Last month Business Day reported that the South African Oil and Gas Alliance (SAOGA) reckoned the Western Cape was well positioned to become a top services hub for the African oil sector on the back of accelerated growth in Africa’s oil-exporting economies.

It pointed out that the International Monetary Fund has forecast that growth in Africa’s oil-exporting countries such as Nigeria and Angola will surge to about 7% this year due to the rising oil price. SAOGA believed maintenance and repair services to oil and gas rigs also presents a big opportunity for the Western Cape.

The Western Cape government – in conjunction with business promotion agency Wesgro and the Department of Trade and Industry – is already exploring the viability of an Industrial Development Zone (IDZ) at Saldanha Bay. One of the central nodes of the IDZ would be setting up Saldanha Bay – which already undertakes existing repair work on an ad hoc basis – as a base for servicing the Oil and Gas Cluster and a Maritime Ship Building and Repair Cluster.

The IDZ feasibility study concurs with SAOGA’s bullish pronouncements around oil and gas industry activity in Africa. The feasibility document noted a ‘clear evidence’ of an increased demand globally for ship repair services with the global ship repair market demand forecasted growth at a compound annual growth rate of 3.1% from 2010 to 2015.

The document added that while this growth rate might seem marginal, the global ship repair industry generated large amounts of direct and indirect revenue. “Therefore a small increase in growth can have significant impact.”

The document point-ed out that industry participants had indicated that it would cost a shipping company between $2 million and $3 million for seven days work on a 50 000 dry weight ton (dwt) vessel in Cape Town. This means considerable spin offs for second and third tier suppliers.

The IDZ feasibility study document also argued that the private sector was geared to fund and develop infrastructure developments at Saldanha Bay.

This included the upgrade of repair quays, creation of a new repair quay, and a dry dock for repair, conversion and fabrication of vessels.

The document indicated presentations to and negotiations with government stakeholders were well under way, and added enticingly “there is a very real possibility of going ahead within the next five years”.