January 2011 Newsletter

It's been a little too long since I last penned an entry for our newsletter and I offer my apologies for the missed issues. Aside from a badly-needed long summer break over the holidays the past few months have been very busy on account of a number of things which I shall touch on in this letter.

I read some recent research that suggested managers should have at least 3 years in a job before being rotated or promoted into another one. This is considered the minimum time for a person to understand the role, make some significant decisions to advance the cause and then experience at least the first wave of consequences from those decisions thus giving the vital feedback that creates real learning. With 18 months down my transition to setting new directions is well underway.  I set out a lot of my thinking in a Green Paper  just before Christmas and subsequent discussions with the Board and other stakeholders have sharpened the focus of what SAOGA will concentrate on.  In summary:

• We need to focus on the opportunity to grow dramatically the repair, maintenance and upgrade services for upstream marine vessels (i.e. rigs, barges, FPSOs etc) operating in the region. Much of our skills development and training activity will focus on this sector;

• We need to heed our members request that we provide them with more tangible market opportunities - to do this we will increase both our efforts to raise the global profile of the South African industry and work to secure specific opportunities for individual companies through more focused company matching efforts;
• We need to change the way we work with industry to be more industry driven.  We will look to form a "Cluster Leadership Team" to oversee the repair, maintenance and upgrade hub. This industry group will identify and set the priorities and will initiate projects to tackle them - these in turn will be run by industry task teams. SAOGA will play a role in supporting and coordinating but the primary priorities and efforts will be industry working for industry;

• We will continue to support efforts to inform public policy, attract upstream companies into the country and initiate new clusters but will look where possible to others to drive these efforts e.g. Wesgro/DTI TISA will assume primary responsibility for investment promotion and trade missions;

• Finally, we intend to pursue a longer term collaboration with Marintek or similar partner to provide strategic support for the development of the sector - specifically the engagement will look at new market/value-chain  opportunities for SA-based industry and collaborative initiatives to improve the competitiveness of our repair, maintenance and upgrade hub;

SAOGA has moved! At the end of January SAOGA moved from the offices we have occupied in the ABSA building to 4 Loop Street.   The new offices are far better suited to carrying out our mission. In particular we have a boardroom and a couple of smaller meeting rooms that can be used for industry roundtables and other events and we have a number of hot desks that can be used  by out of town members or potential investors and clients for the industry. Please let me know if you'd be interested in making use of facilities.  Also if you're in the area feel free to drop by and say hello!

The outlook for the industry as a whole continues to be very positive. In the past few months the outstanding exploration licenses have been issued for the Orange River Basin blocks and the various operators are pushing ahead with their plans.  It seems very likely that at least one rig will be active in the area from 2012.  Forest's Ibubhesi project appears to be making progress since their recent public announcements that they intend to proceed with a concept that includes a gas power generation station near where the gas comes onshore.  I am told that the latest government energy supply plan incorporates 9GW  of electricity produced from natural gas - this is a substantial increase on past plans and should provide a big boost to efforts to develop our local gas supplies. An important component of that new supply will potentially come from shale gas deposits in the Karoo. Shell has recently announced, not without controversy it must be said, their intention to proceed into an exploration phase for this resource.  Personally, based on my long experience of the company I believe Shell will responsibly address the various environmental concerns before proceeding - the recent events in the Gulf of Mexico in any case provide strong incentives for operators to pay attention to the HSE issues and Shell is already one of the very best in this arena.  Meanwhile the exploration successes in the region continue apace. I believe there were 2 new gas discoveries along the Tanzania/Mozambique border announced last week bring the total discoveries in that area in the past year to 5 or 6.  Clearly this is going to be a future growth area and it is good for SA because we are well positioned to be the hub between the east and west of Africa. 

Closer to home we are waiting on some critical decisions from TNPA. The dry dock concessioning process in Cape Town seems to be progressing and a soon-expected decision on land availability in Saldanha Bay promises to spark the beginnings of a substantial oil and gas supply base in the Western Cape. 

To end I'd like to draw your attention to a few things:

• The next  Networking Breakfast is scheduled for 31 March; speaker is still to be determined but mark the date;

• We have for a while been examining ways to improve market intelligence to members. GBI, one of a number of global data services in the industry, has offered to host a demo conference call session of their offerings and I have suggested we make the offer to our members to come and attend a session at our offices to see what is available and perhaps discuss how SAOGA could facilitate access to such information. We will shortly send out an announcement about this and I encourage those who are interested to respond - I certainly think it could be useful and interesting;

• The AGI Ghana Oil & Gas Show is coming up in October and there are currently opportunities for companies to take stand space to exhibit here.  I expect that beyond exhibiting there will also be a fairly structured opportunity to set up meetings with potential buyers in Ghana.  There should also be another email on this topic soon but if you are interested please let us know.

• Somewhat belatedly I have completed the trip report from our UK/Norway visit in October last year.  It has been written in a journal style with reasonable records of each meeting. My hope is that this will allow the full membership to benefit from the trip - you can download the report at http://www.saoga.org.za/content/saoga-uknorway-trip-october-2010

• We also took a Board decision recently to make our quarterly status updates available as part of a drive to improve communications. These are reports we submit to our funders at the end of each calendar quarter detailing the current state of finances, output in terms of the targets set and a management commentary on the quarter which I put quite a bit of effort into because in the long run this will be the historical record of SAOGA. You can find these at http://www.saoga.org.za/reporttable