Tenders are being prepared for two major oil-services infrastructure projects, collectively valued at around R10-billion, for the deep-water Port of Saldanha, on South Africa’s west coast.

The developments are being packaged as build, own, operate and transfer concessions and are being marketed jointly by the newly established Saldanha Bay Industrial Development Zone Licencing Company (SBIDZ) and Transnet National Ports Authority (TNPA).

They also fall under the ocean-economy component of government’s wider Operation Phakisa (Operation Hurry Up) programme, and envisage transforming Saldanha Bay into a one-stop rig repair and oil services hub and with the new dedicated infrastructure to be in place by January 2018.

Currently the port is best known for facilitating the export of iron-ore mined in South Africa’s Northern Cape province, and there are parallel plans to increase the export of iron-ore from around 57-million tons to over 70-million tons a year. However, negotiations are under way with the iron-ore miners on dust-suppression plans, as the red iron-ore dust is seen as a possible constraint to other proposed activities in the IDZ.

Requests for proposals (RFPs) will be issued for a 380-m-long, 21-m-deep rig-repair berth, or Berth 205, to service deep-water rigs, as well as a shallower 500 m jetty and repair facility to service a range of other vessels associated with oil and gas exploration and development.

Port manager Willem Roux says that although the RFPs have not yet been issued, the intention is to identify preferred bidders by September, so that there is sufficient construction time to meet the January 2018 deadline.

In addition, TNPA will be moving ahead with work on an offshore supply base in the coming months, to supply rigs with food and materials, as well as waste-collection services.

The SBIDZ, meanwhile, is preparing to ease the way for investors, including through establishing the zone as a so-called ‘free port’ - a customs control area that offers duty-free, value-added-tax-free conditions for operators.

It is currently estimated that the marine infrastructure associated with Berth 205 and the jetty will require an investment of around R6.5-billion, while the land-side infrastructure, including cranes, workshops and warehouses, could involve around R3-billion in capital expenditure.

The TNPA, which plans to invest around R3.9-billion across the South African port system in 2015/16, has not set aside a specific budgetary allocation for the infrastructure being put out on tender. However, it will play a role in the design and will help facilitate environmental approvals.

Roux indicates that it will also insist that the facilities are operated on an ‘open access’ basis and that there is both black-economic empowerment and local community involvement.

SBIDZ business development executive Laura Peinke believes that the rationale for the projects remains strong despite the recent sharp decline in the oil price and she remains optimistic that private fleet owners or independent operators will be interested in the tenders, when issued.

This view is supported by South African Oil and Gas Alliance executive director Ebrahim Takolia, who argues that a number of international service providers are likely to be attracted by the long-term economic rationale of locating a hub in close proximity to the expanding African market.

He says Saldanha Bay is well located for both the rigs operating off West and East Africa, as well as for passing trade, or the so called tow-rig market. It is estimated that there are currently up to 100 rigs operating offshore Africa, while as many as 120 rigs pass by South Africa for repair, primarily in Asia.

Roux says the intention is to transform Saldanha Bay from being a “port of last resort” for rig repair to a “port of first choice”.

However, TNPA CEO Tau Morwe is more circumspect, indicating that the fall in the oil price may dampen the appetite of investors and could, thus, have an impact on the timing of the projects.