Chinese demand for West African oil in exchange for a range of consumer goods and services, and Western countries wishing to source oil supplies away from the turbulent Middle East have moved African oil prospecting and production into deeper waters. New undersea surveys using the latest technology are likely to discover reserves that may have escaped earlier detection during surveys where limited technology was used. Even some prospecting operations in shallower water are yielding new hope of significant discoveries.
With this in mind, Sunbird Energy and its partner PetroSA are poised to exploit the Ibhubesi gas field some 60 km off South Africa’s Northern Cape coast in water depths of up to 250m. Gas from this field will likely be used for a power station south-east of Saldanha Bay. The project will involve the installation of a subsea production system and its associated fittings, a floating production, storage and offloading unit or a semi-submersible production platform. Gas will be brought ashore using a 400 km pipeline to an onshore gas receiving facility, most likely located near Ankerlig power station.
In another venture that confirms new impetus in the hunt for oil and gas off South Africa, PetroSA has partnered with Sasol Petroleum International to survey a block off the country’s west coast to the west and north of Saldanha Bay in water up to 480m deep. Meanwhile renewed drilling off the southern Cape coast has discovered new gas reserves.
These and similar projects along the west coast of Africa is heralding an unprecedented demand for rigs, drillships, platforms, undersea pipelayers and associated vessels, escalating their daily charter rates. For each day that a vessel is out of service for maintenance, its owner loses great earning potential that, in the case of a drillship or rig, can amount to hundreds of thousands of dollars. If maintenance facilities are some distance from the oilfields, downtime – and therefore an off-hire period – is extended to include voyage time to the maintenance yard. The recently upgraded and well-utilised rig maintenance facility in Cape Town harbour can thus compete favourably with Oriental yards, given its relative proximity to West Africa.
The most recent project involved extensive refitting work on the Dutch company Saipem’s semi-submersible drilling rig Scarabeo 7, prior to its special periodic survey. Work included extensive steel and pipe replacement, and the fabrication and the installation of a new accommodation module. Service providers in Cape Town and further afield earned over US$90 million in revenue and about 1 100 jobs were created, albeit some temporary in nature.
Companies that can build in Africa and provide local support and services are at an advantage, according to Friso Visser, regional sales director and board member of Damen Shipyards Cape Town. The company also has a service hub in Durban. He said the continent’s oil and gas future was obvious – so much so that Damen has increased its newbuild output and is investigating growth potential in other locations too. ‘With the large gas reserves in Mozambique and Tanzania and the oil and gas developments in East Africa, a lot of newbuild and repair activities will arise. This concerns not only offshore vessels, but other vessels as well, such as patrol boats, tugs and inspection boats,’ says Visser.
Saldanha Bay is becoming a prime location for maintenance work on offshore vessels. Despite berthing space being at a premium, numerous rig maintenance projects have been undertaken in its sheltered deepwater lagoon. Recent work on two rigs in particular has emphasised the importance of the west coast port as a repair centre.
Gerry Klos, GM of DCD Marine Cape Town says: ‘Not only does Saldanha have the requisite draught for these vessels, but [it] also [has] the necessary infrastructure, including abnormal mobile cranes and sufficient accommodation [for those working on these projects].’ His company has worked on several oil rigs and other vessels involved in the offshore sector.
‘This project [refitting a rig] is significant in terms of local economic development – the ultra-deepwater rig is the first oil and gas project since the launch of the Saldanha industrial development zone [IDZ].’ In identifying specific skills required for the project, DCD Marine sought and trained local personnel, creating much-needed employment. Upskilling of staff also leads to long-term employability.
Yet despite various training programmes, simultaneous work on rigs in Cape Town, Saldanha Bay and Ngqura port in South Africa’s Eastern Cape province is stretching the limited reserves of personnel. Staff range from highly qualified engineers, electronic experts and artisans to thousands of unskilled workers.
The challenge has been exacerbated by routine maintenance work conducted by local artisans aboard many ships, and other larger projects. These include major refits of diamond recovery vessels and local shipyards that are building tugs and other small craft. Personnel are also required for engineering work in Simon’s Town’s naval dockyard, less than 50 km from Cape Town.
Alan Winde, Western Cape Minister of Agriculture, Economic Development and Tourism, underlined the importance of these marine engineering projects during a speech at the conclusion of the Scarabeo 7 project in Cape Town. He pointed to the shortage of essential skills for work of this magnitude.
‘The provincial government is trying to create the right environment in which such projects can be tackled, and is addressing the skills shortage,’ he said. Without the threat of piracy and no canal tariffs to pay, the Cape route is the preferred passage for the delivery of new vessels from Oriental shipyards to their drill sites off Europe, the US Gulf, West Africa and Brazil, even if the Suez Canal provides a shorter option.
Its well-developed infrastructure makes the Cape a convenient waypoint for new drillships, rigs and other vessels to refuel, revictual and undertake engineering work. Some vessels are too deep to enter Cape Town harbour and rendezvous with launches or helicopters off the port. One example was the new drillship Pacific Sharav, which was recently serviced by supply vessels while en route from the Samsung Heavy Industries yard in Korea to the US Gulf where it will operate on a five-year contract for Chevron.
Five similar vessels belonging to Houston-based Pacific Drilling have passed the Cape while taking up station in the US Gulf, off Nigeria or Brazil. Two more are under construction in Korea for delivery within 12 months. These and other new vessels that come this way epitomise developments in the wider offshore oil and gas sector. Numerous rigs and drillships are on order to replace older structures that are due for scrapping or whose dated equipment cannot operate in deep water.
Local service providers – launch and helicopter operators, engineering companies, chandlers, bunker agencies, logistics companies and ships’ agents – benefit from these stopovers in the Cape or Saldanha. Crew members, engineers and shipyard staff need to be repatriated after several months aboard, and their replacements join prior to the onward voyage.
This provides significant revenue for hotels, transport services and airlines. Adding to the good news from Saldanha Bay, Oiltanking Grindrod Calulo Holdings will build a crude oil facility at the port. The US$20 million crude oil storage and blending terminal will hold 13.2 million barrels of oil in 12 concrete tanks.
Almost equidistant from West African and South American oilfields, the port is a good location for a crude oil blending and trans-shipment hub, and will also require the construction of a new jetty to handle the increased tanker traffic generated by this expanded role of the port.
It is one of the first projects announced late last year after the port area was declared an official IDZ with all the associated benefits for investors in the area.
Yet another development has come to Saldanha Bay. Funded by major oil and energy industry players and equipped to deal with accidents ranging from minor leaks in bunker pipes to extensive pollution disasters, Oil Spill Response Limited (OSRL) has established a base at the bay. For more than 27 years, the company has dealt with oil-related incidents, and its operation includes accident prevention training programmes for oil industry personnel.
In choosing Saldanha (where it was met with a warm welcome), OSRL noted the port’s strategic position relative to West African oilfields and prospective oil and gas production on a vast scale off East Africa.
Local maritime authorities have welcomed the inauguration of OSRL’s base, since each of the approximately 40 ships that pass the Cape daily carry hundreds of tons of fuel, and an increasing number of laden tankers are anchored off the coast. It is yet another safeguard to curtail oil pollution along the coast that so far has been spared major incidents.
If the port authority accelerates the provision of a dedicated and extended rig repair and maintenance berth, the vibrancy of the port as an offshore hub of note will be enhanced. Considering these and other proposed developments at Saldanha, the former fishing settlement is bound to expand far beyond the expectations of those who laid out the iron ore terminal in the early 1970s.
Exploiting the extensive Mozambican gas field will require the construction of about 218 platforms of various types, raising the expansion potential for Southern African engineering firms. To construct these platforms and other gas-related infrastructure, vast volumes of project cargo – pipes, pumps and other equipment – will need to be imported.
This will expand the current horizons of shipbrokers, the clearing and forwarding sector as well as land cartage companies. Even liner companies will benefit as containerised parts for the construction yards will need to be imported.
Among the factors inhibiting the growth of the Southern African oil and gas sector to its full potential is the lack of large dry docks capable of accommodating the largest tankers, drillships and oil rigs. Among the sites under consideration for said dry dock is Saldanha Bay. It is close to a major shipping route that carries about 13 000 ships each year, has a major offshore oil and gas industry only a few days’ steaming to the north, and another offshore gas field is poised for production.
Political will needs to be sharpened to ensure that a large dry dock is built, and that the maritime oil and gas sector is expanded to the point where the Cape becomes the Singapore of the southern hemisphere.
