The land is being cleared and progress is being made at South Africa’s first industrial development zone (IDZ) to be developed exclusively for oil and gas services.

The IDZ will be an oil and gas services complex in the Port of Saldanha Bay and is expected to be up and running within four years, according to Saldanha Bay IDZ executive: business development Laura Peinke.

She said an agreement for the provision of engineering services had been signed this week.

“Prior to six months ago, nothing was really happening. A lot of work has now started on site,” Peinke told a Barloworld Power oil and gas seminar in Cape Town on Wednesday.

The land was now being cleared, while the Saldanha Wastewater Treatment Works was being upgraded. Other current projects included construction of the site camp building and designing the link road bridge. An environmental-impact assessment study was currently in its review phase.

Peinke said the IDZ was looking at clustering companies in areas that would service their requirements.

“For companies, it means the land closest to the port has been set aside for the industry that really needs it. That creates a cluster development…companies working together in the value chain setting up next to each other.”

Peinke noted that existing export activities from the port, such as iron-ore and manganese, would continue, but the IDZ would not have to contend with container traffic. Investors had specifically requested a port that could cater to the burgeoning oil and gas sector in Africa.

“All seven other ports in South Africa can fit into the Saldanha port. It’s a sizeable port with a lot of opportunity for development,” Peinke stated.

Transnet, which owns the land, said it intends putting the entire project out to the private sector. It estimated this would cost R10-billion.

“The private sector feels this is high. But it means that Transnet will not restrict investment. It will not specify return on investment or concession timelines,” noted Peinke, adding that the private sector had shown great interest in investing in the IDZ. 

“While it may take three to four years, companies have been saying that this is an ideal facility for them. Coega is great, but the container terminal is there. This would be oil and gas-focused.”

“It is looking very positive at the moment. Rig repair and vessel repair was our biggest driving factor. But in the past two to three years, most investors fall into the marine/subsea engineering and fabrication sector,” said Peinke.

“By far the biggest interest is rigs on tow from South East Asia to other markets and they see it as a convenient stop.”

Peinke told the seminar that the government had set aside R700-million for infrastructure, such as security and roads, to attract investment to the 330 ha port area.

She said the general maintenance quay needed to be repaired, while a dedicated rig repair quay had to be built. Dredging studies for the quay, expected to be 480 m in length, were being finalized.

A quayside would be built alongside the Mossgas facility to service and repair vessels, as well as equipment coming from offshore.

The IDZ Business Forum, together with the United Nations Development Programme, had started funding programmes to support local businesses. South Africa’s defence acquisition, disposals and research and development agency Armscor would also be involved in a joint programme to train semiskilled artisans.