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South Africa and Region Arena Subsea Valley – market information Andre Kruger, Senior Market Advisor Innovation Norway South Africa www.innovationnorway.no Opportunities in the Oil & Gas Industry – South Africa and Region Regional perspective Domestic upstream activity is at an early stage but there are current exploration prospects in 4 regions 20 companies were allocated 36 permits/ rights/ applications Orange River Basin • Kudu gas discovery in Namibia (Tullow) • Ibhubesi gas discovery (Forest, Sunbird, Petro SA) 200m WD • Active DW/SW exploration for gas & oil targets (BHP, PetroSA, Cairn India, Anadarko). Bredadorp Basin • Mossgas Synfuel Refinery • Current production nearing end of life (PetroSA ) • PetroSA FO Field development started recently ($1bn) • Block 11B/12B exploration area – large oil potential (Total and Canadian Natural Resources) Exploration Drilling Tugela Basin • Immature exploration play • 4 wells – indication of oil system Shale Gas • Potential energy game changer for South Africa • Potentially 8th largest global shale reserves: 390 tcf www.innovationnorway.no Economic growth in Africa is projected at around 6 % pa. This growth is strongly driven by developments in oil and gas producing countries. Currently more than 40 countries on the continent are in various stages of oil and gas exploration or production. Cape Town, in the Western Cape region of South Africa is strategically situated to service the activity along the West Coast of Africa as well as the fast developing activity on the East Coast, with special reference to the Mozambique Channel. The Port of Durban is in close proximity to Mozambique and East Coast. South Africa , as the major economy in the Region, offers a more favourable business climate than most of its African peers. South Africa has the industrial capacity to provide repair, maintenance and engineering services to the industry. Exploration/ major global oil field service companies/ logistic companies have already set up Regional Offices in South Africa www.innovationnorway.no Value Proposition Africa, and particularly Southern Africa will realize significant opportunities across the oil and gas value chain as the industry develops towards its potential. South Africa is the gateway economy for the region and offers a suitable base for extended operations along the west and east coasts. The country offers: - A range of service providers - A mature and industrial economy - Outsourced fabrication, local agents and Joint Venture partners. Subsea structures being manufactured locally for Ghana - Good logistics and connections to the region - An excellent location for locating and recruiting staff. - Established, upstream service centre in Cape Town. Emerging oil & gas zone in Saldanha Bay, close to Cape Town, on the West Coast, focused on repair, maintenance and supply/ logistics activities. This area will also be a Freezone. Conclusion The opportunity for Norwegian companies would be to use South Africa as a base and service hub in Sub Sahara Africa in order to benefit from the increased exploration activity in South Africa and the growing industry along the West and East Coasts of Africa. www.innovationnorway.no Saldanha Bay Supply Base under development – Artist Impression www.innovationnorway.no From a Regional perspective • As in other markets, the oil price lead to a far reaching response in Africa. Capital budgets were cut, frontier exploration activity went down drastically • Many of the significant frontier plays lie on the continent • African Governments such as Mozambique (LNG Decree Law), Kenya, Tanzania and South Africa are reviewing legislation in order to making it more investor friendly • 76% of oil production coming from Nigeria/ Algeria Egypt and Angola in 2014 90% of gas production coming from Nigeria/ Libya/ Algeria and Egypt in 2014, but industry is poised for major growth when East Coast comes on stream • Natural gas expected to make a change to African landscape with planned investments in LNG trains in Nigeria, Mozambique and Tanzania • Companies are dealing with African challenges such as lack of infrastructure, local content and skills shortages which are African realities, BUT uncertain legislation can be a show stopper • Improved efficiencies, dealing with local content and skills development are key drivers for companies to realise growth www.innovationnorway.no East and West Coast • Mozambique Legislation has progressed for large scale LNG projects. Anadarko and ENI will reach final investment decision soon. Target for first gas- 2020 4 LNG trains to be completed by 2020 • Tanzania Major discoveries by Statoil/ Opher Energy and BG Group/ Exxon Mobil Onshore LNG plant proposal First gas expected 2020- 2025 • Uganda Substantial oil discoveries. Believe to have largest onland oil reserves in Sub Sahara Tullow is the major player Progress to commercial production has been slow due to political and regulatory issues • Kenya Tullow found oil reserves onland in Turkana basin. Production by late 2015/ 2016 Oil Bill was passed Pipeline to the coast for export is under discussion www.innovationnorway.no • Nigeria Second largest oil reserves on continent Exploration in deep and ultra deep offshore areas Conflict and infrastructure difficulties • Angola Main areas of exploration are in deep and ultra deep blocks 2009- 2013 production stagnated due to technical issues related to water injection systems, gas cooling and FPSO’s Outlook for production is positive. 10 projects scheduled to start production by 20171.2 mbd over next 4/5 years • Ghana Jubilee Field: largest find offshore West Coast last decade. Tullow major player with Anadarko and Kosmos Number of other projects starting production in 2016 (Tullow) Other discoveries in exploration/ appraisal phase – high future potential www.innovationnorway.no www.innovationnorway.no www.innovationnorway.no www.innovationnorway.no