October 2009 Newsletter

Two things come foremost to mind as I reflect on the past month.  Firstly, we have been busy with business planning.   At one level this is the annual cycle of creating budgets and setting targets that underpin our contract with our funders.   In another sense though it is a moment to reflect on the opportunities for our industry and figure out how we are going to play a role in helping our member companies to unlock them.   While we undoubtedly face challenges in establishing our place in the global oil and gas market I have been struck by the opportunities that are on offer.  Some big ones come to mind:  massive West African procurement spend (out of ~$350m per day of oil revenue) on all manner of goods and services that can be competitively supplied from South Africa, a large marine repair & maintenance opportunity situated around our “best in the region” ports,  a huge PetroSA refinery project in the pipeline ($4bn+ of SA spend), opportunities to follow PetroSA and Sasol as they expand abroad, opening up the Orange River basin opportunity on our northwest coast and our suitability as a “base” for global players operating in the region (cheaper and easier to locate here than further north).  Our role is to help SA companies access these opportunities (and others not listed) and our business plan  targets 3 specific areas to help position our industry favourably: marketing and promoting local industry in the global market, building up the capability of our industry to compete globally and developing skills for the industry.  While these broad areas are fairly clear, there is still work to be done to focus our activities. I want to spend significant effort over the next few months consulting with industry to understand what we can do that will have a real positive impact. These insights will become the foundation of our longer term business plan which will be compiled in the first quarter of next year.
 
The other issue which has loomed large in the past couple of weeks is the challenge we face in delivering  a world-class marine repair and maintenance proposition.  We have the facilities, the capabilities and the location to be a major player in servicing the rigs and other vessels engaged in the offshore oil and gas business, not only in west Africa but potentially further afield.   However, we do face challenges in working together with the National Ports Authority (TNPA) to ensure that things run smoothly and that the necessary infrastructure is there and working.  The positives and negatives of this have been evident recently with the Chevron Escravos LPG FSO which is currently in the Cape Town harbor undergoing major life-extension work.   I consider this an extremely important trial project for Cape Town and have been quite involved in trying to ensure that the project stays on track.  One of my key observations is that we, as an industry, need to learn to work more effectively with TNPA (who in no small way are a key part of our industry) to ensure that clients get the best possible service.  While there are undoubtedly service delivery issues in the port it is also becoming clear to me that many in industry don’t always act in the best of faith when it comes to things like vacating quays or dry-docks as promised – and this creates a vicious cycle of mistrust that hurts us all.  We need to break the “us and them” cycle with TNPA and work collectively to address issues in the ports and I am looking to have SAOGA play a facilitating role in bringing this about.  I know this is an ambitious undertaking which needs to involve the industry players in the port and the TNPA but we have to do it if we are to offer an attractive proposition to the likes of Chevron and provide a strong basis for growing this business.  Stay tuned for more specifics.
 
To end I would like to make a quick plug for two things. The SAOGA AGM is on November 18 and I’d like to encourage you to come. Aside from the usual AGM stuff I’d like to present and discuss some more of our thoughts on the way forward – questions and feedback will be most welcome.  Secondly, the South African Oil & Gas Directory is now online at www.oilandgassa.com. The project is still in its infancy but I see this site as becoming a centerpiece of our marketing efforts for the local industry and would encourage you all to ensure that you are listed with the right information – SAOGA members get a basic listing as part of the membership fee.