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SA must position itself to be top supplier of oil, gas skills

1st August 2014

By: Creamer Media Reporter

  

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By: Guy Lundy

The oil and gas industry in Africa is experiencing unprecedented growth, especially on the East Coast, where recent gas discoveries are transforming local economies in countries like Mozambique and Tanzania. South Africa is ideally positioned to become a major hub in the booming oil and gas sector on the continent, but there is a huge global shortage of skills in the industry, especially at middle management and executive levels.

If South Africa is able to rise to this challenge and do the necessary work to increase the required levels of skills through development and training, the country could be well on its way to building a full-blown hub for the oil and gas sector on our continent. But this will take a concerted and joint effort by training institutions, private companies and government.

Africa now contributes around 11% of the global supply of crude oil and 6% of the world’s gas. According to a report by PwC on current developments in the sector, released in June last year, Africa is the ‘last true oil and gas frontier’, with more than 4 200 oil and gas blocks identified on the continent.

While much of the onshore and offshore exploration has for the last 20 years focused on West Africa – mainly Nigeria and Angola, but also Gabon, Equatorial Guinea and Ghana – significant activity has taken place on the East Coast over the last few years. Tanzania and Mozambique are experiencing rapid growth as a result of major gas finds, and oil exploration is taking place in Kenya, Uganda, Sudan, South Sudan and Malawi. Mozambique has been described as “one of the most important natu- ral gasfields discovered in the last ten years” by one of the oil and gas companies currently drilling exploratory wells off the country’s coast.

In South Africa, some of the world’s top oil and gas multinationals have been bidding for licences to explore gasfields north-west of Saldanha, off northern KwaZulu-Natal and south-east of Mossel Bay, as well as shale gas reserves in the Karoo.

Given the country’s geographic location, South Africa – and especially Cape Town – is in an ideal position to develop into a world-class hub to provide expertise and services for oil and gas projects in Africa on both the West Coast and the East Coast. South Africa can provide First World facilities for the industry, many of whose top executives would prefer the lifestyle choice provided by Cape Town to, say, Luanda or Port Harcourt.

The South African Oil and Gas Alliance (Saoga) is based in Cape Town and aims to drive the growth of the industry in sub-Saharan Africa through skills development, local know- ledge, geographic location and maximising government, institutional and private business resources. Also forming part of this envisaged hub is the Saldanha Industrial Development Zone, which has been designated a marine oil and gas services complex to provide services for the estimated 120 oil rigs that currently pass through South African waters.

The severe shortage of skills – estimated at 15% worldwide for the oil and gas industry – is likely to remain an issue for some years to come. In the 30- to 40-year-old age range, from which most senior management and executive leaders in most industries are usually drawn, there is a dearth of suitably qualified candidates. This is primarily the result of plummeting oil prices in the 1980s and 1990s, which saw fewer young people obtaining industry-relevant qualifications.

Odgers Berndtson is conducting a global executive search for the four most senior positions for a foreign gas exploration company active off South Africa’s coast. The average age of those the firm has interviewed is in the late 50s, with the oldest aged 66. Compounding the problem is that senior executives and managers in the industry must have specific technical skills and experience, which cannot be easily transferred from other industries. A civil engineer cannot simply be plucked from building bridges or dams and placed on an oil rig to drill wells.

We are finding that the skills required for more junior positions are now starting to come through, especially from countries like India, where there is a strong focus on engineering training. We urgently need similar investment in skills development and training in South Africa.

What can South Africa do to seize this opportunity? While local universities produce excellent geologists and engineers, we also need to encourage the training of other relevant professionals, such as accountants, lawyers and tax specialists, who understand the oil and gas industry. More specifically, universities should take the opportunity to offer more industry- related courses and attract students from all over Africa, companies active in the sector need to focus on mentorship to facilitate the upskilling of young people, and government has a crucial role to play in opening up South Africa to foreign skills – companies should be incentivised to facilitate the entry of skilled foreign managers, who can ensure the transfer of skills to local employees.

Working together, there is no reason why we cannot form an attractive centre for this burgeoning industry, which, we believe, will bring immeasurable economic benefits to South Africa.

 

Lundy is a principal at global executive search firm Odgers Berndtson, focusing on the oil and gas sector.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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