South Africa’s maritime economy has the potential to contribute up to R189 billion to the country’s gross domestic product (GDP) and create about a million additional jobs, the recent Oceans Economy Investment Seminar in London heard from Deputy Transport Minister, Sindisiwe Chikunga.
The seminar, which forms part of the Phakisa oceans economy initiative, welcomed European-based investors looking to invest in South Africa and with maritime-related interests in particular.
“South Africa is situated on one of the busiest international sea routes, which places us in a critical position in terms of international maritime transportation. Our geographical location presents a huge opportunity for investing in a diversified maritime market,” Chikunga pointed out in her speech at the seminar last week.
The first phase of Operation Phakisa will include initiatives by government to enhance the enabling environment for exploration of oil and gas wells. Mechanisms will include providing an enabling policy and legislative environment; promoting inclusive economic growth; addressing the skills gaps and overcoming infrastructure challenges.
There are currently more than 80 rigs that pass the South Africa coastline every year and/or are in close proximity to South Africa. The offshore oil and gas markets have recently gone through a major slump and this has had a negative impact on the exploration side of the market. However, with no viable alternative to fossil fuels in sight, the market is expected to rebound quite quickly.
Offshore and marine oil and gas rigs require maximum safety due to their volatile and demanding environments. With the increase in consumption of oil and gas there is a necessity for increased production of these resources, but it is equally important to ensure safety. Prasheen Maharaj, chief executive officer of Southern African Shipyards (SAS), a local ship repair company based in Durban, says this is where a rig repair company such as SAS comes into play. “SAS is also perfectly positioned, through local ports such as Durban and Richards Bay, to support the upswing in new exploration fields,” he says.
Maharaj says the current rig repair infrastructure, skill levels, efficiency and pricing is wholly inadequate and uncompetitive in order to capture a meaningful share of this market. “However, we believe that with further investment in infrastructure, training and development as well as the introduction of modern, efficient technology, South Africa can become a leading global player in the rig repair sector.”
According to African Economic Outlook 2015, African oil and gas have become important components of the world’s hydrocarbon supply–demand balance. This year, 13% of global oil production is projected to take place in Africa, compared with 9% in 1998. The continent has a majority of the world’s known resources of platinum, chromium, and diamond and a large share of the world’s bauxite, cobalt, gold and uranium deposits.
In 2010, Anadarko Petroleum made one of the most important natural gas discoveries in the last 20 years. Today, the company and its partners have discovered more than 75 trillion cubic feet (Tcf) of recoverable natural gas resources. These massive natural gas discoveries have the potential to elevate Mozambique to the world’s third-largest exporter of natural gas. In line with this forecast and in anticipation of Operation Phakisa, SAS has invested heavily into doubling the company’s capacity.
Maharaj says although there are insufficient volumes of rigs calling into South Africa to make the rig repair business economically viable, SAS recently partnered with the world’s largest global shipbuilding company, China State Shipbuilding Corporation to tender for the concession of an oil and gas services hub in Saldanha, representing a potential investment of R12 billion.