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Cablegate: Anadarko Petroleum Finds Gas in Northern Mozambique

VZCZCXRO0629
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0171 0540734
ZNR UUUUU ZZH
R 230734Z FEB 10
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 1321
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0626
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS MAPUTO 000171

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET EINV ETRD MZ
SUBJECT: ANADARKO PETROLEUM FINDS GAS IN NORTHERN MOZAMBIQUE

REF: 08 MAPUTO 1073

1. (SBU) SUMMARY: In its first deepwater exploration well,
one of eight wells planned in northern Mozambique's Rovuma
Basin, U.S. independent oil and gas exploration and
production company Anadarko Petroleum Corporation has struck
a sizable natural gas deposit. The first deepwater
exploration well found 480 net feet of pay of natural gas at
14,000 feet, with a gross column of more than 1,200 feet.
Anadarko will continue analysis to determine if the find is
commercially viable, while exploration will continue for
petroleum. Anadarko's country director is optimistic about
encountering even greater quantities of natural gas and
hopefully oil given the geological similarities between the
Rovuma Basin and the Niger Delta, as well as the Gulf of
Mexico. However, exploration thus far on the East Coast of
Africa has yet to result in petroleum finds. The Rovuma
Basin find validates the Government of Mozambique's (GRM)
natural resource development plan for the North and will
increase interest from other companies, according to Minister
of Natural Resources, Esperanca Bias. Anadarko's
announcement is another reminder that natural resource
revenues may soon outpace donor assistance and the importance
of accelerating the Government of Mozambique's (GRM's)
movement towards compliance with the Extractive Industry
Transparency Initiative (EITI). END SUMMARY

2. (SBU) Anadarko is drilling two on-shore and six
off-shore exploration wells in the Rovuma Basin along the
border with Tanzania. The first deepwater exploration well
found 480 net feet of pay of natural gas at 14,000 feet.
This find has a gross column of more than 1,200 feet which is
a strong indicator of the potential of the Rovuma Basin to
produce natural gas. More analysis at their headquarters in
Houston in required before a determination of the find's
commercial viability is established.

3. (SBU) John Peffer, managing director of Anadarko
Petroleum in Mozambique, told Econoff on February 19 that the
Niger Delta and the Gulf of Mexico have similar geologic
features to the Rovuma Basin. In both of those there is
natural gas and petroleum. Natural gas is known to exist in
East Africa, but Peffer said no one has yet struck oil. He
believes strongly that, "plenty more gas is out there." He
also remains optimistic that oil will be found at one of the
remaining five deepwater drill sites. Peffer noted the
deepwater area they are drilling in now is totally unexplored.

4. (SBU) Minister of Mineral Resources, Esperanca Bias, is
even more pleased than Anadarko because commercially viable
natural gas production requires more extensive infrastructure
investment than oil, and will contribute greater to the
development of northern Mozambique. Peffer says the natural
gas find validates the GRM's development plans for the Rovuma
Basin. Increased interest from international exploration
companies is expected, which may lead to higher concession
prices in future rounds of bidding.

5. (SBU) COMMENT: While Anadarko remains upbeat about their
initial finding of large quantities of natural gas in their
first exploratory well, the company is more interested in
petroleum. Energy experts estimate that with Mozambique's
already significant coal and natural gas resources, and the
possibility of petroleum, that by 2014 all foreign assistance
will be outpaced by natural resource revenues. In a country
where corruption is described as "rampant" by Transparency
International, Post will continue to push for Mozambique to
take concrete steps to join the Extractive Industries
Transparency Initiative (EITI), as the window for donor
leverage on the Government of Mozambique (GRM) could be
narrowing. END COMMENT
ROWE

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