NYSE:STO) has made significant discoveries in the area as well. It was also able to find a stakeholder for the resources in Japan by the name of Inpex. Statoil ASA(ADR) (NYSE:STO) is exploring the possibility of drilling for oil and is on the verge of completing drilling a well by the end of the month. Statoil registered a 58% decline in its net profit at $1.1 billion, blaming lower production and low prices.
The fuss has brought the African country in the limelight as a potential source of natural gas for countries worldwide, especially for the energy-hungry Asian countries. This huge deposition and the geographical location of the reserves have made it more than feasible to build an LNG export terminal.
The opportunity provided
Mozambique is strategically located to catch the eye of any oil and natural-gas company that wants to satisfy the ever-growing demands of the Asian countries. In a drive to satisfy their energy needs along with safeguarding the environment, the Asian countries are looking for greener sources of energy. This has set huge demand for natural gas in countries like Japan, China and India. In fact, Japan is the biggest importer of LNG in the whole world.
Oil biggies like Chevron Corporation (NYSE:CVX) , Shell, and ConocoPhillips (NYSE:COP) have rushed to grasp the opportunity by building export terminals from nearby Australia. Chevron Corporation (NYSE:CVX)’s Gorgon and Wheatstone LNG projects in Australia are some of the biggest LNG projects and are touted to deliver first loads by 2015 and 2016, respectively.
Chevron is pushing to increase the capacity of these projects, injecting a lot of capital behind these projects to reap the benefits of the Asian market’s price premium. Chevron Corporation (NYSE:CVX) also reported a 6.4% drop in revenue in the first quarter this year to $56.8 billion on the backdrop of decreasing oil prices, though it posted higher production output.
Additionally, the nuclear disaster faced by Japan at Fukushima Daiichi has made these countries aware of the hazards of using nuclear energy, and in turn has boosted the sale of natural gas as the best available alternative.
This provides an enormous opportunity for Anadarko Petroleum Corporation (NYSE:APC) to tap this energy-hungry market where natural gas is trading at price premium, four times higher than the price in the US, by building the world’s second-biggest LNG export terminal offshore Mozambique.