South Africa’s western offshore attracts operators

October 21, 2014

Map of petroleum licenses, PSA west coast

Oil and gas exploration has turned many areas of Sub-Saharan Africa into economic hotspots, and operators are now looking at South Africa’s western coast.

Planned infrastructure improvements may improve exploration logistics, but uncertainty about changes to petroleum regulations may hamper development.

Foreign operators with stakes in licenses off the west coast include: Cairn India (Block 1); Sunbird Energy (Block 2A); Thombo Petroleum Ltd. and Afren plc (Block 2B); BHP Billiton Petroleum Ltd. and Global Offshore Oil Exploration SA Pty Ltd. (Block 3B/4B); and Anadarko Petroleum Corp. (Block 5/6/7).

In west coast deep water, licensees include: Shell South Africa Upstream BV, OK Energy Ltd., and New African Global Energy (New AGE).

According to the government's Petroleum Agency, which promotes and regulates exploration for onshore and offshore oil and gas resources, Spectrum has completed a 10466 line km 2D multi-client survey over the deepwater areas of the Orange basin with tie-ins to wells on the shelf.

The agency also maintains the national petroleum exploration and production database, and provided the map at right.

PetroSA

South Africa's national oil company, PetroSA, released its 2014 annual report 21 October.

Interim Chairman Sizwe W Mncwango said the PetroSA Board decided "to gradually reduce PetroSA’s international focus and expenditure to enable the business to intensify focus on achieving a leadership position in the South African markets... [and] will continue to refine this focus in the coming years in an effort to achieve our bold aspiration of attaining at least a 25% share of the South African market by the year 2020."

PetroSA expects to drill a well on Block 1 with Cairn India in 2015-2016, saying "Any gas discovered could potentially support or benefit from infrastructure developments likely to be established on the West Coast, emanating from activities from the development of the Ibhubesi gas field in Block 2A.

"Oil discoveries would likely be developed through FPSO solutions, similar to what has been used for our Oribi/Oryx field development."

The annual report also highlighted the results of the one-year Technical Cooperation Permit (TCP) for Block 3A/4A (offshore Orange basin) that PetroSA signed with Sasol Petroleum International in June 2013. PetroSA says both companies contributed equally and identified two two hydrocarbon plays in the block: Albian fluvial gas and syn-rift graben plays. The partnership has started the 7-12-month process of converting the TCP ino a 3-year ER, and then plans to acquire new 2D seismic and perhaps other data. Sasol and PetroSA have equal equity shares in the block.

Regulation

In anticipation of increasing petroleum activity, South African legislators are talking about splitting the laws that now jointly govern both mining activities and the oil & gas industry.

Parliament passed Amendments to the Mineral and Petroleum Resources Development Act (MPRDA) in February that would allow the state to hold a free 20% stake in all energy projects. It was also approved by the National Council of Provinces, but has not been signed by the President. Bloomberg reported that ExxonMobil, Anadarko Petroleum, and Total objected to the amended MPRDA on the grounds that it was too vague.

In July, Independent Online reported that Mineral Resources Minister Ngoako Ramatlhodi said “It might make a lot of sense to split the provisions for oil and gas from those regulating mining, because the industries are at different stages of development.”

Jacques Botha, chief economist at Afriforesight, said “The oil and gas industries are new in South Africa, and will present a fresh start for the country to follow global best practice.”

On 19 September, Engineering News reported that Minister Ramatlhodi said he had met with President Zuma and was “certain that the President will make an announcement on it in the next few weeks.”

Until the amended MPRDA is enacted, the legislative and fiscal uncertainty will no doubt delay exploration and development investment decisions.

Training

South Africa's CPUT Survival Centre helicopter escape trainingThere are three universities in Cape Town, all with programs to develop skill sets for the oil & gas industry. The University of the Western Cape (UWC) offers structured Masters Programs in Petroleum Geoscience and Mineral Exploration Geology.

The Cape Peninsula University of Technology (CPUT) offers a range of standard engineering curricula, including Maritime Studies and Maritime Engineering. CPUT also hosts a Survival Centre on its Granger Bay campus, next to the V&A Waterfront and Table Bay Harbor. The Survival Centre is a member of the International Association for Safety and Survival Training (IASST). CPUT provides training to all maritime rescue services, and all courses are accredited by the South African Maritime Safety Authority (SAMSA) via the International Maritime Organisation (IMO). 

The University of Cape Town (UCT) offers BS, MS, and Postgraduate Diplomas in a full range of engineering and science disciplines, including geology and oceanography. UCT also offers professional development courses, including a 30-day course on South African Oil and Gas Law and Policy, this past July, which covered upstream licensing, contracts, environmental management, and the laws and regulations for downstream operations.

Image at right: South Africa's CPUT Survival Centre helicopter escape training

Saldanha Bay IDZ

NASA image of Saldanha Bay, RSA

The Port of Saldanha Bay in the Western Cape Province is South Africa’s largest natural harbor, about 105km (65mi.) north-west of Cape Town. It’s been targeted as an ideal location to develop an oil and gas and marine repair hub, providing service, maintenance, fabrication, and supplies. The area is strategically located between oil and gas developments on the west coast of Africa and the recent gas finds on the east coast of Africa.

RSA President Jacob Zuma launched the Saldanha Bay Industrial Development Zone (IDZ) on 31 October 2013. "Our objective is to develop the Saldanha-Northern Cape linked region in an integrated manner through rail and port expansion as well as back-of-port industrial capacity," Zuma said.

"Our strategy is also aimed at strengthening the maritime support capacity to create economic opportunities from the gas and oil mining activities along the African west coast, as well as the expansion of iron ore mining production and beneficiation in the Northern Cape."

Before the launch, Trade and Industry Minister Rob Davies said that a feasibility study had suggested that the Saldanha Bay IDZ could potentially contribute 86% to the gross geographic product of the Western Cape and create as many as 12,000 new jobs. "Additionally, the Saldanha Bay IDZ is likely to attract foreign direct investment worth approximately R9.3-billion over 25 years," Davies said.

Photo at right: NASA image of Saldanha Bay, RSA

Photo below: Semisubmersible drilling rig at pier in Saldanha Bay. Photo from AngloAmerican plc.

Semisub at pier in Saldanha Bay, RSA; image from AngloAmerican

Crude oil terminal

In September 2013, German company Oiltanking GmbH entered a joint venture with several South African companies to build a commercial crude oil storage and blending terminal at the port of Saldanha. The terminal is planned to include 12 1.1MM bbl concrete tanks with a total capacity of 13.2MM bbl. Oiltanking said the new crude oil terminal in the Port of Saldanha Bay would be built as state-of-the-art facility in accordance with the highest technical, operational and environmental standards. The existing jetty can handle vessels up to very large crude carrier (VLCC) size.

The company said that Saldanha was an excellent location for a crude oil hub, "as it is close to strategic tanker routes from key oil-producing regions to major oil-consuming markets." Ideally situated for the blending of west African and South American crude oils, Saldanha "has the potential to establish itself as a global crude transhipment hub focused on certain established trade routes."

The joint venture, Oiltanking MOGS Saldanha (OTMS), received an environmental permit to build and operate the terminal in April 2014. The company said that the receipt of the Environmental Authorization is a major milestone in the project and brings to conclusion a phase that lasted more than two years.

The Environmental Impact Assessment required eight studies by independent experts. OTMS decided to also conduct a marine oil pollution control study “to ensure that any and all of its environmental risks are adequately understood and addressed.”

Related OE news, west coast of South Africa:

Sunbird secures funding for Ibhubesi, 7 October 2014

Sunbird final scoping for Ibhubesi gas project, 27 August 2014 [Block 2A]

Cairn evaluating Block 1, RSA's Orange basin, 24 April 2014

Sunbird awards contract off South Africa, 13 September 2013 [Ibhubesi gas project]

Sasoil, PetroSA to explore Orange basin, 21 June 2013 [Blocks 3A/4A]



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