African energy: Eastern El Dorado?

In energy terms, east Africa has long been the continent's poor cousin. Until last year it was thought to have no more than 6 billion barrels of proven oil reserves, compared with 60 billion in west Africa and even more in the north. Since a third of the region's imports are oil-related, it has been especially vulnerable to oil shocks. The World Bank says that, after poor governance, high energy costs are the biggest drag on east Africa's economy.

All that may be about to change.

Kenya, the region's biggest economy, was sent into delirium on March 26 by the announcement of a big oil strike in its wild north. A British oil firm, Tullow, now compares prospects in the Turkana region and across the border in Ethiopia to Britain's bonanza from the North Sea. More wells will now be drilled across Kenya, which also holds out hopes for offshore exploration.

Kenya's find raised less joy in Uganda, where oil was first struck in 2006. Tullow, together with China's CNOOC and Total of France, will start pumping it next year, initially at a paltry rate of 5,000 barrels a day. But the Lake Albert basin, which straddles the border between Uganda and Congo, holds more than a billion barrels of proven reserves and possibly twice that in potential finds.

South Sudan, for years the largest oil producer in the region and locked in an oil dispute with Sudan, now wants to send crude out through Kenya on a pipeline to a proposed new port in Lamu. Such a channel could also serve Ethiopia, which shares Kenya's joy about their joint oil prospects. But their winnings pale next to those farther south. Tanzania has done well out of gold, earning record receipts of $2.1 billion last year, a 33 percent increase over 2010. It will do even better from natural gas. The past month has seen the discovery of enormous offshore gas fields. Those finds have drawn interest from Britain's BG Group and Statoil of Norway. Statoil's recent gas find is estimated to hold almost a billion barrels of oil equivalent.

Happily, Tanzania's gas field extends south to Mozambique, where Italy's Eni last month unveiled a find of 1.3 billion barrels of oil equivalent, matching similar finds by an American firm, Andarko. With plans to build a liquefied natural gas terminal, Mozambique could be a big exporter within a decade.

Yet the region is not just excited about fossil fuels; a parallel push toward alternative energy is underway. Several east African countries are keen to realize the Rift Valley's geothermal prospects. One of the world's largest wind farms is being built in Kenya, not far from the new-found oil in Turkana. Its backers say it will produce 300 megawatts, three times the total electricity output of Rwanda.

That is a drop in the bucket for Ethiopia. Its rivers, plunging from well-watered highlands into deep canyons, have enormous hydropower potential. Meles Zenawi, the prime minister, has ordered the construction of a series of dams at a total cost of over $8 billion. The jewel is the $4.7 billion Grand Ethiopian Renaissance Dam on the Blue Nile. This will generate 5,250 megawatts, increasing electricity production in the country fivefold, providing a surplus for export and allowing Ethiopia to open up as a manufacturer.

The arrival of potential energy wealth comes with risks. Instead of bringing the region together, petro-rivalries could drive it apart. The continued dispute between South Sudan and Sudan should serve as a warning: South Sudan has cut off its supply of 300,000 barrels a day to Sudan, most of which is destined for China, complaining that transit fees to Sudan's export terminal are too high.

Security is another problem, underscored by deadly grenade attacks in the Kenyan port of Mombasa this month by jihadists connected with Somalia's Al-Qaida-linked Al-Shabab militia.

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