South Africa has world-class expertise in the fields of engineering, procurement, construction plus the labour capacity to participate meaningfully in sub-Saharan oil and gas exploits which could fundamentally alter the region, but policy certainty and prudent contracting are key. This emerged at MDA Attorneys’ Collective Wisdom lecture held in Johannesburg this month in presentations by oil and gas project representatives and seasoned infrastructure industry leaders.

Euan Massey, MDA Attorneys Director, outlined how collaborative contracts can establish integrated management systems and shared resources. “These result in cost efficiencies, the delivery of projects within agreed timeframes and quality outputs on projects,” he said. 

Niall Kramer, Executive Director of SA Oil & Gas Alliance (SAOGA) provided an overview of projects in the region and insights about success factors on international oil and gas projects. In his view, South Africa is readying itself for a gas economy given the catalytic discoveries in the region.

“We need to drill for data, we need both policy certainty and alignment and we need infrastructure mapping if we are to adequately balance services like drilling, manufacturing, infrastructure and support services,” he said.

Stefano Marani, CEO at Renergen Limited, outlined Renergen’s success as the emerging producer of liquid helium and liquefied natural gas. “We chose to focus on our core business. We wanted a turnkey solution with minimal risk which we handed to a very capable and experienced legal team to manage for us, leaving us free to focus on developing capacity and opportunity,” he said.

An update on the Mozambique LNG project was provided by Henk Schurink, Consultant at Schurink Consulting. “The Mozambique LNG Project represents an extraordinary opportunity to meet increasing world demand for a sustainable, reliable and cleaner source of energy.

Anadarko and the other participants in Mozambique LNG are committed to working collaboratively with Mozambican communities and government officials to safely develop these natural gas resources in a manner that protects the environment, encourages additional foreign investment and contributes to the long-term economic stability of the region. Through sound contracts, it is possible to operate within the environmental Acts and legislative guidelines,” said Schurink.

Natalie Reyneke, Senior Associate at MDA Attorneys, shared deeper insights on the benefits and challenges of Engineering, Procurement and Construction (EPC) contracts - commonly used by private construction sector players when undertaking construction works on oil and gas projects.

“EPC contracts are called turnkey construction contracts because they ensure that projects are delivered at a guaranteed price by a guaranteed date to specified performance levels or contractors incur liabilities,” she said, adding that the correct contract choices have the potential to fundamentally change the engineering and construction industry and provide solid corporate governance. These matters bode well for investors in these large-scale undertakings.

Risk allocation is also vitally important, according to Ian Massey, Director at MDA Consulting, who explained that there have been several additions and amendments under the FIDIC and New Engineering Contract (NEC).