A gas project in Texas, in the US, built by Valerus
The African region of engineering and construction group Kentz believes it is strongly positioned for any future shale-gas extraction activity in South Africa, following the recent acquisition, by the London-listed group, of integrated oil and gas solutions provider Valerus, of the US.
The South African government has indicated that it intends putting in place the regulatory framework required to facilitate shale-energy exploration and development and has also indicated that it would like to see gas playing a more significant role in the country’s future energy mix.
The regulations have not yet been finalised, though, and a number of organisations have been formed to oppose shale-gas mining in the Karoo, owing largely to the water intensity of the process in what is a water-stressed region. In addition, some observers have warned that amendments to the Mineral and Petroleum Resources Development Act, which include a 20% free-carry for the State in oil and gas projects, might dampen investor appetite.
Nevertheless, regional development director for Africa Colin Crowley believes Valerus’ process-engineering capabilities could enable Kentz to become a significant service provider to domestic gas producers should a shale-energy sector eventually start to emerge.
Valerus was acquired by Kentz for $435-million in January and currently offers oil and gas surface facility services in North and South America, where it has developed extensive gas-handling and processing expertise.
“This acquisition opens a door for us in this emerging and relatively niche market,” Crowley says.
The Houston-based company has solutions that are applicable to both conventional and unconventional gas producers and regional MD for Africa Carl Dyer says these could also enable Kentz to participate more fully in the natural gas projects that are starting to take shape in East Africa, especially in northern Mozambique and Tanzania.
Both Anadarko, of the US, and Eni, of Italy, have made astonishingly large gas discoveries in the Rovuma basin and both companies are currently advancing plans for liquefied natural gas export terminals in Mozambique.
Dyer points out that Kentz, whose global activities are strongly aligned to the energy sector, has been active in Mozambique for a number of decades and says the group is currently developing a standalone office in Maputo. Johannesburg, however, will remain the group’s African headquarters.
Kentz further consolidated its position in Mozambique earlier this year, when Brazilian miner Vale awarded the company coal processing and handling contracts for Phase 2 of the Moatize development, in the Tete province. It is also busy with aspects of the first phase of an infrastructure programme for Nacala, in northern Mozambique, and is hopeful of being awarded additional contracts relating to the ongoing upgrade of the Nacala port.
Africa as a whole is also viewed as an important growth market for the 14 500-employee-strong group, with the region currently comprising only 11% of its $15.6-billion project pipeline.
Kentz, which entered the African market three decades ago to support the development of Sasol, has grown to employ 5 000 people and is also currently eyeing prospects in West Africa, especially the energy-rich markets of Angola and Ghana.