Oil and gas to fuel growth on the West Coast
JOHANNESBURG - The oil and gas sector is the fastest growing in South Africa, and a slew of recent announcements show that the vision for the Saldanha Bay is already bearing fruit.
A month ago, it was announced that Royal Bafokeng Holdings is involved in two oil and gas projects in Saldanha Bay that could total an outlay of more than R4 billion.
Phase 1 of the Sunrise Energy liquid petroleum gas import facility terminal, costing R1 billion, was officially launched in August this year. According to CEO Pieter Coetzee the next two phases would cost R200 million each, while a road-to-rail facility would be around R50 million. Royal Bafokeng CEO Albertinah Kekana said Sunrise Energy’s LPG import and storage terminal was the largest in Africa.
Royal Bafokeng’s second Saldanha project is a R2.6 billion oil tanking venture, already under construction and due for completion by 2019. Kekana said: “When completed, it will be the only dedicated oil blending and storage facility in Africa.”
Wesgro recently announced that the oil and gas sector of the Western Cape economy had sustained 7 120 direct jobs, and 6 120 indirect jobs in the province as of 2015 and added R1.5 billion to the provincial economy in 2015.
MEC for Economic Opportunities Alan Winde noted that Saldanha Bay was at the heart of this success and is currently servicing 82% of the market in South Africa, its proximity to the Angolan and other oil fields being a factor in its favour.
Mozambique’s oil fields provide further potential. Laura Peinke, Executive: Business Development and Saldanha Bay Special Development Zone noted that “A recent report by Wood Mackenzie reported that more than 15 major upstream projects have reached final investment decision stage in 2017 to date, one of which is the Coral FLNG project by ENI in Mozambique.”
Niall Kramer, Chief Executive Director of the South African Oil and Gas Alliance (SAOGA) said, they were meeting with at least two international investors on a monthly basis while Winde confirmed that SAOGA and the Saldanha Bay Industrial Development Zone (IDZ) were hosting more than four interested delegations a quarter. “Most recently, a French delegation of maritime companies met with local companies to explore partnership opportunities and areas of growth in projects such as port infrastructure and specialist fabrication,” he said.
Saldanha has of course long attracted a variety of businesses, with the oil and gas players the latest to take advantage of being located in a port larger than those of Durban, Cape Town, Richard’s Bay and Port Elizabeth combined.
Leading compressor and generator hire company, Rand-Air recently opened a branch in the IDZ, and with Saldanha Bay the only dedicated iron ore export facility in South Africa, the Sishen/Kolomela-Saldanha iron ore export channel sees trains pulling 342 wagons of iron ore arriving every nine hours. The ore is loaded onto ships waiting at the ore quay or stockpiled at ArcelorMittal.
Wesgro estimates that the Saldanha Bay IDZ has the potential to contribute 86% to the gross geographic product (GGP) of the Western Cape, creating around 12 000 new jobs.
Last year, Standing Committee Chairperson on Econ Development, Tourism & Agriculture Beverley Schäfer said, “The development of the SB IDZ forecasts R53.4bn cumulative contribution to the WC GGP by the end of 2020, with an approx. R8.2bn in cumulative taxes back to the national fiscus.”
The impact on the area is already being felt, with property prices and rental demand in the area soaring. According to Lew Geffen Sotheby's International Realty, house sales between 2013 and 2016 “showed an increase of nearly 300% (291.92%) in Saldanha alone”. And positive effects are expected to be experienced in neighbouring towns too, for example the popular holiday town of Langebaan, 30km from Saldanha.
Says Dries Venter, Langebaan Ward Councilor: “The development of the IDZ in Saldanha will have a direct impact on Langebaan by inter alia stimulating housing demand and positively impacting on the tourism and leisure sectors. Increases in possibly higher guesthouse occupancies and support for restaurants and retail will result in balancing out economic activity all year round. Businesses will no longer be reliant on the festive season, Easter and school holidays. This will all have a positive multiplier effect on job creation and the growth of Langebaan, which will hopefully attract further services to support the growing population.”
Langebaan is well equipped to serve the expected boom, with facilities such as the 18-Hole Gary Player Design’s Black Knight golf course and a host of other facilities offered at the Langebaan Country Estate.
“The IDZ in Saldanha has already impacted businesses in Langebaan – we’ve seen a definite increase in accommodation, conferencing and leisure interest from businesses there, and are enjoying introducing our new neighbours to our beautiful corner of the West Coast,” says Kate Richardson, Langebaan Country Estate Marketing Manager. “It’s not surprising really, we have a great offering here and we’re just half an hour from Saldanha. Once the IDZ is at full capacity, the spin offs for Langebaan will provide even more business and thus job opportunities for the whole area. It’s a very exciting time.”
- BUSINESS REPORT ONLINE