The promulgation of the Saldanha Bay industrial development zone (IDZ) will facilitate additional oil and gas activity in South Africa by providing a base for regional African field service activities related to oil and gas exploration and development, says the South African Oil and Gas Alliance (Saoga).

Saoga CEO Ebrahim Takolia notes that oil and gas exploration and production in Africa has increased significantly in the last three years following significant discoveries in East Africa, which added to the well-established oil production activity in West Africa. In addition, offshore and onshore exploration in South Africa could increase domestic activity in the local oil and gas sector in the next three to five years.

Takolia mentions that the biggest challenge facing the oil and gas industry in Africa is the shortage of specialised skills and a lack of local technical knowledge to undertake large-scale exploration and development. The lack of midstream, or logistical, infrastructure has resulted in Africa facing significant challenges, with respect to providing energy at a time when oil and gas production on the continent has increased significantly.

“South Africa is already a natural hub for oil and gas activity in Africa, as it offers world-class infrastructure, access to service and supply expertise and an established downstream value chain,” he adds.

Takolia points out that, as a result of African oil and gas exploration, 25% of all offshore drill rigs are currently located off Africa’s coastline, with ten rigs serviced in South African ports in the last year, which generated significant domestic economic activity in South Africa.

Engineering News reported last month that Trade and Industry Minister Dr Rob Davies said a feasibility study had shown that Saldanha Bay was strategically located to service Africa’s substantial oil and gas sector, owing to an increasing number of oil rigs that will require maintenance and the high volume of marine traffic along South Africa’s West Coast.

Davies pointed out that the study had also indicated that the IDZ project could potentially contribute 86% to the region’s gross geographic product and create nearly 12 000 direct, indirect and induced jobs.

Saldanha Bay IDZ forms part of one of the 18 Strategic Integrated Projects overseen by the Presidential Infrastructure Coordinating Commission, as part of South Africa’s infrastructure drive. Analysts believe it could create a platform for an oil and gas industry boom on the West Coast.

“Additionally, the Saldanha Bay IDZ is likely to attract foreign direct investment worth about R9.3-billion over 25 years,” Davies highlighted.

Takolia further mentions that the initial opportunities at the Saldanha Bay IDZ will not only arise out of the field services and related activities in the upstream sector but will also focus on midstream-sector activities, notably logistics and storage, which will develop as the local and regional industry develops.

“Companies have already started to invest in the Saldanha Bay IDZ, such as Sunrise Energy, which announced on October 3 that it would co-invest in a liquid petroleum gas import facility with South Africa’s Industrial Development Corporation and international fuel clean-up company Oil Spill Response, which announced on October 9 that it would set up a response facility,” concludes Takolia.