Shell has confirmed a deal with Cove Energy in its bid to target...

Shell has confirmed a deal with Cove Energy in its bid to target East Africa.

Oil giant Royal Dutch Shell has agreed to buy an East Africa-focused exploration firm for £1.1 billion amid predictions that the region will become a major natural gas source.

Shell has offered 220p a share for London-listed Cove Energy, which has major operations in Mozambique, Kenya and Tanzania, matching a rival bid made by Thai state-controlled oil firm PTT.

The oil and gas industry has taken increased interest in East Africa after large gas discoveries were made in the region, with analysts predicting a hive of activity as exploration firms seek to satisfy high demand in Asia for liquid natural gas (LNG).

Michael Blaha, Cove executive chairman and a former Shell employee of 29 years, said Shell would be an "excellent partner" given its "project development, operating and marketing experience" in the LNG industry.