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South Africa Energy report AUGUST 2012

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Acknowledgements Focus Reports would like to thank all the individuals, institutions or companies involved in producing this special report. Special thanks go to Ms. Dipuo Peters (Minister of Energy), Alan Winde (Minister of Finance, Economic Development & Tourism of the Western Cape Government), Warwick Blyth (South African Oil and Gas Alliance), Ayanda Mjekula (SASDA) and Cas Coovadia (the Banking Association of South Africa), who showed us their strong interest and support throughout the entire project.

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SOUTH AFRICA REPORT

This report was prepared by Focus Reports Project Director: Koen Liekens Project Coordinator: Mathilde Paquet Contributors: Chiraz Bensemmane, Herbert Mosmuller, Isabella Romeo Gomez Project Publishers: Crystelle Coury and Ines Nandin

Contents Acknowledgements .................................................................................................4 South Africa: Springboard To The Next Frontier .................................................. 7 South Africa’s Refining Future: Diverging Decisions................................................................................................10 Investments For The Long Term-Inals..................................................................12 South Africa’s Backyard E&P Plans.......................................................................15 Project Ikhwezi: Extending The Life Of Petrosa’s GTL Refinery.........................18 Coordination Center To Tap Into The New Frontier.............................................18 Cape Town’s A-Berth Facility To Boost Oil & Gas Hub Status...........................20 Turning The Western Cape Into The Next Singapore..........................................22 South Africa Pushing For Greater Involvement Of Private Operators In Port Infrastructure Developments.................................................................................24 Capturing Rig Business By Reaching Out To The International Scene.............25 South Africa’s Upstream Service Providers To Expand Into Southern Africa ...26 Training Africa’s Talent Of Tomorrow: Boot Camp South Africa?......................28 Interview with Minister Dipuo Peters, Department of Energy of South Africa .33 Interview with Jay Wileman, President Sub Saharan Africa,GE Energy............34 Interview with Johan de Vos, Managing Director, Gigajoule..............................35 Interview with Luis Fernando Flores Beteta, Managing Director – Sub-Saharan Africa Region, MSA Africa ..............................................................36 Interview with Sean Smith, Regional General Manager, Honeywell .................37 Interview with Rob Otty, Managing Director, Norton Rose South Africa..........38 Interview with Mark Flower, Managing Director, South Africa, Fluor................39

Copyright © All rights reserved. No part of this publication maybe reproduced in any form or by any means, whether electronic, mechanical or otherwise including photocopying, recording or any information storage or retrieval system without prior written consent of Focus Reports. While every attempt is made to ensure the accuracy of the information contained in this report, neither Focus Reports, neither the authors accept any liabilities for errors and omissions. Opinions expressed in this report are not necessarily those of the authors.

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Interview with Robin Vela, Chief Executive Officer, SacOil................................40 Interview with Johan De Villiers, General Manager, The Pavilion Conference Centre.......................................................................................................................41 Interview with Tony Sofianos, Chief Executive Officer, Wings Travel Management............................................................................................................42 Interview with Ayanda Mjekula, Chief Executive Officer, SASDA......................43 interview with Alan Stothard, Managing Director, IQS INTERNATIONAL ......44 Interview with Alain Wald, EMEAI Leader, Hydratight.......................................45

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This sponsored supplement was produced by Focus Reports. Project Director: Koen Liekens. Project Coordinator: Mathilde Paquet. Contributor: Chiraz Bensemmane, Herbert Mosmuller, Isabella Romeo Gomez. Project Publishers: Crystelle Coury & Ines Nandin. For exclusive interviews and more info, please log onto energy. focusreports.net or write to contact@focusreports.net

SOUTH AFRICA REPORT

SPRINGBOARD TO THE NEXT FRONTIER

SOUTH AFRICA W

hen South Africa entered the prestigious club of BRICS countries in 2011, the country designated the oil and gas industry as a priority sector for economic

growth. “I think we have overcome the hurdle of recognizing the importance of the sector, and are now going into the details of the investments that need to take place, as well as the supOffshore rig sunset.

port programs that we need to put in place,” said Rob Davies, minister of trade and industry.

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SOUTH AFRICA REPORT

plans for South Africa’s future energy mix, out-

Share 15% 23% 6% 6% 9% 42% of total new GW 20

lined by the government a year earlier. “In 2005,

15

we faced the challenge of security of supply of

10

25

These announcements followed the new

17.8

liquid fuel products, while we additionally faced Dipuo Peters, minister of energy

9.6 6.3

5

challenges of electricity supply in 2008. Those

0

events spurred us into action and as a result we

2.6 al

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we look at the total energy base as well as the different resources available. This is an important tool in planning for the future,” added Nosizwe Nokwe, group chief executive officer, PetroSA

South Africa’s minister of energy, Dipuo Peters. In line with President Zuma’s declaration of

ro

Energy share

T

T

yd

CG

a

O s-

Pe

2.1

0.0

CG

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ak

Commiteed new builds 10.1 0.0 0.05 0.0 Existing fleet (2010) 35.5 1.8

3.9

2.4

H

G

now have the 20-year Integrated Resource Plan (IRP) in place. This is an energy mix plan where

Import

8.4

Solar/PV

1.0

CSP

8.4

Wind

s

le

ab

w ne

Re

1.0

1.0

2.4

0.0

In 2010

90% 5% 5% 0% <0.1% 0%

In 2030

65% 20% 5% 1% <0.1% 9%

Policy-adjusted IRP from December 2010, outlining the proposed generation new build fleet for South Africa for the period 2010 to 2030. Source - Standard Bank

2012 being the “Year of Infrastructure,” the political urge to enhance the country’s energy security has spurred

The growing realization that infrastructure

South Africa to ramp up its investments in downstream infrastructure.

is one of the country’s key bottlenecks has also

The country has just completed an investment of more than USD 2 bil-

reached South Africa’s Western Cape province,

lion in a new pipeline and is now studying the possibility of constructing

which aims to position itself as an upstream

a mega-refinery. South Africa’s six existing refineries, in turn, are looking

oil and gas service hub to the broader region.

into renewing their own refining infrastructure. PetroSA, the country’s National Oil Company (NOC), is also invest-

Charl Möller, chief executive, Transnet Pipelines

Blessed by its unique geographic positioning, advanced infrastructure and a sophisticated

ing at the other end of the value chain in upstream production of off-

engineering and manufacturing base, South

shore gas from a new field on the country’s South coast. In addition to

Africa’s Western Cape –a province the size of Louisiana- is showing a

serving its purpose of extending the life of the company’s gas-to-liquids

strong determination to revamp its infrastructure to better service the

(GTL) refinery, it was a move that additionally boosted seismic activities

exploration and production (E&P) boom in Sub-Saharan Africa.

along the South African coast. This has added to the industry’s excite-

2012 saw the completion of one of South Africa’s most significant

ment concerning onshore fracking opportunities, which exist in spite of

infrastructure projects: a ZAR 23.4 billion (approximately USD 2.24 bil-

a government-imposed moratorium on fracking.

lion) state-of-the-art pipeline from Durban to Heidelberg, in Gauteng. Durban, the country’s third largest city, is South Africa’s most important port of entry for the downstream sector and handles 80 percent of South African fuel imports through its single buoy mooring (SBM). Gauteng, in turn, is South Africa’s wealthiest and most energy-hungry province, home to the country’s administrative capital Pretoria as well as its largest city: Johannesburg. “The big 24 inch pipe we have put in the ground is our way of preinvesting in transportation infrastructure and later on we can add more capacity,” said Charl Möller, chief executive of Transnet Pipelines. A state-owned entity, Transnet is the company behind South Africa's

One of the NMPP pumpstations

866 August 2012

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national transport businesses including its pipelines, rail, ports and ter-

REPORTS August 2012 Oil & Gas Financial JournalFOCUS • www.ogfj.com


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SOUTH AFRICA REPORT No room for thinking small. No room for thinking small.

PetroSA enjoys pioneering status in the conversion of gas-to-liquid (GTL) fuels. We are the third largest commercial refinery, out of five in the world. PetroSA also develops new GTL technologies to meet future opportunities. Our conversion produces cleaner, more efficient and environmentally friendly fuels, petro-chemicals and alcohols. Our high-quality products are sought after in international markets such as Europe, the USA and Asia. In growing economies, we are the leading light in the growing conversion from crude- and coal-based energy towards a more reliable and efficient energy resource, natural gas. PetroSA is amongst the leaders in shaping sustainable solutions in the energy sector, but it is also a partner in the energy sector's unrelenting efforts to meet the growing consumer demand for cleaner, reliable and efficient energy solutions.

www.petrosa.com

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SOUTH AFRICA REPORT SOUTH AFRICAâ&#x20AC;&#x2122;S FIRST BEE COMPANY GETS BOOST FROM NMPP Despite a national empowerment drive, South Africaâ&#x20AC;&#x2122;s black eco-

Now, key infrastructure developments in South Africaâ&#x20AC;&#x2122;s down-

nomic empowered (BEE) companies found themselves in a tough

stream landscape are providing the necessary additional push for

battle to penetrate an oil major-dominated downstream industry.

these smaller players to take on a greater role in the capital-inten-

The smaller to medium-sized BEE companies have traditionally had

sive and highly competitive market.

limited to no control over most of the countryâ&#x20AC;&#x2122;s downstream infra-

South Africaâ&#x20AC;&#x2122;s first BEE company in the sector was the inde-

structure, which largely remains owned and controlled by majors in

pendent distributor of petroleum products Afric Oil. Today, the

the likes of Shell, BP and Sasol.

company prides itself on being the first independent black-owned

In 2007, South Africa gazetted its Broad-Based Black Economic

company to have received capacity allocation on Transnetâ&#x20AC;&#x2122;s new

Empowerment (B-BBEE) legislation. Aimed to deracialize South Afri-

pipeline, which it perceived to be a major boost in its competitive-

ca's economy and fast track the entry of Historically Disadvantaged

ness vis-Ă -vis the traditional oil majors.

Individuals (HDIs) into the business arena, the act is the accepted

â&#x20AC;&#x153;As far as pricing is concerned, we are very competitive as

framework for economic empowerment in South Africa.

Transnet is managing the infrastructure on our behalf, as well as on

In addition to the act, for 7 years now, the oil and gas industry in

behalf of the other players. Without this leasing opportunity, we

South Africa follows the Petroleum and Liquid Fuels Charter, aimed

would have to build and manage our own depots,â&#x20AC;? commented

at empowering small and medium BEE companies by stating that

Tseke Nkadimeng, Afric Oilâ&#x20AC;&#x2122;s chief executive officer. â&#x20AC;&#x153;We are now a

25 percent of the industryâ&#x20AC;&#x2122;s procurement should come from them.

serious competitor to the oil majors,â&#x20AC;? he concluded.

minals. Its pipeline division, Transnet Pipelines, holds the mandate over South Africaâ&#x20AC;&#x2122;s strategic pipeline assets and now acts as the custodian of the 347 mile long New Multi-Product Pipeline (NMPP).

  

â&#x20AC;&#x153;At the moment,â&#x20AC;? MĂśller continued, â&#x20AC;&#x153;we are in the first phase of a 5-phased expansion plan. With present projections of demand, we aim to complete the final expansion by 2035.â&#x20AC;? A major new infrastructure asset for the country, the NMPP is expected to reach an extensive economic life span: â&#x20AC;&#x153;If we adhere to our strict operating and maintenance programs, experts have estimated its economic life to 75 years,â&#x20AC;? MĂśller pointed out. With the NMPP, a brand new competitive facility for transportation of refined products in South Africa has become reality. Buffered by two terminals on each side of the pipe, disruptions in the supply chain can now be accommodated for up to five days.

SOUTH AFRICAâ&#x20AC;&#x2122;S REFINING FUTURE: Diverging Decisions Whereas the New Multi-Product Pipeline (NMPP) lessened the immediate urgency of raising South Africaâ&#x20AC;&#x2122;s fuel capacity, the plans on where to invest next vary considerably. PetroSA has recently intensified its plans to build a world-class crude

                Â? Â? Â?Â?Â?  Â?  Â?      ­ Â&#x20AC; Â&#x201A; Â&#x20AC;Â&#x201A;Â&#x192; Â&#x201E;Â&#x2026; Â&#x2020;Â&#x2020;Â&#x2020;Â&#x201A; Â&#x20AC; Â&#x201A; Â&#x20AC;Â&#x201A;Â&#x192;

       

refinery in the Coega Industrial Development Zone in the Eastern Cape prov-

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South African refinery ownership and crude throughput

SOUTH AFRICA REPORT

Crude oil refined at the following refineries: Name

Crude throughput/ bpsd* Ownership

Chevref

100,000 Chevron South Africa

Enref

125,000 Engen Petroleum

Natref Sapref

92,000 Sasol/Total South Africa (64/36%) 180,000 Shell South Africa/BP Southern Africa 950/50%)

Coal and gas processed and refined at: Sasol Secunda

150,000

Sasol

(crude equivalent @ average yield)

Gas processed and refined at: PetroSA

45,000

PetroSA

(crude equivalent @ average yield) Source - South African Petroleum Industry Association (SAPIA) *bpsd: barrels per stream day

ince, an initiative called Project Mthombo. If built, the facility would become Africa’s biggest crude refinery with a capacity of 360,000 barrels a day. South Africa’s existing refiners, however, have questioned the economic logic of such major investment and believe that the country may be better served through an investment in the existing refining base. Last year’s data from the South African Petroleum Industry Association (SAPIA) indicate a combined national capacity of about 692,000 barrels a day, which is already significant within the African continent. Apart from synthetic fuel operations run by Sasol and PetroSA, production comes from BP and Shell’s SAPREF, Engen’s Enref in Durban, Chevron’s Cape Town refinery and Total and Sasol’s inland Natref refineries. Gerard Derbesy, CEO, BP Southern Africa

The downside is that these refineries are old and outdated, and currently in a condition

described by Energy Minister Peters as “decaying.” Durban-based SAPREF –a joint-venture between Shell SA Refining and BP Southern Africa- is Southern Africa’s largest crude oil refinery accounting for 35 percent of South Africa’s refining capacity alone. Gerard Derbesy, CEO of BP Southern Africa, assessed the situation: “Today, like the rest of the industry, the refinery runs on around 75 percent capacity, while the rest of the world stands at Rob MacKenzie, managing director, Endress+Hauser

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around 85 percent.” Having labeled the country’s refining capacity

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SOUTH AFRICA REPORT as just “adequate,” Derbesy recognized the need to boost its reliability. Last year, the South African government set 2017 as the deadline to upgrade the country’s existing refineries with the purpose of implementing cleaner fuel standards in line with the EURO 5 fuel specifications. The required upgrades

ì Built over 400 years on customer service and reliability. î

were expected to come with a price tag of ZAR 25 billion (roughly USD 3 billion). Rob MacKenzie, managing director of the Swiss-based flow measurement & management expert firm Endress+Hauser, points to the complex nature of plant maintenance as one of the biggest problems for the industry in South Africa. “A part of the reason for this is that skills required for the people onsite are also more and more difficult to find,” he said. “What we need to do as a service provider is to support the technical expertise of customers. For example, we have now also entered into contracts in South Africa with some of the group’s global customers, where we offer onsite maintenance services in addition. In this way, we have people permanently positioned at our customers’ sites to avoid problems, rather than wait for them to happen,” MacKenzie explained. “One of the most important elements for organizations such as ours however is to have the right support and service levels in different countries around the world. Around 25 percent of the staff that we now employ in South Africa are part of the service department, which gives us a strong competitive advantage,” added MacKenzie. To ramp up its service capacity, Endress+Hauser has invested in new infrastructure in South Africa: “We are currently constructing a new head office in South Africa and are upgrading our existing offices to turn them into a logistics and service center. The move to the new building is planned to be completed in September 2012,” he elaborated. Commenting on South Africa’s inability to meet local demand through its own refineries, Min-

Vopak is the world’s largest independent provider of conditioned storage facilities for bulk liquids. Whether it’s liquid or gaseous chemicals, oil products, petrochemicals, biofuels, vegetable oils or Liquifed natural Gas (LNG) we ofer complete storage and transshipment solutions at 80 terminals in 32 countries, covering and connecting the world”s major shipping lanes. In Durban, our backbone is the storage of chemical products and we are developing into the petroleum market. With our world-wide standards in best practices and our global values we give our customers the highest service and top performance in safety.

dependency on imported petrol, diesel and other liquid fuels is on the increase, adding that the country continues to rely on foreign refineries to meet local demand. As a result of South Africa’s strong reliance on its single buoy mooring (SBM),the Port of Durban is still expected to remain a bottleneck in times of need. “Under a crisis scenario where a refinery such as SAPREF, Engen or Natref has an unplanned shutdown,” said Derbesy on behalf of BP, “the infrastructure will become very constrained to take on all the additional cargo.” And although their financiers have not yet been identified, additional import terminals in Durban will have to be the way forward in facilitating clean fuel imports and extra capacity.

INVESTMENTS FOR THE LONG TERM-INALS In line with the rapid increase in consumption of petroleum products, independent storage providers are taking on a growing role in South Africa. To address the rapidly expanding market in the country, storage providers are now looking into different ways to invest in new infrastructure too. With terminals in 81 different locations around the world, Netherlands-based Vopak chose the South African city of Durban for its first –and still only– terminal on the African continent. Histori-

Vopak Terminal Durban (Pty) Ltd 105 Taiwan Road, Islandview Phone: 031-4669200 Fax: 031-4669272 e-mail: sibusiso.zulu@vopak.com Website: www.vopak.com

12 70

ister of Energy Dipuo Peters further announced in June 2012 that –as a net importer- the country’s

cally used for chemical storage, the terminal is due for expansion to address the company’s rapidly developing petroleum business. “This is why we are studying the opportunity to build more tanks in Durban, to eventually achieve

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SOUTH AFRICA REPORT INVESTMENTS IN ENERGY SECURITY - USD 3 BILLION FOR GREEN INDUSTRIES South Africa’s strong coal dependency is the country’s most signifi-

years, including the manufacturing of green

cant climate change challenge. “Coal accounts for more than 70 per-

components and services related to green

cent of our primary energy consumption in South Africa. It reflects

industries. “We are investing significantly

our lack of oil and gas reserves as much as it highlights, in contrast,

in the green economy but are still sourcing

our vast reserves of coal,” acknowledged Sasol’s chief executive offi-

many parts from abroad. Instead, one would

cer, David Constable.

Abel Malinga, division executive mining & manufacturing, IDC

In an attempt to reduce its carbon footprint, create jobs and bring economic benefits to rural areas, South Africa has identified green industries as a key focus area within its New Growth Path –

like to see that a certain number of components can be manufactured in South Africa,” highlighted Abel Malinga, IDC’s divisional

executive mining & manufacturing.

President Zuma’s plan to create five million jobs by 2020 to counter

Set to cover the next five years, the investment plan focuses

soaring unemployment rates. Its state-owned finance institution

around five key green areas: renewable energy, energy efficiency,

Industrial Development Corporation (IDC), commercial banks and

emission and pollution mitigation, and fuel-based power such

other development institutions will play a critical role in develop-

as waste-to-energy and co-generation, as well as biofuels. In this

ing and investing in these industries by providing funding to this

respect, the IDC and the German Development Bank (Kfw) already

fledgling sector.

announced a ZAR 500 million (approximately USD 60 million) Green

The IDC alone has set aside ZAR 25 billion (approximately USD 3 billion) to invest in the green industries value chain over the next five

Energy Efficiency Fund earlier this year, aimed at promoting investments in both energy efficiency and renewable energy.

a 50/50 balance between chemicals and petroleum products,” said

The IDC Green Industries Unit is providing development fnance to a number of industry projects that will reduce the nation’s carbon output.

Vopak’s managing director in Durban, Marcel van de Kar. “For Vopak we see a demand from out of the market to expand our

The unit supports the development of green industries and solutions including bio-ethanol fuels, wind farms, solar thermal energy, photovoltaic electricity generation and waste management – in

terminal in Durban and the establishment of new storage capacity in southeast of Johannesburg. Furthermore we get requests for independent stor-

line with government’s objectives of a totally carbon-neutral country by 2050. If you have the true entrepreneurial spirit and a project that can contribute to creating jobs and building South Africa’s industrial capacity, visit www.idc.co.za to fnd out how the IDC can help you go green.

age capacity in Richards Bay (roughly 110 miles east of Durban) for chemi-

Turning renewable energy

cals that we now store in Durban as well as petroleum products and LPG,”

generation into a breeze

van de Kar expanded. “We see the need for an open and independent distribution facility, as well as a buffer and strategic storage facility. It will assist in preventing a shutdown of the economy in case of hiccups in the system. Beyond operational issues and mechanical defects that can occur, strategic storage is also

Gauteng can contribute to all these different aspects,” he detailed. In addition to the New Multi-Product Pipeline, future expansion of South Africa’s inland terminals is not only essential to serve the country’s growing

Chillibush7072IDC

important from a political perspective. We believe that a new terminal in

energy thirst; it also creates an additional buffer to enhance energy security within southern Africa as a whole. Neighboring countries such as Botswana, for instance, are still highly dependent on South Africa for their supplies

Telephone: +27 86 069 3888 Email: callcentre@idc.co.za To apply for funding online visit www.idc.co.za

and are the first to feel the heat when supply chain disruptions occur.

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SOUTH AFRICA REPORT Our New Multi-Product Pipeline has reduced the number of trucks on the road between Durban and Johannesburg

The Transnet New Multi-Product Pipeline is an underground system specially designed to ensure the safe and efficient transportation of fuel from Durban to Johannesburg. But at Transnet, people will always come first. This technology we’ve put in place will minimize road deterioration and ease traffic congestion. That’s why, when the NMPP is fully operational it will reduce the number of tankers currently on the roads by 60%, making your journey safer and far more pleasant. It’s yet another example of how an invisible system is making a very noticeable difference to the lives of all South African. We’re the backbone of the economy and we’ll stop at nothing to keep everything moving.

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SOUTH AFRICA REPORT LOCAL BRANDS IN SOUTH AFRICA: NOT TO BE UNDERESTIMATED Effective as from January 1, 1999, leading South African compres-

stick with its own name rather than leveraging on the Atlas Copco

sor, generator and auxillary equipment rental company Rand-Air

brand, Rand-Air’s general manager Louwrens Erasmus pointed to

has been part of the Swedish multinational Atlas Copco group.

an exceptional track record in the local market.

While some may have expected the international group to push

“From a rental perspective, Rand-Air has been in existence

through its well-known brand name into the South African market,

since 1972, which now gives us a track record of 40 years in the

the Rand-Air brand is a prime example of the strength of local

industry. We have had an established name with high values and a

brands. In response to the question why the company preferred to

strong customer focus within the industry. From this point of view, we have historically been regarded as ‘the rental company’,” Erasmus boasted. On the sale of equipment, however, Atlas Copco remains the established market leader in South Africa. In the oil and gas industry, the company has been extensively supplying South African refineries. “For the last 20 or 30 years, Rand-Air has been a supplier to Sasol, both in Secunda and in Sasolburg. We have dealt with them significantly and have acquired significant operational knowledge from them. We have also been involved with Chevron in Cape Town, as well as Engen and Sapref in Durban in the past,” Erasmus noted.

Sapref refinery in Durban, copyright Michael Sand

Transnet Pipelines, for instance, currently services this market through

Saharan Africa for the Paris Headquartered geo-

its flagship terminal in Tarlton, Johannesburg. Following the company’s

physical services company CGGVeritas. “This

own major investment in the New Multi-Product Pipeline (NMPP), it is

means that,” Jacquand continued, “while South

now looking at the private industry to expand the roughly 1 million cubic

Africa is not yet a big oil and gas-producing

feet facility in Tarlton. This, in turn, is creating new opportunities for independent storage providers as well as South Africa’s local Black Economic Empowered (BEE) companies.

country, the government realizes that action is Raoul Jacquand, Sub-Saharan Africa geomarket director, CGGVeritas

needed due to the depletion of current fields. The list of applicants is growing, and permits for feasibility studies are being converted into

SOUTH AFRICA’S BACKYARD E&P PLANS

exploration rights licenses. Last year PetroSA organized tenders for its

In 2002, South Africa introduced its Mineral and Petroleum Resources

seismic offshore activities. CGGVeritas took it as a good sign because it

Development Act aimed at providing the necessary legislative and legal

showed that this flagship player is ready to explore again; as we all know,

building environment to attract E&P players. As the Act gained traction

finding is impossible without exploration!

over the years, exploration has picked up accordingly, “most of the explo-

The international community needs to overcome its reticence about

ration rights that were granted 3 to 4 years ago have been asked to be

South Africa and the continent as a whole. Hopes that an iconic country

extended, which shows the confidence of the sector,” testified Mthozami

like South Africa will blossom and grow are strong,” Jacquand concluded.

Xiphu, chief executive officer of the Petroleum Agency SA (PASA)– the

Since the Minister of Mineral Resources granted its exploration right

government’s body promoting exploration for onshore and offshore oil

for the Orange Basin Deep Water area off South Africa’s north-west coast

and gas resources and their optimal development.

in February 2012, it also became the first time in 108 years for Shell to

“The offshore map of PASA that we have in our office here gets

have an upstream business in South Africa. Describing offshore as the

updated quickly,” concurred Raoul Jacquand, geomarket director Sub-

company’s bread and butter, chairman and country GM Bonang Mohale is

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SOUTH AFRICA REPORT WHAT THE FRACK? In April 2011, the South African government placed an indefinite moratorium on oil and gas exploration in the Karoo region, where the controversial shale extraction technique of hydraulic fracturing (fracking) might be deployed. A semi-desert natural region of South Africa, the Karoo occupies about 153,000 square miles i.e. roughly one-third of the total area of South Africa. A vast and ecologically sensitive region, sheep farming currently still is the economic backbone of the arid Karoo region. The area, however, is also thought to hold vast deposits of natural gas in shale rock deep

Map of the Karoo region in South Africa, as delineated by the World Wide Fund for Nature. Source - NASA

underground. Many of the local farmers and conservationists are con-

pendent report by Econometrix assessed the economic benefits of the

cerned about the possible environmental impact of extracting these

shale gas potential in the Karoo region where the late Tony Twine -highly

deposits.

respected in the industry- was the lead economist. Rather than attempt-

The counter-lobbying content of mainly local farming communities through non-profit organizations such as Treasure Karoo Action Group (TKAG) comes down to a clear no against fracking. In their view, gas pro-

ing to assess any environmental impact, the report set a benchmark for the potential of the Karoo shale gas deposits. “When it comes to the economic benefits and by looking at the num-

duction would mainly be driven by short-term

bers in the Karoo,” elucidated Econometrix’ managing director Rob Jef-

gains for foreign oil companies and the South

frey, “the estimates shows a range of USD 11 to 30 billion per annum as

African government, while putting at stake the

a potential contribution to GDP. This may not be particularly significant

water supply and health of the people of the

in international terms, but in South Africa this represents between 3 and

Karoo.

7 percent of the GDP.”

Promising estimates, however, have motivated the South African government to study extraction possibilities in the area. An inde-

At present, the South African government made one thing clear: fracking in the Karoo should not come at any cost. Until further notice,

Rob Jeffrey, managing director and senior economist, Econometrix

the moratorium will therefore stay in place.

ready to start increasing E&P investments.

ing (fracking) as useful, necessary and critical,

“South Africa still faces energy poverty, where 10 million of the 50

Mohale also defends Shell’s efforts to look at

million South Africans have zero access to any form of energy. They are

unconventional gas as a supplement for electric-

the people that bring down our forests and trees just to cook, heat and

ity generation. “Gas makes a strong case. It is a

be able to provide some general energy. In a country that is relatively

cleaner source compared to coal-fired power sta-

advanced in terms of being endowed with natural resources, clearly this situation cannot be. If oil or gas is found, it could reduce South Africa’s

Bonang Mohale, chairman & country GM commercial, Shell

dependence on imported energy supplies and help meet growing energy demand.

tions at around one tenth of the cost… It is worth pointing out that gas has 50 to 70 percent less CO2 emissions than coal-fired power stations,”

he added.

The biggest single contribution Shell can make to social and eco-

Mohale further points to South Africa as a market where oil and

nomic development is by helping to meet growing energy demand while

gas companies can make a significant difference, because every dollar

respecting the people and the environments where we work,” Mohale

invested almost directly shows the causal effect in the quality of lives for

pointed out.

the majority of people. For him, and perhaps for many others to come,

Whereas he recognizes the country’s moratorium on hydraulic fractur-

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August 2012

energy.focusreports.net

this makes South Africa the most exciting market to be in the world today.

FOCUS REPORTS

August 2012 Oil & Gas Financial Journal • www.ogfj.com


Energy.FocusReports.net

SOUTH AFRICA REPORT INTERVIEW WITH JOHN LANGHUS, COMMERCIAL DIRECTOR OF FOREST EXPLORATION INTERNATIONAL Mr. Langhus, you first came here in January 2009 with the task to

goal is for more people to realize that we do

secure production and exploration rights for Forest in South Africa.

not have to wait for these sources, because

How has the journey been in these first 3 years?

we already have an excellent source of gas off

The challenge for South Africa on the West Coast is the lack of an

the West Coast of South Africa. South Africaâ&#x20AC;&#x2122;s investment climate, does

existing market for gas. We have therefore been working diligently to develop such a market, knowing that the name of the game here is â&#x20AC;&#x2DC;gas to power.â&#x20AC;&#x2122; We need a very significant initial customer to justify the large infrastructure investment.

John Langhus, managing director - international, Forest Oil Corporation

it play a role in the way you manage the strategy for Forest here? The fiscal regime for oil and gas in South

Do you feel that a perception change has taken place with

Africa is quite positive and is an area of public policy that is very

regard to the role that natural gas can play within South Africaâ&#x20AC;&#x2122;s

encouraging for investors. The National Treasury has done an excellent

energy mix?

job in crafting policy to be more conducive to investment in the oil and

South Africa has been slow to get there and certainly lags behind

gas industry. They have provided tax incentives for for exploration and

in the understanding of the importance and value of gas compared

development expenses, have made easier the temporary importation

to the rest of the world. However, they have certainly come around

of expensive exploration and drilling equipment, and so forth.

more recently, triggered by the major gas finds offshore Mozambique and the debate about the possibilities of shale gas in the Karoo. Our

This is an extract. To consult the full interview, please visit www. energy.focusreports.net

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17 75


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SOUTH AFRICA REPORT PROJECT IKHWEZI: EXTENDING THE LIFE OF PETROSA’S GTL REFINERY

oil finds in Uganda and the discovery of oil in Ghana. Together with

Although South Africa is far from a known destination for oil and gas, explo-

Bill Torr, Tullow’s Africa finance manager and general manager in

ration interest in its acreage has recently followed suit after the Sub-Saharan

Cape Town.

the Dublin office, we were jointly responsible for this discovery,” says

E&P boom. One of the biggest confidence boosters in this respect is the

“Including Ghana, Uganda and now Kenya, this office has been

fact that the country’s NOC, PetroSA, is actively exploring South African

responsible for opening up 3 new basins in Africa in the last 5 years.

shores, as part of Project Ikhwezi.

We have also opened up a new basin off the coast of South Amer-

Since its board approval in March 2011, Project Ikhwezi has been

ica. Note that opening up just 1 basin would already be an honor in

described as one of the most strategically important initiatives in the com-

a geologist’s life,” he adds. Tullow’s success rate has indeed been

pany’s history and is set to play an instrumental role in sustaining the life of

exceptional: a record 44 out of 46 wells were successful in Uganda in

its gas-to-liquids (GTL) refinery in Mossel Bay, a harbor town located 250

just six years.

miles east of Cape Town.

Amongst the world’s oilfield services com-

The project involves tapping into gas reserves in PetroSA’s F-O field,

panies, Houston-based Baker Hughes is one

located 25 miles southeast of its F-A production platform off the south

of the largest. At present, the company has

coast of South Africa. Nosizwe Nokwe, the NOC’s group chief executive

operations in roughly 12 countries in Sub-

officer sees a crucial role for PetroSA as “the gas company” in enhancing

Saharan Africa. “When we speak about Sub-

the growth strategy of South Africa.

Sahara, we typically speak of a number of

“There is an energy deficit in South Africa that is hampering our growth,”

core nations, including Nigeria, Angola, Equa-

noted Nokwe. “In partnership with the other State-Owned Entities (SOEs),”

torial Guinea, Congo and Gabon,” said Baker

she continued, “our role is to use some of our technical knowledge to assist

Hughes’ sales director for Sub-Sahara Africa.

with overcoming some of the barriers that may persist. Our energy is coalfired, which is not environmentally sustainable.

Chris McCarty, sales director Sub-Sahara Africa, Baker Hughes

More recently, however, new “frontier” areas have also come into play. “Today, we have a lot of up-and-coming countries, such

We have a role to play in helping to find other sources of energy, together

as Ghana and Ivory Coast on the West Coast. Others that we see as

with Eskom (the electricity public utility)… We are already a pioneer in Gas-

countries on the rise are: Mozambique, Tanzania and Uganda on the

To-Liquids (GTL) technology, have a wealth of experience and knowledge in

East Coast,” added McCarty.

this field, and are using our position to further grow in the gas value chain.”

To oversee its operations in this entire region, Baker Hughes has chosen Cape Town as its base which has —in recent years— taken

COORDINATION CENTER TO TAP INTO THE NEW FRONTIER

on increasing responsibilities, following a company-wide global reor-

South Africa is gearing up to tap into a boom of E&P activity in Sub-Saharan

decisions were coming out of Europe and Aberdeen, in particular.

ganization in 2009. “Formerly, a lot of the support and management

Africa. Whether in Cape Town or Johannesburg, the country now hosts a

The reorganization shifted the decision-making, the control and

myriad of regional headquarters for the upstream sector, labeling itself as

the technical expertise to Africa. This did not happen overnight. We

the springboard to tap into the rest of Africa. Tullow Oil, Baker Hughes and

continue to move more and more people into the African countries.

DHL are three examples of international companies that took the leap.

We are also hiring, recruiting and developing a lot of people within

In addition to Dublin and the London headquarters, global oil and gas

Africa. While more of the decision making now takes place here, the

E&P company Tullow Oil has embraced Cape Town as its third key office

shift also brought our technology a lot closer to the field, whether it

location. Coming forth out of a 2004 acquisition of Energy Africa, the team

is here in South Africa or Angola, Uganda, Ghana, Equatorial Guinea,

of Cape Town has been a key asset in Tullow’s remarkable exploration suc-

Congo, Gabon, etc.” McCarty noted.

cess in Africa.

German-headquartered global logistics firm DHL makes a third

“What put Tullow on the map was probably a combination of the

18

76

August 2012

energy.focusreports.net

prime example of the springboard proposition. Whereas the German

FOCUS REPORTS

August 2012 Oil & Gas Financial Journal • www.ogfj.com


Energy.FocusReports.net

SOUTH AFRICA REPORT

we are investing in Africa’s long-term growth

In more than 45 years of operations in Africa, Baker Hughes technology offerings, coupled with local expertise, have pushed performance boundaries and set records in drilling, formation evaluation, completions, and production operations.

To learn more, please

At Baker Hughes, we remain committed to providing world-class service and fit-for-

contact your local Baker Hughes

purpose technology for Africa’s oil and gas operators. That’s why we’ve embarked

office or visit us online at

on an ambitious investment program to build new facilities, upgrade and expand

www.bakerhughes.com/africa

capacity at existing locations, and provide extensive employee training to support Africa’s operations now and into the future.

www.bakerhughes.com © 2011 Baker Hughes Incorporated. All Rights Reserved. 31823

FOCUS REPORTS

August 2012

19


Energy.FocusReports.net

SOUTH AFRICA REPORT DHL also provides an extensive range of services in heavier freight

CAPE TOWN’S A-BERTH FACILITY TO BOOST OIL & GAS HUB STATUS

operations and capital projects to the oil and gas industry. Oversee-

Completely redeveloped with the sector in mind, the newly con-

ing roughly USD 1.25 billion global revenues from energy, the com-

structed A-Berth facility has perhaps been the most significant

pany’s global president for its energy sector, Steve Harley, runs the

upstream oil & gas servicing infrastructure recently coming on stream

show from his new offices in Cape Town.

in the Port of Cape Town. Dedicated to the repair and maintenance

multinational has particularly been known for its Express Division,

“South Africa plays an important role for us in a number of ways,

of rigs, specialized upstream vessels and associated equipment,

both in terms of being a center where management sits as well as a

A-Berth is now the home turf to flagship South Africa-headquartered

financial and training center. We also bring in people for coordination

DCD Marine. DCD Marine provides turnkey ship repair solutions to

meetings and the country is also a hub for the Express operations in

the marine and oil & gas sectors across Africa. Established in 1903,

the Southern African region,” Harley concurred. “Moreover,” added

DCD Marine’s main facility is situated in the port of Cape Town and is

Harley, “there is a lot of interest in creating locations such as Sal-

the largest ship repair yard in Africa. “We have always seen a very big

danha Bay to become a logistics hub for both

opportunity along the West Coast of Africa, and more recently along

East and West Africa. This again emphasizes

the East Coast as well, to have a service and repair facility,” said its

the importance of South Africa within the

general manager Gerry Klos.

Steve Harley, president, DHL Energy Sector

developing of logistics solutions for the whole

“This was our vision when we started building our facilities in 2005. To

of Africa. We are very interested in participat-

put it in another perspective, we have taken the work -that would have

ing in such developments as a company.”

traditionally gone elsewhere- to Cape Town,” initiated Klos. While DCD Marine also operates in the South African ports of Coega and Saldanha

IT’S A TOUGH BUSINESS. WE MAKE IT EASIER.

www.dhl.com/energy

20

August 2012

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SOUTH AFRICA REPORT

  ENGINEERING SOLUTIONS FOR THE OIL AND GAS INDUSTRY  ­    €      ­ ‚  ­€     ƒ „…

  

                           

Port of Ngqura

Port of Ngqura



 Cape Town

                   ­€­‚€ƒ‚„ FOCUS REPORTS

August 2012

21


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SOUTH AFRICA REPORT PASSED WITH DISTINCTION Ranking among the best in the world, the World Economic

Brian Kennedy, group managing execu-

Forum’s Global Competitiveness Indices have regularly praised

tive of one of the top 4 South African

South Africa’s financial system for being sophisticated, robust and

banks, Nedbank Capital, even sees South

well regulated. The recent global financial crisis was an excellent

Africa as one of the best places to be a

moment to put these statements to the test. “The first part of the

banker today. “The fact that we sit on the

crisis did not really affect us badly at all,” said Cas Coovadia, managing director of the Banking Association of South Africa. “Once the crisis led to a downturn in the real economy, our economy

Cas Coovadia, managing director, The Banking Association of South Africa

African continent and that there is so much to be done here, is a key driver of motivation. One should not underestimate the

contracted by roughly 6.7 percent. As a result of that, we also saw

role that bankers – who understand how

contraction in the business of the banks. Nonetheless, we man-

these things work - have to make a differ-

aged to maintain a profitable situation and had absolutely no capi-

ence. There are going to be big projects in

tal or liquidity problems,” he continued.

Africa for the next 50 years. The oil and gas

It thus showed that in circumstances of severe economic downturn, the South African banking sector was still able to maintain a strong liquidity and capital position, while remaining profitable

sector alone is already lifting the economy Brian Kennedy, group managing executive, Nedbank Capital

and creating additional jobs,” explained Kennedy.

albeit at a lower level. This emphasized the robustness of the sector,” Coovadia illustrated.

Bay, for instance, the company seems to have a particular keenness to remain strongly rooted around Cape Town. Some of the highlights of the upgrades were announced at A-Berth’s opening ceremony Gerry Klos, general manager, DCD Marine

in November 2011: a new laydown area of roughly 460,000 square feet, a warehouse facility of around 30,000 square feet, office space of

approximately 11,000 square feet and a medical facility were all included

DCD Marine's workshops in Cape Town

during the renovations. “Our preference lies in Cape Town because we can offer the most

Apart from increasing the company’s operational flexibility, the acqui-

cost-effective solutions for the customer there, thanks to our state-of-

sition places a sizeable foot in the door 1,000 miles north of Cape Town,

the-art facilities,” justified Klos. “These facilities have all the necessary

in the neighboring Namibian Port of Walvis Bay,. At the end of the day

communication tools, project offices, 3G connections, safety systems, a

however, Cape Town will remain the prime coordination center too.

clinic, workshops, equipments, and so on. There is no yard that has bet-

“Even if we were to start taking on oil and gas work in Walvis Bay such

ter facilities in the world for the size on which we operate,” he added.

operations would be led from Cape Town,” concluded Klos.

Whereas Klos’ Marine division may account for only 10 percent of

between 2005 and 2011, and are set to soar further following this year’s

TURNING THE WESTERN CAPE INTO THE NEXT SINGAPORE

acquisition of South Africa’s second largest ship repairer Elgin Brown

“Around our coast, we see significant movement of rigs, with 132 oil

and Hamer.

rigs passing by South Africa in the last year alone. Of those 132, very

DCD’s multidimensional group today, its revenues increased tenfold

22 80

August 2012 energy.focusreports.net

REPORTS August 2012 Oil & Gas Financial Journal •FOCUS www.ogfj.com


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SOUTH AFRICA REPORT

THE AGENCY P26492

We are not just moving goods, but we are also moving our country forward

Transnet National Ports Authority is the largest

pilots through the School of Ports and obtained

port authority in southern Africa, with a mandate

new tugs for the ports of Durban, Ngqura and

to manage and control all eight commercial sea

Richards Bay. We are committed in investing

ports on the 2 954km South African coastline.

to make South Africa the hub of African Trade.

We’ve invested more than R2.0 billion during the

We are the backbone of the economy and we

past year to improve the efficiency of our eight

will stop at nothing to keep everything moving.

ports. We’ve deepened, and widened the entrance channel of the Port of Durban; constructed additional liquid-bulk facilities at the Port of Richards Bay; provided a four-berth container terminal at the Port of Ngqura; and re-engineered the Port of Durban’s container terminal. The 194.6 million tonnes of cargo handled by the eight South African seaports annually represents 98% of the

national ports authority

import / export volumes of this country. Recently we have produced the first three black female

FOCUS REPORTS

delivering freight reliably

August 2012

23


Energy.FocusReports.net

SOUTH AFRICA REPORT few were able to be serviced in the South African ports, because we

“The problem with Cape Town is that there

are still building the necessary capacity. This is where we see a huge

is no great space to further develop the port

opportunity because of our proximity to the industry versus other

area… Going forward, we almost need a dual

hubs such as Rotterdam or Singapore.

hub in the Western Cape,” stated Warwick

This is why many companies have started taking us in serious consideration, and have increasingly begun to open their regional head offices here,” stated Alan Winde, minister of finance, economic development & tourism of the Western Cape government. Many South Africans –particularly those in the Western Cape- are

Blyth, CEO and executive director of the South Alan Winde, Minister of Finance, Economic Development & Tourism, Western Cape Government

African Oil and Gas Alliance (SAOGA), a nonprofit organization dedicated to promoting the development of South African-based industry

supplying products and services to the upstream oil & gas sector.

looking at Singapore as a role model for their own future role in the sec-

Asking Blyth which location could best complement Cape Town,

tor. “I have been in Singapore to talk to the industry players there. We

he looked at Saldanha Bay, a natural deepwater port on the southwest

also had a lot of discussions with the Singaporean government and have

coast of South Africa, north of Cape Town. “It is only about one hour

had the opportunity to learn from their experiences,” added Winde.

from Cape Town and is thus a very attractive future proposition,” Blyth

The Province’s premier, Helen Zille, supports the notion that both Sin-

replied. Ongoing delays in physical oil and gas related infrastructure

gapore and Rotterdam can be important role models in a certain way.

investments over recent years, however, support the notion that the dual

Her real ambition, however, is to be a modern version of these hubs. In

hub proposition is not an overnight story.

five years time, Zille alludes to becoming the preferred port of maintenance and shipbuilding and –repair, not only for the West Coast’s gas deposits, but internationally. “We would rival Singapore,” she boasted.

SOUTH AFRICA PUSHING FOR GREATER INVOLVEMENT OF PRIVATE OPERATORS IN PORT INFRASTRUCTURE DEVELOPMENTS A key determinant with respect to the future of South Africa’s port infrastructure is the Transnet National Ports Authority (TNPA). A division of the state-owned company Transnet, the TNPA acts as the ‘port landlord’ in South Africa, providing port infrastructure and marine services at the country’s eight commercial seaports. This year, the South

Tau Morwe, chief executive, Transnet National Ports Authority (TNPA)

African government allocated ZAR300 billion (roughly USD 36 billion) to spend on capital projects over the coming 7-year period, roughly one sixth of which will trickle down to the TNPA. “The big projects include the expansion of the iron ore terminal in Saldanha Bay, which effectively increased capacity from around 50 to 83 million tonnes,” said Tau Morwe, TNPA’s Chief Executive. “Additionally, we will be moving both the manganese terminal and the liquid tank farms from Port Elizabeth to the Port of Coega. Also, we will deepen the berths of the Durban container terminal while additionally expanding the Cape Town terminal,” he added. According to Morwe, further implementation of the National Ports Act will also enhance industry participation in future oil and gas port infrastruc-

24 82

August 2012 energy.focusreports.net

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SOUTH AFRICA REPORT ture. This may be a welcome move for the private sector, which has been known to publicly criticize the TNPA for favoring its cash cow container business over additional oil and gas and ship repair infrastructure. “Compared to the past, we now have the

Investing in the Maritime Industry of the Future – Today

National Ports Act which basically tells us to launch a publicly transparent terminal process

Cadets of SMIT Amandla Marine in the Port of Cape Town

for any new terminal coming on stream. You will therefore see the private sector becoming more and more involved in terminal operations in the port. As Transnet we therefore do not necessarily need to fund the building of terminals. The private sector can now build, operate, own and transfer such facilities,” he said.

CAPTURING RIG BUSINESS BY REACHING OU TO THE INTERNATIONAL SCENE Dormac, one of South Africa’s flagship local players in ship- & rig

SERVICE ACTIVITIES

repair, is convinced that a dual hub in the Western Cape would enhance its focus on the sector and potentially mirror the success of common user facilities such as the Australian Marine Complex South of Perth in Australia. In an attempt to progress faster however, the company has also been looking at international partnerships as the way forward. “In many

Chris Sparg, managing director, Dormac

instances, in South Africa, we tend to give a lot more importance to international players before appreciating the local competence that exists” explained Dormac’s managing director Chris Sparg. “The local confidence may still be lacking, which is why we hope that an international alliance will help elevate the profile in order for the government to engage with us directly,” his divisional director offshore Salvo Cuttino added.

Management of Ofshore Tanker Terminals Subsea Services In-Port Bunker Delivery Ofshore Supply & Support Ocean & Coastal Towage Environmental Protection Support for Emergency Response Vessel Management

To better reach out to the international community and increase their chances of winning rigorous tendering processes, South Africa’s ship and rig service yards have also deployed what one may call “a multiport model.” As a result, companies akin to DCD Marine and Dormac can now be found in multiple ports in the Southern African region. Apart from greater flexibility, this wider geographic coverage effectively puts these yards in a better position to tap into work coming from both the West and East Coasts of Sub-Saharan Africa. And just in case the mountain will not come to Muhammed, these flagship players will also not hesitate to reach out further beyond Southern African territory. “In the coming 5 years,” Sparg explained, “you will see a new division being started under the oil and gas division to support the riding squads or repair teams along East and West Africa. As opposed to bringing rigs into a port in West Africa, our intention is to put large teams in those areas to conduct complete projects to

HEAD OFFICE 31 Carlisle Street, Paarden Eiland 7405 P.O. Box 1339, Cape Town 8000 Tel: +27 (0)21 507 5777 Fax +27 (0)21 507 5885 Email: smitamandla.cpt@smit.com www.careersatsea.co.za www.facebook.com/SmitAmandlaMarine

assist our clients.”

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83 25


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SOUTH AFRICA REPORT SOUTH AFRICA’S UPSTREAM SERVICE PROVIDERS TO EXPAND INTO SOUTHERN AFRICA

as offshore oil & gas support, which is not just

“There is a range of countries where we would have never thought

tering and offshore support, but also LNG ter-

Growth in this market has been identified

limited to our traditional services of vessel char-

to find oil or gas, most particularly in the East of Africa with countries such as Kenya and Uganda for oil and Tanzania and Mozambique in terms of gas,” stated Elias Pungong, oil and gas sector leader Africa

minal activities,” Maclons added. “In my opinPaul Maclons, managing director, SMIT Amandla Marine

ion at the moment, Mozambique on its current growth trajectory is probably set to outgrow

for Ernst & Young. Standard Bank’s adjacent figure visualizes this geo-

South Africa from a resource exploitation point

graphical shift, where the light brown –indicating development rather

of view. China, India and Brazil have all made

than production– areas are perhaps even the most remarkable.

plans to substantially invest in Mozambique,”

In Mozambique alone, Anadarko recently estimated its total recover-

concluded Maclons.

able natural gas resources to be between 30 and 60 trillion cubic feet (Tcf), enough to meet an entire year's gas consumption by France, Germany, Britain and Italy.

“Significant developments are also taking Dave Murray, business unit manager - transport, SMIT Amandla Marine

place in Namibia from an offshore concession perspective,” added SMIT Amandla Marine’s

The exciting news was perhaps first heard by the neighboring South

business unit manager transport Dave Mur-

Africans, where the upstream service providers have been respond-

ray. “There is a lot of excitement, but developments are slow. There

ing enthusiastically by broadening their focus within Southern Africa.

still remain some questions around licensing, logistics and partnerships.

“Companies such as Anadarko, ENI, Shell and Sasol have all invested

Namibia today is perhaps where Mozambique was 3 to 4 years ago,”

in exploratory offshore oil and gas activities in that market,” said Paul

observed Murray.

Maclons, managing director of the Southern African specialist marine

Bruce Xiste, vice president Southern Africa of the French inspection

services company SMIT Amandla Marine – subsidiary of 170 year old

and certification company Bureau Veritas, sees a massive growth poten-

Netherlands headquartered SMIT.

tial for the region. “We have mainly invested in Namibia, South Africa

19TH AFRICA OIL WEEK – 29 OCTOBER TO 2 NOVEMBER 2012, V&A WATERFRONT, CAPE TOWN Becoming a preferred oil and gas hub

de Villiers stated. “We have positioned ourselves as one of the most

requires more than oil and gas infrastruc-

iconic buildings in Cape Town’s renowned Waterfront area. We do

ture alone. Aspects such as financial stabil-

not only offer conference facilities, but in terms of hotel capacities

ity, legal framework, hotels, road infrastruc-

we remain linked to the various venues in the area,” he added.

ture, etc. most definitely count. In line with

This August, The Pavilion opens a second conference centre inside

this, the country has invested significantly in

the V&A Waterfront: “ this will give us access to over 4,000 square

state-of-the-art conference venues. General

meters –roughly 43,000 square feet– of flexible conference space

manager of The Pavilion Conference Centre

within walking distance of 1,500 hotel rooms, making it possible

in Cape Town, Johan de Villiers sees his four star venue playing a

to host major local or international delegations without having to

key role in uniting the international oil and gas community. “Today,

face any logistical concerns,” added de Villiers. The 19th Africa Oil

South Africa is being regarded as the ideal host for bringing every

Week –one of Africa's premier international oil and gas events– will

one together due to our iconic strategic location. We create the

take place at the Pavilion Conference Centre from 29 October to 2

opportunity for all the Sub-Saharan players to gather in one place,”

November 2012.

Johan de Villiers, general manager, The Pavillion Conference Centre

26

84

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August 2012

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www.pwc.co.za

SOUTH AFRICA REPORT

www.pwc.co.za

With PwC, With PwC, Africa has Africa has no borders no borders                    

So weĂ­ll start by getting to know you. You do the talking, weĂ­ll do the listening. What you tell us will shape how we use our network of 163,000 So weĂ­llaround start bythe getting you.connections, You do the talking, the people worldtoĂą know and their contactsweĂ­ll anddo expertise Ăą listening. What you tell us will shape how we use our network of 163,000 to help you create the value youĂ­re looking for in the Oil and Gas industry. people around the world Ăą and their connections, contacts and expertise Ăą to help you create the value youĂ­re looking for in the Oil and Gas industry.

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Š2012. PricewaterhouseCoopers (â&#x20AC;&#x153;PwCâ&#x20AC;?). All rights reserved.

(12-11382)

Š2012. PricewaterhouseCoopers (â&#x20AC;&#x153;PwCâ&#x20AC;?). All rights reserved.

(12-11382)

August 2012

27


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SOUTH AFRICA REPORT

1,200 people in South Africa alone to soar in the coming years. â&#x20AC;&#x153;By the end of 2015, we need

TRAINING AFRICAâ&#x20AC;&#x2122;S TALENT OF TOMORROW: BOOT CAMP SOUTH AFRICA?

to have around 2,500 people in Southern Africa. This implies that we will be recruiting new

Africaâ&#x20AC;&#x2122;s E&P boom is generating a stark

people, expanding in our markets, enlarging our service offering, broadening our customer

increase in demand for qualified labor, a

base, etc. In oil and gas, we will mainly target Mozambique,â&#x20AC;? concluded Xiste.

trend that is being felt by the South Africans.

and Mozambique, while we are in the process of opening up in Zambia at the end of 2012. Botswana and Zimbabwe, in turn, remain coordinated out of South Africa,â&#x20AC;? he said. Based on regional growth opportunities, Xiste expects Bureau Veritasâ&#x20AC;&#x2122; current capacity of

Organizations such as SAOGA see the opportunity for the country to train more African

Before 2000

talent on its territory. The infrastructure for

Today

training in South Africa is great. Moreover, a lot of crew changing goes through either Cape Town (offshore) or Johannesburg (for international stopovers),â&#x20AC;? said its CEO and executive director Warwick Blyth. â&#x20AC;&#x153;There is a lot of opportunity to do a lot more upstream training in South Africa. We now have 2 facilities that offer offshore survival courses in Cape Town and yet, too many people are still flying to Europe for

O&G production

O&G production O&G development projects

such training,â&#x20AC;? Blyth added. â&#x20AC;&#x153;We work very closely with SAOGA to promote and ensure the availability of local resources,â&#x20AC;? testified Alan Stothard, managing director of IQS International, a South African gem when it



  

 

 

  

         đ° ?𰠲𰠯𰠜𰠊𰠤𰠊𰠎𰠧đ°&#x20AC;  đ° Żđ° Žđ° Ľđ°&#x20AC;­đ° łđ° ´đ° Żđ° °đ°&#x20AC;  𰠳𰠼𰠲𰠜𰠊𰠣𰠼đ°&#x20AC;  đ° Ąđ° Žđ° ¤đ°&#x20AC;  đ° Šđ° Žđ° Žđ° Żđ° śđ° Ąđ° ´đ° Šđ° śđ° Ľđ°&#x20AC;  đ° łđ° Żđ° Źđ° ľđ° ´đ° Šđ° Żđ° Žđ° łđ°&#x20AC;  đ° Šđ° Žđ°&#x20AC;  đ° &#x2018;đ° &#x2C6;đ° &#x201C;đ° &#x2026;đ°&#x20AC;  𰠭𰠥𰠎𰠥𰠧𰠼𰠭𰠼𰠎𰠴đ°&#x20AC;Źđ°&#x20AC;  𰠡𰠨𰠥𰠴𰠼𰠜𰠼𰠲đ°&#x20AC;  𰠴𰠨𰠼đ°&#x20AC;  đ° Ąđ° łđ° łđ° Ľđ° ´đ°&#x20AC;Źđ°&#x20AC;  𰠰𰠲𰠯𰠤𰠾𰠣𰠴đ°&#x20AC;  đ° Żđ° ˛đ°&#x20AC;  𰠢𰠾𰠳𰠊𰠎𰠼𰠳𰠳đ°&#x20AC;  đ° łđ° Ľđ° Łđ° ´đ° Żđ° ˛đ°&#x20AC;Ž

    đ°&#x20AC;´đ°&#x20AC;šđ°&#x20AC;ľđ°&#x20AC;  đ° &#x201C;đ° ľđ° ­đ° ­đ° Šđ° ´đ°&#x20AC;  đ° &#x2019;đ° Żđ° Ąđ° ¤đ°&#x20AC;Źđ°&#x20AC;  đ° &#x201C;đ° ľđ° ­đ° ­đ° Šđ° ´đ°&#x20AC;  đ° ?𰠥𰠲𰠍đ°&#x20AC;Źđ°&#x20AC;  đ° ?𰠯𰠲𰠎𰠊𰠎𰠧𰠳𰠊𰠤𰠼đ°&#x20AC;Źđ°&#x20AC;  đ° &#x201C;𰠥𰠎𰠤𰠴𰠯𰠎đ°&#x20AC;Źđ°&#x20AC;  đ° &#x160;đ° ?đ° &#x2C6;đ° đ° &#x17D;đ° &#x17D;đ° &#x2026;đ° &#x201C;đ° &#x201A;đ° &#x2022;đ° &#x2019;đ° &#x2021; đ° &#x201D;đ° Ľđ° Źđ°&#x20AC;şđ°&#x20AC;  đ°&#x20AC;°đ°&#x20AC;ąđ°&#x20AC;ąđ°&#x20AC;  đ°&#x20AC;śđ°&#x20AC;śđ°&#x20AC;śđ°&#x20AC;  đ°&#x20AC;°đ°&#x20AC;ľđ°&#x20AC;°đ°&#x20AC;°đ°&#x20AC;  đ°&#x20AC;  đ° &#x2020;đ° Ąđ° ¸đ°&#x20AC;şđ°&#x20AC;  đ°&#x20AC;°đ°&#x20AC;ąđ°&#x20AC;ąđ°&#x20AC;  đ°&#x20AC;śđ°&#x20AC;śđ°&#x20AC;śđ°&#x20AC;  đ°&#x20AC;°đ°&#x20AC;ľđ°&#x20AC;ąđ°&#x20AC;°đ°&#x20AC;  đ° &#x2026;đ° ­đ° Ąđ° Šđ° Źđ°&#x20AC;şđ°&#x20AC;  𰠳𰠥𰠏𰠼𰠳𰠳𰠯𰠾𰠴𰠨𰠥𰠌𰠲𰠊𰠣𰠥đ° &#x20AC;𰠢𰠾𰠲𰠼𰠥𰠾𰠜𰠼𰠲𰠊𰠴𰠥𰠳đ°&#x20AC;Žđ° Łđ° Żđ°&#x20AC;Žđ° şđ° Ą đ° &#x2014;𰠡𰠡đ°&#x20AC;Žđ° ˘đ° ľđ° ˛đ° Ľđ° Ąđ° ľđ° śđ° Ľđ° ˛đ° Šđ° ´đ° Ąđ° łđ°&#x20AC;Žđ° Łđ° Żđ° ­đ°&#x20AC; 

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CarBure_OGFJ_1208 1

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SOUTH AFRICA REPORT AN ABC TO MITIGATING RISK IN EAST AFRICA – A SOUTH AFRICAN PERSPECTIVE Despite the growth hype, East Africa is not for the faint-hearted. What makes the region worth moving into? Focus Reports therefore asked the following question to a number of South Africa-based service and equipment providers: “What advice would you give to industry players entering East Dimmie de Milander, group commercial director, Starlite Group

Africa?” Dimmie de Milander, group commercial director, Starlite Group: “In Africa, everything revolves around respect. Africans are really percep-

tive of this principle. In essence, a contract is of lesser value than a handshake in Africa. This is the key difference to doing business anywhere else in the world. We can enter in multimillion dollar contracts on a handshake whereas the actual paperwork may only follow weeks later. We are now working for a Sudanese company in South Sudan, which is about the toughest political environment you can face in Africa. Yet, we still get paid and things do work. We have known these people for 10 years, have never let each other down and have always been open and honest with one another. It is all about trust and being good, rather than trying to look good.” Starlite, a homegrown South African offshore helicopter service supplier, bets highly on the up and coming East Coast – particularly Kenya, Tanzania and Mozambique as well as a number of new frontiers on the West Coast. In fact, “South Africans tend to work well under unstable African conditions with long supply lines. Our staff is more used to rougher conditions than

At SAMSA we pride ourselves on young people who want to discover SAMSA has been training young

some of the European and Western companies are,” de Milander added. Mark Tapson, general manager Southern & Sub-Saharan Africa, Emerson Process Management: “Localization is a key part of the strategy. For many of the projects, for example in Mozambique, supplies cannot just be obtained down the road. It can be an entire logistical

the Maritime Industry. Nurturing champions in the global maritime industry.

nightmare. The closer you can be to the end-user or project site, the lower the risk. Wherever we can drive localization, we therefore should definitely do so. The local people – as well as the host country as a whole – need to be involved.” Anton Botes, leader oil & gas industry, Deloitte South Africa: “At Deloitte South Africa, our strategy is to offer insight into these different countries’ political thinking. We have an oil and gas center of expertise that these companies can tap into. We actually have a set of solutions to those issues that any organization will typically face when entering, which vary according to the life cycle of the organization.” Botes further added that most of his clients seeking to understand the potential of the East Coast of Africa, face 4 groupings of issues that need to be resolved first: “understanding the country (political stability, outlook, short-term VS. long-term, opinions on beneficiation, etc.), ease of doing business (setting up an office, paying taxes, using local workforce, etc.), upstream-specific challenges (availability of service & maintenance facilities, sourcing of spare parts, etc.) and sustainability over time,” he observed.

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ferent training initiatives to get the skills of various inspection person-

A Q&A with Stanley Subramoney, deputy CEO of PricewaterhouseCoopers in South Africa

nel up to levels of international acceptance. We have done this quite

What are some of the factors that still

well and have trained over 200 individuals in various disciplines of

make investors hesitate about Africa?

welding inspection and non-destructive testing in the past two years.

One of the key factors is infrastructure and

IQS developed a training matrix and a resource development plan, in

logistics. In many parts, moving goods and

line with what the industry requires. Our focus is oriented towards the

services across the continent is still slow and

comes to inspection and quality services to the sector. â&#x20AC;&#x153;In this way,â&#x20AC;? Stothard continued â&#x20AC;&#x153;we have been involved in dif-

international acceptance of the qualification, which helps overcome certain stumbling blocks we may face, for example in the power

Stanley Subramoney, deputy CEO, PricewaterhouseCoopers

expensive. As we speak, there are a number of large scale cross-border infrastructure projects taking place, which will help

industry. We try to target training in a way that is acceptable to every-

the African countries to become more competitive.

one while - at the same time - we try to find people work.â&#x20AC;? People-intensive businesses such as classification societies and

Would you say that the governments of Africaâ&#x20AC;&#x2122;s new E&P frontier

inspection companies in particular, see no other way than training

countries â&#x20AC;&#x201C;for instance on the East Coast- are now tackling foreign

most of their experts on their own turf. Peter Hamer is the director

investment differently to ensure the creation of a sustainable local

of operations Sub-Saharan Africa for the Norway headquartered clas-

economy?

sification society DNV, and reflects on how â&#x20AC;&#x201C;from his offices in Dur-

Historically, the problem in Africa has been the fact that wealth has

ban- he coordinates African talent development to grow his business

been exported while poverty has been imported. We have used our

across the continent. â&#x20AC;&#x153;I started working with our first African DNV

mineral wealth and created infrastructure that all led to our ports, in order to export our goods. I believe that the African governments and their models have become smarter. These models now have a much stronger focus on local development, local empowerment and

www.quality.co.za Inspection and Quality Services, established in 1989 to provide professional services to Mining, Power Generation, Engineering, Manufacturing, Oil, Gas and Petrochemical Industries.

Services provided by IQS:  Project Management & Consulting        (On-site and pre-manufacture)    Â? ( 24 Hour call out)   Â?Â?      Â? Â?   Â? Â?  Monitoring Â?­    Â?Â&#x20AC; Â?­  

local procurement. There has also been a major shift with respect to what companies are now doing to protect, sustain and grow the local environment. Global companies are becoming more responsible and have become more sympathetic. I hope that the model of the future is one of partnership. Instead of only exporting wealth, I hope to see Africa importing opportunities, job creation and growth. South Africaâ&#x20AC;&#x2122;s PetroSA has shown strong ambitions to expand its footprint across Africa. How do you see the role of these African NOCs, going forward? The NOCs play a critical role across the continent. They align with government policies and have access to governmentâ&#x20AC;&#x2122;s resources. The NOCs will start to play beyond their borders and drive resources as so-called government-to-government contacts. As these companies start to move outside of their respective countries, they will pass on their value systems, grow the wealth of the country, grow partnerships, and support local procurement. This is an extract. To consult the full interview, please visit www. energy.focusreports.net

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SOUTH AFRICA REPORT

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August 2012

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SOUTH AFRICA REPORT REVAMPING SOUTH AFRICA’S MARITIME SECTOR On July 4, 2012, the South African Maritime Safety Authority

ment in the sector. “SAMSA

(SAMSA) took control over South Africa's polar research vessel

for example also launched a

from the Department of Environmental Affairs (DEA). Starting its

national

voyage with 32 cadets in Cape Town, the vessel set course for Dur-

last year, of which hundreds

ban to collect another 15. In the coming months, the SA Agulhas

have already gone to sea,” he

–now converted into a training vessel– will be sailing to Namibia,

added. “We are increasing the

Angola, Ghana, Liberia and Nigeria to collect further cadets to join

number of intakes at our mari-

the South Africans for on board training.

time universities and will soon

cadetship

program

A historic milestone, the investment is part of SAMSA’s man-

launch the National Maritime

date by the Government to develop a maritime strategy to grow

University of South Africa. On

and develop the country’s maritime economy. “At present, we

the policy side, we are also

are investing heavily in taking young people to sea,” said Tsietsi

finalizing our shipping policy and are adjusting the taxation policy

Mokhele, CEO of SAMSA. Crowned a champion of transforma-

accordingly. We are recreating South Africa as a center of excel-

tion, Mokhele has been praised for his efforts on skills develop-

lence when it comes to shipping,” Mokhele boasted.

colleague in 1999. We sent him out for two years to develop skills and

Commander Tsietsi Mokhele, chief executive officer, South African Maritime Safety Authority (SAMSA)

of 5 and is still growing,” he commented.

competences in the UK and Norway. As a result, he has been leading

Whereas DNV’s success in the Sub-Saharan

our Ghanaian operations since 2002, and the group became a team

region largely came down to the selection of the right people, local skills development has also been a key factor to reassure the company’s less confident international clients in these riskier African markets. “The clients see that DNV Africa has a pro-active way of working and a strong focus

HANDLE THE COMPLEXITY OF RISK IN AFRICA

Peter Hamer, director of operations, DNV Sub Sahara Africa

on building long-term relationships. As soon as they feel that we have control over what we do here in Africa, they see their risk profile decrease… One of our roles is to act as an example, to show that companies can operate safely.”

Deeper, higher temperature and pressure wells present significant risks to business operations and to health, safety and the environment. Managing these risks is essential for duty holders, operators and society at large. DNV has gained knowledge and experience with most types of drilling and well intervention appliances over the last 30 years. Through our classification rules, standards, recommended practices and drilling and well intervention services, we can help handle the risks associated with the complex nature of drilling and well intervention. 𰀤𰁍𰁂𰁔𰁔𰁊𰁇𰁊𰁄𰁂𰁕𰁊𰁐𰁏𰀁𰁴𰀁𰀷𰁆𰁓𰁊𰁇𰁊𰁄𰁂𰁕𰁊𰁐𰁏𰀁𰁴𰀁𰀤𰁆𰁓𰁕𰁊𰁇𰁊𰁄𰁂𰁕𰁊𰁐𰁏𰀁𰁴𰀁𰀴𰁂𰁇𰁆𰁕𰁚𰀍𰀁𰁉𰁆𰁂𰁍𰁕𰁉𰀁𰁂𰁏𰁅𰀁𰁆𰁏𰁗𰁊𰁓𰁐𰁏𰁎𰁆𰁏𰁕𰁂𰁍𰀁𰁓𰁊𰁔𰁌𰀁𰁎𰁂𰁏𰁂𰁈𰁆𰁎𰁆𰁏𰁕𰀁𰁴𰀁𰀵𰁆𰁄𰁉𰁏𰁐𰁍𰁐𰁈𰁚𰀁𰁒𰁖𰁂𰁍𰁊𰁇𰁊𰁄𰁂𰁕𰁊𰁐𰁏𰀁𰁴𰀁 𰀢𰁔𰁔𰁆𰁕𰀁𰁓𰁊𰁔𰁌𰀁𰁎𰁂𰁏𰁂𰁈𰁆𰁎𰁆𰁏𰁕𰀁𰁴𰀁𰀦𰁏𰁕𰁆𰁓𰁑𰁓𰁊𰁔𰁆𰀁𰁓𰁊𰁔𰁌𰀁𰁎𰁂𰁏𰁂𰁈𰁆𰁎𰁆𰁏𰁕

www.dnv.com

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The SA Agulhas in the Port of Cape Town

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interview with:

Minister Dipuo Peters, Department of Energy of South Africa

We do also see the Petroleum Agency South Africa (PASA) actively promoting exploration in South Africa, with examples of Project Ikhwezi in the F-O field for PetroSA and the Orange Basin Deep Water for Shell, as well as onshore potential in the Karoo despite several environmental constraints. Overall, do you see the possibility for South Africa to become a self-sufficient nation when it comes to energy? President Zuma always says he can feel it in his blood that there are hydrocarbons in this country, because we share the same geological space with Mozambique and Namibia. Gas deposits have been found in the different blocs, which have not yet been fully developed. Exploration has taken place off the coast of the Northern Cape and there is a lot of potential. What we still need to do is determine whether we will have gas-fired power plants, gas-to-liquid processes, and so on. Additionally, we are very excited by the notion of a high presence of shale gas, but are equally worried as a country about such production. This is why the Cabinet has established a task team to investigate the so-called fracking technology. As the Department of Energy, our message is that we are interested in shale gas production, but it will not help us if we have shale gas and no people. It is important for us that the technology will not devastate Mother Earth as we are its custodians for generations to come. We are also very sensitive to the ecological issues with regards to this area. It is very important for this report to address issues such as the technology used, the water usage and the protection of the environment. We have a long term trajectory for carbon reduction and we know the International Energy Agency’s (IEA) claims that we have entered the “golden age of gas,” but our excitement will remain tempered until we find more answers. These answers will either give us the green, amber or red light. If it is amber, we will cautiously approach the possibility of production and see how we can improve the existing technology with

FOCUS REPORTS

the help of our sister Department of Science and Technology. While green light will mean “Christmas”, a red light will simply mean that we will have to look for resources elsewhere. It is all about finding the balance between the environmental and developmental considerations. Development should not come at any cost.

Would you have anything to add as a closing remark? People are dying in developing countries because of a lack of energy access. There are children that cannot be given the necessary immunization because vaccines cannot be kept in fridges. There are women in labor that die because the ambulances cannot reach remote locations due to insufficient fuel supplies. As part of the PICC, we also try to identify the growth points in order to make sure that there is supporting infrastructure, which is why the issue of rail lines, pipelines, etc. becomes so important. We are entering very exciting stages of development, but we will manage to keep South Africa working. We will keep the lights on, the cars on the roads and the planes in the air. We have been speaking to other countries to enter into supply agreements for crude in particular but also for end products. We now have a diversified energy consumption policy, where we talk about solar for water, heating or lighting, and LPG for cooking and heating. In this way, we can use the little electricity for job-generating heavy industries.

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interview with:

Jay Wileman President Sub Saharan Africa GE Energy

Mr. Wileman, shortly after your appointment to regional executive in 2009, you publicly expressed your excitement around a multimillion dollar agreement for upgrading some of Sasol’s facilities. From a general perspective, can you elaborate on the relationships that GE Energy has established with flagship companies -such as Sasol- in this part of the world? Being a global company, GE deals in quite a number of different environments. Doing so, we focus on strong customers -and partners- that value technology and technological solutions to address some of their toughest problems, and Sasol certainly has been one such player that highly values our technology. Our portfolio fits very well with this company’s needs, given their production focus. We have a long standing relationship with Sasol. Said agreement had a number of objectives, from increasing production to environmental management solutions, and is a great example of the strong partnership we have. Today, we aim to build more such partnerships across the Sub Saharan continent.

Back then, you have also been quoted saying that ‘GE has a portfolio of different solutions for energy, because not every region or country is the same.’ If you would be speaking to your counterparts across the world, what sets the Sub Saharan region apart from a strategic point of view?

portfolio to support diversification with a balanced technology approach. We have one of the strongest portfolios of solutions to help our customers achieve this diversification.

Shortly after you were appointed regional executive, you stated in the press that you were on the lookout for both operational and financial partners in renewable energy. How far on track are you with these intentions today? I was very impressed by South Africa’s Integrated Resource Plan (IRP), launched by the Department of Energy in 2010. In addition to all existing and committed power plants (including 10 GW committed coal), the Policy-Adjusted (after consultation) IRP includes 9,6 GW of nuclear; 6,3 GW of coal; 17,8 GW of renewables; and 8,9 GW of other generation sources. South Africa came up with the tariff structure last year as well as the IPP tendering process. We are looking to bringing in our technology, and will continue to monitor and look for the opportunity to have partners in South Africa.

If GE CEO Jeff Immelt would ask you about GE Energy’s biggest challenge going forward in Sub Saharan Africa, what would you tell him? When we visited Kenya, South Africa and Nigeria together earlier this year, he asked me this question. My answer to him was that our first job was to build a strong team that is able to focus on serving the customer and solving his top problems with our technology. One of my pleasures as a leader in South Africa has been to build out such leadership team and make sure that we have everything set to ensure the right customer focus.

Certainly, one of the principles we follow is to deploy a diverse portfolio. Our technology portfolio for a company, country or the Sub Saharan continent is actually quite different. While South Africa has a strong focus on coal and while West Africa is blessed with oil and gas, Central Africa –for instance- will have a much stronger orientation towards hydropower. Overall, it is quite a diverse continent. Therefore, we bring in our

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interview with:

Johan de Vos Managing Director Gigajoule

Looking back at 2004-2005, Gigajoule conducted its first feasibility study for gas infrastructure in Mozambique. As a brief introduction to the readers, can you first explain what drove this initial project into an opportunity for the company? Mozambican gas was already discovered in the 1960s and was first connected to South Africa through the construction of the Sasol gas pipeline. Then, there was a specific need from the government of Mozambique to ensure that some of the gas would be used for domestic consumption. We became involved in an advisory role initially, which evolved into supporting the setting up of the Matola Gas Company later on. We started construction in July 2004 and by March 2005 we had completed 100 km of gas network that connected the first industries. Since then, we have connected more than 30 industries in Mozambique, which were converted from imported fuels to natural gas. This was the first imperative. What we then found happening in the last couple of years is quite different. We have seen several investors now moving to Mozambique.

Looking at the South African situation today, we see a shortage of energy supply and skyrocketing electricity tariffs. President Zuma has even interfered to limit Eskom’s 2012 tariff increase. How has this shaped the need for alternate supply projects? One of the lessons we will hopefully learn in the region is that we must be careful on how we manage state monopolies. If we allowed independent power producers (IPPs) to come in much quicker, we would not have faced as many troubles as we do today. If we would have allowed competition to Transnet in the pipeline sector, our fuel situation would have been different. However, I think that the National Treasury and the Department of Energy (DOE) did staggering work by launching the renewable tender process at COP17 last year. This is a mile-

FOCUS REPORTS

stone for South Africa and the success of getting that process in the country was internationally reputable. Now, they have extended the range to coal, gas and hydro initiatives. Allowing IPPs at competitive prices and starting to build power stations is the only way for South Africa to get out of its energy crisis. The key for the next years will be how quick we can get to a situation where we will actually have power. You cannot grow the economy of the country if you ask people to cut back on electricity and if you do not allow new developments. We need to take the “actual cost of not having power” into account. There are specific examples where we have lost opportunities to have gas in the country. There is an inertia within our government system that has blocked a massive amount of opportunities, such as LNG in the Western Cape for example.

Hypothetically speaking, if the moratorium on shale gas is lifted and production actually takes place in 10 to 15 years, how will this reshape the South African energy mix according to you? Our total energy mix is still coal-based, which brings a lot of environmental issues. We then have coalbed methane (CBM) in Botswana, the Kudu and Ibubhesi gas fields on the West Coasts, the Karoo etc. The Sasol project was in the region of a 2.5 to 3 TCF reserve. The latest estimate for Anadarko’s finds in Northern Mozambique, however, is 30 TCF! Such developments could have a massive impact. What happened in Mozambique over the last few years is going to change the energy landscape of Southern Africa.

How do you see this playing out against gas finds on the West Coast of South Africa? They should be concerned with the recent finds in Mozambique as their competitive landscape is changing. If they do not develop this gas, they will not be able to compete. Perhaps they have already lost the window of opportunity! Kudu has been discovered in the 1970s, why is the gas not yet flowing into a power station?

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interview with:

Mr.Luis Fernando Flores Beteta Managing Director - Sub-Saharan Africa Region MSA Africa

Can you elaborate on the historical role these operations have played within MSA globally? Historically, casualties were very common in the mining sector. In Pennsylvania, USA, where the company was founded in 1914, 3 out of 10 miners would die. In an effort to address this problem, John Thomas Ryan - MSA’s founder - convinced Thomas Alva Edison - the inventor of the light bulb - to power an enclosed electric circuit and develop the first electric Cap Lamp. This was a significant change to the coal mines in the Pittsburgh region, where many of the explosions were caused because of the use of traditional oil flame lamps. After selling its products in the USA, other mining countries entered MSA’s radar, such as Canada, South Africa and Australia, and today we reach the market of more than 140 countries in 5 continents. In South Africa, we have more than 70 years of presence, whereas South Africa officially overtook Germany as MSA’s second largest market last year. In 1940, MSA was in fact first looking to enter Australia. Due to the War however, we first opened the company in South Africa. At that time, we were the only safety company here focused on saving lives. The truth is that, today, the South African standards are very well advanced compared to the rest of the world.

The African continent remains a rough place when it comes to safety. Is there more work to be done - in terms of safety awareness - compared to other continents? The African continent has many global players, who are focused intently on applying global safety standards. Even though many African governments push for local content, they are also committed to safety for their workers. In certain cases, some companies become too focused on cost, rather than quality. In comparing an MSA product with one of our competitor’s, you may find that both products are well in line with the South African Bureau of Standards (SABS); however, our products will usually even exceed these standards.

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Are there still a lot of products of inferior quality in the market today? There are indeed. Moreover, it also happens regularly that our products are being illegally copied. In some countries, they even put our brand name on imitation products. We have very important quality controls in South Africa for the products we sell. We need to create awareness that all our products are being tested regularly, which generally is not the case for inferior quality products.

MSA also has got manufacturing facilities in South Africa. Can you elaborate on these capabilities? In South Africa, we manufacture hardhats and respirators, among other products. Our hardhats in particular have become a standard in OGP companies worldwide. Through our Logo Express department in South Africa, we have established a new in-house design team that offers branding opportunities for customers. This is much more advanced than traditional stickers which are prone to damage, and can hide any damage on the hardhat. On the technical side, we also produce an instrument here that is only used for the South African market, as well as Cap Lamps. This illustrates the technical capabilities we have here in South Africa.

What opportunities are there to further expand these facilities? We are investing further in our factory in South Africa. We believe in South Africa and even though we have already been here for more than 70 years, we plan on being here forever. Africa, as well as South Africa, is the last economic development frontier and we expect a lot of growth in both the mining and OGP segments. We also have an office in Zambia, as well as distributors in many of the 42 sub-Saharan countries. The future here is bright! We need to stay in Africa, and within our Group worldwide it has been made very clear that we need to continue growing in emerging markets, such as this part of the world is.

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Energy.FocusReports.net

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interview with:

Sean Smith Regional General Manager Honeywell

You coordinate your regional operations from South Africa. Within the region you have previously spoken of rates of growth in Angola and Nigeria of over 40%; this is very high. The same is not true of South Africa because the infrastructure is already more developed. How do you see this balance playing out between the two? South Africa is the anchor. There are also economies that are becoming very strong in Africa; these include both Nigeria and Angola. Additionally, Botswana seldom receives attention, but in fact it has had the fastest GDP per capita growth rate for 50 years worldwide and is a true African success story. In Angola and Nigeria we will be key players. If there is a refinery, we will not support the people who make the cable for that refinery; we will run it. In South Africa, however, we will still drive single-digit growth but we will never expect a 30 or 40 percent rise. We are aware that we have been here a very long time and we have had very good growth in the country, but the rate of growth will without doubt decline. Supporting the companies that are already here is the future and we already do that; they are good customers and we are good suppliers. However, our most substantial area of growth will be in mining, minerals and metals. South Africa will not be the focal point for this; we mine less gold here now than we did during the1990’s.. Growth will occur in emerging economies, for example, Zimbabwe with a platinum refinery. In the future, Africa will be a preeminent player in the area of oil and gas. There will be expansion in refining and then the lights will be turned on in the rest of Africa. The infrastructure, the power, the use of gas, the local beneficiation, providing people with clean water: that is where we believe the growth will be seen. While executing that infrastructure, you are going to meet the EPCs. South Africa cannot help Brazil, they have EPCs and lots of capability there, Africa cannot help China; they have enough engineers of their own, likewise for India and Western

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Europe. However, South Africa can certainly help the rest of Africa and the SADAC region in particular. The same technical standards, the same thought process, the same Language, etc. means that there is the capacity to perform. South Africa is the hub, but growth will come from our expansion into the rest of the continent.

This is surprising; when we talked to Energy Minister Dipuo Peters, she said that refineries in South Africa are decaying. Is this not an opportunity for Honeywell to play a role in the modernization? Neighboring countries all have double-digit growth, yet none have refining capabilities. Not only is South African consumption expected to grow, but regionally the South African refiners play a significant role. Generally speaking, refining margins are very thin now globally. The South African refiners are in a very difficult position today: a 100,000 – 180,000 barrel refinery does not have the volume to be globally competitive. Mega refineries are necessary, and their capacity has to be around 400,000 – 600,000 barrels before they are economically viable. The capital difference between these and the 100,000 – 180,000 barrel refineries is not just simply 3 times more, due to economies of scale. The planned Coega refinery will produce approximately 400,000 barrels. I am not sure that the government can afford to build such capacity alone with so many competing social and investment programs requiring support. They are looking for partners, Petronas has been mentioned, and perhaps some investors from Namibia would be interested. However, raising the money is difficult for new refineries globally. The proposed Lobito refinery in Angola, for example, cannot be built because it would be too expensive. Sonangol cannot afford it alone and does not have to build two power stations at the same time, like South Africa does.

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interview with:

Rob Otty Managing Director Norton Rose South Africa

Norton Rose, on a global level, is recognized as a leader in energy practice. On a local level, South Africa is mainly a miningbased economy. Nonetheless, can you introduce to our readers your capabilities in the energy sector in South Africa, as well as the Sub-Saharan region? We have historically had a very strong oil and gas practice, primarily based on the strengths of our Cape Town office. When the renewables stream started, and the government began talking about renewables in earnest, we recognized the market would head in this direction and we responded accordingly in terms of our skillset. To put this in context, during Bid Window 1, of the 28 preferred bidders, we represented 16. For Bid Window 2, which has just been announced, we represent 50% of preferred bidders. There is no doubt that we are the leading energy law firm in South Africa. We have been able to take our existing expertise, leverage our global capability, and provide a very interesting value proposition for our clients. We have a low cost base, international expertise, and the ability to do things that few lawyers in South Africa are able to do. I am very proud of our energy teams. They have become significant contributors to the firm.

The firm has a strong track record across South Africa. If we look at the oil and gas sector, however, there are a number of other regions booming on the African continent, notably including new areas like the East Coast, following recent gas finds in Tanzania and Mozambique. Have you seen this scenario changing the opportunities in the Sub-Saharan region if we speak about energy? I believe activities are becoming more and more focused. With what is going on in Iran at the moment, we have seen places like Mozambique and Angola enjoying a greater focus. The turmoil in the Middle East has also shifted a lot of attention

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to Africa. East Africa certainly shows an interesting trend. There have been increased opportunities in Ethiopia and Kenya. We believe these will continue. The same can be said of Cameroon. Our focus is, hence, more broad than Sub-Saharan Africa. In Nigeria, for instance, I believe there will be a boom over the next five years if the authorities can get the terror problem under control. If you look at the proposed change in legislation for the petroleum industry in Nigeria, there is set to be a flurry of M&A, funding and disputes activity. There are great opportunities for lawyers. We will continue to look at new areas in Africa to assist energy companies.

Do you see this balance enduring? I believe that our current revenue mix will remain stable for at least 18 months to 2 years. The renewables space is opening up, and will continue to open up—but the growth of the sector will probably slow over the next 5 years. However, at the same time, we are now following clients into Africa. For example, we have been appointed by a consortium looking to produce 8000 megawatts of power on the West Coast of Africa. We have been busy putting the agreements together and consulting with African governments. Our focus on energy will endure. Will we see the same massive pace in the local energy sector continuing indefinitely? I do not believe so. Nonetheless, we are tapping into new opportunities to assist international companies entering the market.

Do you feel that there are false prejudices that the international community harbors about the African market? I would not call it ‘prejudice,’ but rather a lack of understanding. Take opportunities in China, India, and Africa. New investors seem far more comfortable allocating their capital to China or India. And yet, the very issues they are concerned about in Africa—things like political instability, democracy, corruption—are rated as less risky in 13 African jurisdictions than India and China. There is a disconnect between perception and reality. Investors should not forget the returns in Africa are equal to, if not higher than, potential returns in China and India for the next 5 to 10 years.

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interview with:

Mark Flower Managing Director, South Africa Fluor

Mr. Flower, in 2008 – a year of considerable turmoil around the world – you came in as new managing director of the South African operations. How did you set your initial priorities? Fluor South Africa acts as an operating entity on behalf of Fluor’s 5 business groups worldwide. In South Africa, the most well known group in the market is probably Energy & Chemicals, previously known as Oil & Gas. However we also work on behalf of the Mining & Metals Group and the Power Group, as well as others. As we are an operating center, we work with the business groups jointly to set the priorities and strategies combined with our regional knowledge of course. Fluor has been operating in South Africa for over 50 years and has had a permanent presence in engineering and construction since 1981. Fluor Corporation itself will celebrate 100 years in business in 2012. Our operations are now well established here, and key challenges are specifically related to the projects we undertake.

As you mentioned, the Energy & Chemicals Group is the most well-known division of Fluor here. What can you highlight about Fluor’s track record in this sector? Going back to the early projects in the 1960s, Fluor has been involved in creating much of South Africa’s oil refining and fuels production capacity. We did the Caltex Refinery in the 60s, the Natref Refinery in the 60s and early 70s, and the Sasol 2 and 3 complex in the 70s and early 80s. Since the completion of the Sasol projects, we have been engaged in ongoing work for all of our Clients in the oil and gas sector. Through the course of setting up the permanent presence in 1981, we have also done work in various other industries, including Mining and Metals, Power, and others. We have also done other work for refiners and clients within the subSaharan African region, for example in Zambia, Mozambique, Angola, and Cote d’Ivoire. The work flow in these locations is

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not as continuous as in South Africa however. We also have an Operations & Maintenance unit to support small capital projects on a long-term contract basis.

At its Secunda Craft Training Center, Fluor South Africa has successfully assessed and trained over 40,000 people over the years. How significant are these capabilities? The training center is a legacy from the Sasol 2 and 3 projects. Because this was such a large project at world-scale, Fluor – as well as other participating companies – helped to create the necessary skills. Training was mostly construction craft training, including welding, boiler-making, rigging and so on. We have since continued to run the training capabilities in Secunda. This is an investment rather than a profit-center for us. Moreover, it is a social investment that creates capacity within the industry rather than within our company alone. Yet, we benefit in such a way that we have been able to justify the ongoing expenditure. We still have capacity that is not being used, and there is an open offer to the wider industry to leverage this facility more in the future. We are also supporters of the BuildSafe South Africa initiative. Alongside Sasol, and some of our competitors, we are founding members of this initiative which is driven by similar intentions. We want to create a sustainable industry of which safety and skills development are key aspects. The training center is intended also to create safety awareness and engage in skills assessments.

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interview with:

Robin Vela Chief Executive SacOil

In your own experience, what makes a successful relationship with the government as stakeholder in Sub Saharan Africa? African governments are looking for energy security, which is driven by ownership of acreage by local companies. SacOil, of course, is a South African company and will not be local in every country it moves into. The reality, however, is that very few local companies are appropriately structured. Such companies need structures that can talk to capital markets, technical expertise and one than can deliver energy security on what are ultimately sovereign assets. While local companies may be first prize for these governments, a second prize will be to work with appropriately structured African companies. SacOil is an African company operating from South Africa while being largely South African institutionally held. We are explicitly African in everything we do, which seems to ring a bell with some of these governments we have spoken to. The primary reason is that these governments seek energy security while several of them have strong relations with the South African government. Seeing a South African company coming to their shores is therefore more encouraging than not.

From a geographical perspective, SacOil maintains a strong focus on West Africa. This contrasts the recent E&P excitement around the continentâ&#x20AC;&#x2122;s East Coast. How are you looking at that region? East Africa has been very exciting lately, with discoveries in places such as Kenya, Tanzania and Uganda. However, we also need to be careful. East Africa is at the moment highly contested by the oil majors, and mainly focused on gas, which implies highly capital intensive investments and long lead times to production. We are still a small company and try to focus on so-called regional belts. The West African belt does not just include Nigeria, but also Cameroon, Ivory Coast, and maybe even Gabon. Then, there is a certain Central African basin, which also includes parts of East Africa with countries such as the DRC,

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Uganda and maybe even Kenya. If we could find something closer to home, i.e. in Southern Africa, it would certainly be good. Places such as Mozambique, Malawi, Zambia or South Africa, are interesting. At this point in time, these are the 3 regional basins we are looking at. Yet we also remain opportunistic, implying that we will still consider assets lying outside of this focus.

Speaking on behalf of SacOil, what role do you see for the company in supporting African development? It is a matter of fact that energy security can only be driven by local companies. One cannot rely on national oil companies alone for this matter. The South African government has been quite explicit in trying to encourage new entrants into the industry, that can then account for barrels in countries across the continent and bring the barrels back home in times of crisis. A real example today is the Iranian sanctions that are being imposed on South Africa. South African companies like SacOil can play a role in ensuring that the local industry keeps moving. Energy security is something that is important for the entire continent, but at the heart should be an augmentation of the efforts of national oil companies by small private companies. This is why our entrance into the industry must be encouraged by the government.

Do you have a final message to share with the international readers and investors? Africa today is what we regard as the last real frontier for oil and gas. There have been a number of recent discoveries that have indicated Africaâ&#x20AC;&#x2122;s prospects for hydrocarbons. Not only is it highly prospective, but the acquisition of these assets still occurs at marginal prices. Companies like ours must be seen as a growth vehicle for energy going forward.

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interview with:

Johan De Villiers General Manager The Pavilion Conference Centre

The Pavilion Conference Centre has been chosen to host a series of events, such as the famous Africa Economic Forum with Africa Oil Week/Africa Upstream, the PetroAfricanus Dinner, and the Annual Scramble for Africa, to name but a few. Can you elaborate on the growth path and milestones in terms of successful events that the Pavilion has been able to attract over time? In the past few years, we have been –to some extent- restricted by our size and capacity to host these events. In the last 2 years, we have been able to accommodate such restrictions by offering more lucrative options in our service portfolio. By doing so, we have positioned ourselves as one of the most iconic buildings in Cape Town’s renowned Waterfront area. We do not only offer conference facilities, but in terms of hotel capacities we remain linked to the various venues in the area. The Pavilion Conference Centre does not only organise the conference in itself, but additionally arranges the entire set up, right from the exhibitors’ needs to the actual visitors themselves. We provide security services for high profile clients, and we supply the venue with catering and accommodation services. It is an “all-in-one package”, reducing the pressure for the organising committee. They, in turn, can focus on finding new clients. Today, we are identified as the world conference maker in the Western Cape. We have now received exciting approval to expand our capacities to facilitate 1,000 delegates at a time. We are starting refurbishment in June 2012 and will be operational from the 1st of August with our new facilities. When it comes to the international community and the oil and gas sector in particular, the interest in South Africa has increased significantly. Today, South Africa is being regarded as the ideal host for bringing every together due to our iconic strategic location. We create the opportunity for all the SubSaharan players to gather in one place. We are opening a second Conference Centre inside the

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V&A Waterfront, which will give us access to over 4,000 m² of flexible conference space within walking distance of 1,500 hotel rooms, making it possible to host major local or international delegations without having to face any logistical concerns. The first phase will be completed by May, the second by August. What we do offer our delegates is a reduced green footprint, which is very important in today’s market. In terms of our catering and venues, we do provide green certification that can be offset against the conference. This is a very positive spin-off for the environment. In the oil and gas sector, it is important for the clients to be able to have a carbon neutral footprint.

What makes The Pavilion the venue of choice in Cape Town to host Oil & Gas events and exhibitions? We have a state-of-the-art building that is ideally positioned when it comes to logistics. When you are out of your comfort zone, you do not want too much hassle; you do not want to take 2 trains and 3 buses before arriving at your final destination, but a smooth flow. When you host 1,600 delegates, travel easily becomes a logistical nightmare. We position ourselves quite well with an attractive price. We find that the conference environment knows a harsh, cut-throat business mentality, in which we have to position ourselves and align our suppliers. They complement the organization. Such cooperation is invaluable in order to create a sustainable business in the future. Furthermore, by adding added value services, we have created what we call a “one-stop shop”. If a customer based abroad wants to organize a conference in South Africa, we offer the complete logistical process. We will source out the accommodation and transport to the venue, as well as any catering requirements. We take out the hassle of organizing a conference.

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interview with:

Tony Sofianos Chief Executive Officer Wings Travel Management

When it comes to branding, you changed the face of the company recently. At the ceremony in November 2010, your Head of Marketing and Communication, Cindy-Anne Passet, explained that the change from Wings Corporate Travel to Wings Travel Management reflected the company’s new focus as it moved into 2011. What did this new focus entail exactly? In the oil and gas industry, it is all about managing the travel program and engaging in travel management. This is not a traditional travel company that issues tickets from A to B, but an organization that manages the entire process. What is very important in the oil and gas industry, for instance, is managing supply contracts. Costs are very important in today’s environment and we want to make sure that our customers receive the best value for their money. One of the most critical elements we differentiate ourselves on, is ‘commuter tracking and security.’ For an oil and gas company, it is very important to know where the employees are at any point in time. Working in emerging markets, emergencies do happen. We are able to track our oil and gas clients’ commuters at any given point online on-demand. Every organization has its responsibility, but we have seen that some of our global competitors are unable to service their clients holistically. We provide this service irrespective of where our clients make their reservation.

2 months ago, you celebrated the company’s 20th birthday. With that celebration, a big announcement came along, which was Wings’ first acquisition in Brazil. What was the vision behind this big move? A number of years back, we recognized that in order to operate and be successful in the oil and gas industry, you need to get it right in the tough areas. The tough areas today are Africa, Brazil and Russia. Moreover, it is important to be present in all major regional hubs, which is why we are also opening up office in Singapore in the foreseeable future. In today’s environment of e-ticketing, one can provide an holistic end-to-end solution out of these hubs worldwide.

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You described Brazil as tough market. How different was this from your experience in Africa? There is a significant differentiation in travel patterns. Unlike in East and West Africa, the expatriate population as a percentage of the total workforce is very different. In the newer markets in Africa, this proportion is much higher. In Brazil, we found that a big chunk of the workforce is local instead. This, in turn, generates more domestic rather than international travel. From a commercial side, another challenge in Brazil is that the country hosts a very complex taxation and administrative system. However, in Brazil we remain (one of) the only organizations with a standardized platform, mirroring those other platforms we have worldwide. From a cultural perspective, we have also observed strong differences. The Brazilians are wonderful, but the culture is very different. On the flipside, the opportunities are incredible and the growth in the oil & gas industry in particular is just phenomenal. With that growth in mind, I do also believe that the expat community -as a percentage of the total population- will increase over time.

In addition to your global aspirations, you continue to have South African roots. Do you feel that Wings can be an example for other South African companies? Absolutely, although the international scene remains tough! Unlike many of our competitors that have adopted big brands here, we have chosen the route of growing our own brand globally. What we have recently done to position ourselves optimally as a global player, is to move of our corporate headquarters to London, while South Africa remains home to our administrative headquarters.

What would you say to another South African player thinking to go global? Always do your homework diligently before entering other markets.

And to a prospective client? We understand their industry very well and we can deliver value that meets their needs, both in emerging and first world environments!

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interview with:

Ayanda Mjekula Chief Executive Officer South African Supplier Development Agency (SASDA)

When our colleagues interviewed you during your tenure as Chairman of the Central Energy Fund (CEF) in 2006, you said that the South African oil and gas industry was becoming increasingly regional and that the country had become a service hub to the region and the subcontinent as a whole. At the same time, you also mentioned that the different CEF subsidiaries were increasingly pursuing the ideas of NEPAD. Compared to 2006, has South Africa progressed on this front? As far back as 2006, we were talking about a potential oil hub in the South West of the country. Developments have taken place on an ad hoc basis, rather than in an organized manner. While a lot is happening ad hoc, there could be more activity in places such as Cape Town and Saldanha Bay if it would have been better organized.

Through SASDA, you encourage black economic empowerment of suppliers to the oil and gas industry. Where does the industry stand in terms of empowerment today? In 2005, the Petroleum and Liquid Fuels Charter was concluded by the industry and the Department of Energy, stating that 25% of the industryâ&#x20AC;&#x2122;s procurement should come from BEE suppliers. The spirit of the Charter was to empower small and medium enterprises (SMEs). What has happened however, is that the industry has been using BEE companies â&#x20AC;&#x201C;by law- which are not necessarily small or medium in size. While they are compliant according to the BEE Act, this approach has negated growth of the SMEs. The current legislation which is being contemplated has a far better definition than the BEE Act and puts emphasis on the SMEs unambiguously. It talks about black-owned and black-controlled companies which would talk about 50.1% black-owned companies. This is the space the SMEs play in. Now is the chance to truly empower SMEs rather than conglomerates that happen to have

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a 25% black ownership. This is an important distinction to make. The new legislation can reshape the industry and also has an important addition in terms of localization. Together with the emphasis on SMEs, the 25% will be achieved, especially in view of the fact that there will now be consequences for non-compliance which has not been the case in the past. The emphasis in the proposed legislation is going to be on enterprise development, job creation and tangible transformation of this country.

What kind of sanctions are we talking about then? Fronting is a phenomenon where black people are registered as directors without having actual participation in the company. In some instances, they thus have no economic benefit flowing to them. Now, there is the power to call in law enforcement and take various penalties ranging from imprisonment to fines based on the turnover of the company. Anyone has the right to report what they construe to be non-compliance in terms of the proposed legislation. This did not exist before.

To what extent can SASDA also help in supporting these local companies on the international scene? SASDA plays an important role in terms of supplier development, but it all starts with opportunities in South Africa. We can develop these suppliers to the extent that they become proficient and certified so that we can export them to producing countries like Angola.

Do you have a final message to share? To manufacturers producing goods and services offshore, I can say that we can certainly facilitate the setting up of their operations in South Africa. We can develop their suppliers in their particular space. They must therefore not be deterred by talks of a lack of skills. Through SASDA, we can facilitate the development of such capabilities so that whichever company has to supply such manufacturer will become a sustainable and reliable supplier.

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interview with:

WITH ALAN STOTHARD, MANAGING DIRECTOR, IQS INTERNATIONAL

particular sector?

Mr. Stothard, you founded the company in 1989 but also mentioned that the oil and gas sector is still in its infancy at IQS. As this business is growing, does this also mean you have to reshape some of your organization’s skills and capabilities to better meet the needs of this

As far as our experience and exposure is concerned, we do all projects from an engineering capability perspective, whether it is mines, petrochemicals, etc. The work is broken down to pieces of equipment and standards & specifications. You ultimately end up with a scenario where you put a good quality management process in place to do the job. If your resources are able to have these capabilities, there is no reason why they would not be able to adapt and apply such principals to any industry… From a South African perspective, a lot of people have traveled abroad, going to places such as Kazakhstan, Dubai, UAE, Nigeria, Ghana, Angola, and so on. While this gives them great experience, there still is a shortage of talent worldwide. IQS constantly have people from India enquiring for employment. While we may well recruit such talent, chances are high that they will eventually be deployed in Ghana, Tanzania, Mozambique or Angola, simply because our sector is still very much in its infancy….

What do you now see as the key growth markets in Africa? At the moment, we have projects in Ghana, Namibia, Botswana, Mozambique and throughout South Africa. In the short term, we are still mainly looking at mining locations while the oil and gas opportunities are more looked at from a long term perspective. It takes time to develop these fields, the required infrastructure, the right connections and local resources.

are you about these developments from an oil and gas perspective? One of our senior colleagues is from Tanzania, we have discussed and recognize the potential in this region. We feel there is the need for the services IQS can provide, we will soon establish a company in this region. I am positive about such potential; however, the right people need to be brought in first. We have developed a system whereby we can roll out what we do in Johannesburg to Cape Town, Walvis Bay, etc. What we do is the same worldwide, and it is only a matter of tailoring it to comply with local rules and regulations. In certain areas, however, you need to ensure that the people that are carrying out the work, are capable of understanding the technology that is involved. Within inspection, quality management and NDT, there are very different levels of technology. Some are very basic and simple, while others are quite complex. With complexity comes cost, as well as a need for better trained resources and capabilities. As far as Mozambique and Tanzania is concerned, it is all about finding the people with those capabilities. But there is high market potential and we will make sure that we get the share that we require.

Looking at the talent shortage alone, the industry certainly has its challenges! What keeps you motivated to run the business after all these years? I enjoy what I do! To me, it has gone from earning a living to competing in a global market. Initially, all of our business was being handled from Johannesburg, while we have now become a global player. For example, we now have a joint-venture going with a specialist NDT company Singapore. We further receive enquiries from locations such as Canada, Spain, and Asia. Overall, we are seeing a lot more interest in South Africa and South African capabilities. From my perspective, it is all about the challenges and the excitement. I enjoy the fact that we are growing and that we are being recognized. .

As Warwick Blyth of SAOGA was saying, East Africa is moving and an entirely new sector is developing from scratch there. How positive 44

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interview with:

Alain Wald, EMEAI Leader, Hydratight

US and European economies have been deeply shaken by the global economic downturn, leaving emerging economies responsible for growth. To what extent does the group look at emerging economies and especially the South African market? Hydratight works in several energy sectors; mainly oil and gas, but also nuclear and wind, and despite the major uncertainty that pervades world economies, there is still massive investment in the energy field. South Africa is very much the powerhouse of Africa and Hydratight already has plans to develop its business focus both here and in West Africa.

To what extent is Hydratight South Africa able to bring the group’s full range of products and services to the market, bringing both the latest technology and resources to make a fast, strong impact on the South African market? We are already doing business in South Africa, but we can certainly raise the amount by developing a more “local” approach, rather than as an arms-length business as we are at the moment. We see potential right across our portfolio of products and services, from upstream support of oil and gas to downstream support and mining. We already have plans to introduce our latest technologies in bolting, machining

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and all our associated services - in some of which, particularly joint integrity, we are world leaders.

What are the main priorities, in terms of building up strong foundations to ensure Hydratight will grow in the long run? The main objective is to find a local person to drive sales and contacts here on the ground in South Africa. We will also look for partners to handle contacts in specific business segments. Our rental and service business will obviously need an operational base in the region to serve local clients. These sorts of services cannot be managed very successfully at a distance - the equipment needs to be where it is going also need application engineers, operational staff, field service technicians and account managers to assist clients. As a company we pride ourselves on impeccable customer service.

Hydratight sets international standards in joint integrity on a global scale. With a team of over 1,000 employees operating from 35 global locations, Hydratight has the engineering technology and expertise to offer fast, accurate solutions to your bolting and machining needs. We are the world leader in leak-free connections and pipeline integrity solutions which ensures that our customers improve their operational efficiency. Using state-of-the-art equipment, our qualified onsite technicians offer extensive monitoring, bolting, machining and training services to maximise safety, reduce plant down-time and extend facility life.

How do you see Hydratight’s position in the South Africa market in three years? The best three-year scenario would see us with a local company in South Africa able to handle 80% of our business in the region directly. We want to be recognised as South Africa’s leading company delivering leak-free, secure and reliable joints. Joints are absolutely critical to many energy market and process operations; the cost of leaks is often far greater than the cost of avoiding them, and we specialise in helping companies to avoid them. Over the

To find out more visit

hydratight.com or email solutions@hydratight.com

ENGINEERING MAINTENANCE TRAINING SERVICE

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coming years we hope to persuade South African companies that our message is the right one, and we will help local companies to maintain safer local environments and save money in the process. We will be providing our South Africa customers with innovative, safe and reliable products and services, supported by the highest level of competent personnel – basically setting a new standard by offering the best kind of example; one that has been proven around the world.

What are your final messages to our readers? Hydratight doubled its business in the past three years and we intend to do the same again in the next three years. We plan

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to do it by operating more effectively in vertical markets like oil & gas, and by developing our strategies in new and developing areas – of which South Africa is clearly one. For this we will need dedicated local people with the highest skill levels to support our South African customers, and in so doing developing our business worldwide. We have a very good feeling about the South African market and know our products and services will get a great reception from companies here, because they recognise that doing the job properly is the best way, and while it doesn’t have to cost much more than doing a job indifferently, it brings great dividends in terms of operating efficiency and bottom line cost reduction. Hydratight and South Africa are a very good fit

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Exclusive interviews More interviews available on www.pharma.focusreports.net:

Alan Winde, Minister of Finance, Economic Development & Tourism, Western Cape Government

Bonang Mohale, chairman & country GM - commercial, Shell

Brian Kennedy, group managing executive, Nedbank Capital

Cas Coovadia, managing director, The Banking Association of South Africa

Charl Mรถller, chief executive, Transnet Pipelines

Chris McCarty, sales director Sub-Sahara Africa, Baker Hughes

Commander Tsietsi Mokhele, chief executive officer, South African Maritime Safety Authority (SAMSA)

Dimmie de Milander, group commercial director, Starlite Group

Gerard Derbesy, CEO, BP Southern Africa

Gerry Klos, general manager, DCD Marine

Nosizwe Nokwe, group chief executive officer, PetroSA

Paul Maclons, managing director, SMIT Amandla Marine

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August 2012

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Peter Hamer, director of operations, DNV Sub Sahara Africa

Raoul Jacquand, Sub Saharan Africa geomarket director, CGGVeritas

Rob Jeffrey, managing director and senior economist, Econometrix

Rob MacKenzie, managing director, Endress+Hauser

Chris Sparg, managing director Dormac

Salvo Cutino, divisional director offshore, Dormac

Steve Harley, president, DHL Energy Sector

Tau Morwe, chief executive, Transnet National Ports Authority (TNPA)

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Oil and Gas South Africa report 2012