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Africa: The next great energy growth story

Discussion in 'International Forum' started by erfan, Feb 24, 2012.

  1. e

    erfan Member

    Feb 24, 2012
    Joined: Nov 20, 2011
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    When it comes to emerging markets and energy production, powerhouses like Brazil and Russia tend to dominate portfolio holdings.
    Equally rich -- but less known -- is the emerging oil story in Africa. The continent often is completely ignored by investors, but the tale brewing there could be exactly the catalyst needed to propel the region into superstar status.
    Nineteen countries within the region are now significant producers of petroleum. While nations like Nigeria, Libya and Algeria have been the major sources of reserves and production, new finds in Ghana, Kenya and Uganda are rewriting African history. Angola was inducted into the Organization of the Petroleum Exporting Countries (OPEC) back in 2007, and Asian investment has pushed up production in Sudan rapidly. Since 1989, Africa's proven oil reserves have increased by 116% -- from nearly 59 billion barrels of oil equivalent (BOE) in 1989 to nearly 210 billion barrels today -- and currently make up 13% of the world's oil reserves.
    Countries such as South Africa, Mozambique and Tanzania are working on new horizontal wells to tap trapped petroleum reserves. Kenya has undergone a "land grab" in recent years, as oil exploration and production (E&P) companies have looked toward the politically stable nation and its oil-rich Somalian Plate. The region features geology very similar to the various shale formations dotting the U.S.'s Northeast.

    A great starting place for investors is England's Tullow Oil (TUWLF 0.00%). Since 2007, the E&P company has discovered approximately 4 billion barrels worth of oil across nations like Ghana and French Guiana, and recently set its sights on onshore East Africa. The company has begun seismic testing in an underdeveloped area stretching between Kenya and Ethiopia. Tullow hopes to find 300 million barrels of oil within the region. Analysts estimate that their chances are pretty good, as test wells have come back with so-called "oil seeps." The company also is steadily raising cash by unloading part of its Uganda discovery to France's Total (TOT +0.62%) and China's CNOOC (CEO -0.32%) for $2.9 billion.