Boom time for African oil

Oct 03, 2005 02:00 AM

Billions of dollars will be invested in Africa's oil and gas industry in the next few years, and South African companies have to position themselves to take advantage of the boom in the global oil market.
Measured by reserves and production, South Africa's oil and gas industry is small fry compared with the largest sub-Saharan oil-producing countries, Nigeria and Angola. Still, through home-grown and international oil service companies that have units in South Africa, the country could gain from the extensive growth expected in the West African and Angolan oil industries.

The World Petroleum Conference, which brought thousands of delegates to Johannesburg, offered a platform for African countries to set out their stalls. New licensing rounds and oil production targets were announced by representatives of governments and state oil companies across Africa.
The continent has 9 % of the world's oil and gas reserves. The unstable politics of the Middle East and oil's 50 % rise in price this year makes investing in Africa’s oil business increasingly attractive.

Redge Nkosi, senior manager of business strategy at the National Ports Authority, said there was a good chance of setting up an oil service centre in South Africa that would capture some of the business generated by the West African industry. Nigeria, Cameroon, Gabon, and Equatorial Guinea are all areas where multinationals, such as Shell, ExxonMobil, ChevronTexaco and others are growing their businesses. Nkosi said South Africa has the right facilities at the Cape Town, Saldanha and Durban ports.
“The Saldanha area may need to be expanded. In Cape Town we may have to consider expanding the infrastructure there,” he said.

The National Ports Authority is working with the National Oil and Gas Task Team and other industry players. No decisions on any port infrastructure expansion has yet been made, but Nkosi said the authority may be planning to invest as much as R 3-bn. Any investment decision will depend on the work that South Africa-based oil service and engineering companies can attract.
In sub-Saharan Africa, Nigeria is by far the largest oil and gas producer and the country has significant reserves with more exploration to come. The country plans to lift oil production to 4.5 mm bpd by 2010. At present it pumps about 2.5 mm bpd.

At the World Petroleum Conference, Funsho Kupolokun, group managing director of the Nigeria National Petroleum Corporation, said there were investment opportunities of $ 34.4-bn in Nigeria’s Delta Basin.
Angola, with oil output of up to one mm bpd, is sub-Saharan Africa’s second-biggest producer. It wants to boost this to 2 mm bpd by 2008. Angola plans to hold a bidding round for seven new exploration licences by the end of the year. Carlos Saturnino, chief negotiator for the Angolan state oil company Sonangol, said at the conference that the country would announce a partner for a $ 3-bn refinery to be built in Lobito soon.

PetroSA is one of three companies bidding. Total and China Petroleum & Chemical Corporation are also in the running.
South Africa, with only three oil fields producing 45,000 bpd, will have to be content with piecemeal development of its oil and gas production industry. At the moment, nine companies either have oil and gas prospecting leases or are part of joint ventures in South African waters.

At the World Petroleum Conference, Dave Broad, who is the technical manager for the Petroleum Agency of South Africa, said the agency planned to hold an oil and natural gas exploration licensing round in the “near future” for blocks offshore of Durban.

Source: Sunday Times
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