NPA to invest in Cape oil hub

Sep 20, 2005 02:00 AM

by Samantha Enslin

Up to R 3 bn will be spent on developing the Western Cape oil and gas service hub to capture a slice of the $ 22 bn (R 141 bn) earmarked for exploration and production in west Africa.
Redge Nkosi, a senior manager of business strategy at the National Ports Authority (NPA), said: "Roughly R 2.5 bn to R 3 bn will need to be spent to develop the oil and gas service hub through a combination of private sector and government funding."

It is estimated that by 2007, $ 21.97 bn will be spent on the sector in west Africa, out of a total of $ 57.9 bn globally.
A large capital commitment would be needed to compete with other major hubs, which included Scotland, Singapore, Spain and Texas, Nkosi said.
"The NPA's view is that our ports need not only serve as facilities to transfer cargo, but can also act as catalysts of economic growth."

Africa's share of the world's oil reserves is 7 %. Nigeria is the largest African oil producer, with 31.5 bn barrels of Africa's total annual production of 77.4 bn barrels. The US sources 16 % of its crude oil from Africa. This is expected to rise to 20 % over the next decade.
The low sulphur content of African offshore crude oil makes it sought after. Africa has the largest offshore oil reserves in the world at 38 %, followed by Latin America and Asia. However, oil rigs and floating production platforms in Nigeria and Angola, which were continually increasing, were being serviced outside Africa, Nkosi said.

Africa's lack of infrastructure to support the industry is hindering its progress and increasing its costs. To address the needs of this sector, a working committee, the Cape oil and gas service initiative, was established two and a half years ago to explore the opportunities this industry offered for the province.
The national oil and gas task team is developing a broader strategy, which could include establishing industrial development zones for the hub.

A preliminary cost comparative analysis suggests an advantage for South Africa.
"We think our labour costs would be a lot lower than elsewhere," Nkosi said. "In terms of what of we have identified for the hub, it will take no more than five years to set it up."

So far, initial infrastructure upgrades, such as fencing and lighting, have been completed at A berth, the area designated for the oil and gas sector at the Cape Town port. In the medium term, warehousing will be built for a logistics centre.
In the long term, quay walls at Cape Town and Saldanha will be upgraded and extended and new dry docks will be built to accommodate very large crude carriers. Areas within the ports will also need to be built where platforms can be fabricated.

It is estimated that 8,000 jobs could be created through the hub.

Source: Business Report & Independent Online (Pty) Ltd
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