Logistics companies
that have geared up to
support the expected
boom in oil and gas
exploration and exploitation
across Africa
are experiencing
mixed fortunes.
According to
an International
Energy Agency
(IEA) special
report published
in October 2014,
almost 30% of
global oil and
gas discoveries
made over the
last five years
were in sub-
Saharan Africa.
The Mamba and
Prosperidade field off
Mozambique is one of the
biggest gas reserves in
the world. Oil has been
found offshore Kenya by
Pancontinental Oil and Gas
NL, which is believed to be the
first oil discovery off the East
African coast.
Close to home, projects in
Namibia, Mozambique and
the Karoo have yet to meet the
hype of a year or two ago.
Explorative fracking of the
Karoo, which in March 2014
was reported to be “just weeks
away”, is now seemingly on
hold.
In October
2014 Royal
Dutch Shell
announced
that as part of
a review due to
falling oil prices,
the company
had adjusted
its activities in
shale oil and gas
opportunities
outside of
the Americas
and would be
downscaling its planned South
African operations.
It cited the falling oil prices
as one of the reasons for pulling
out.
Oil drilling rigs are lying
idle off Walvis Bay for the same
reason.
From approximately $100
per barrel in June 2014, oil
prices plunged to less than $50
in early 2015. This is 40% less
than the 10-year average of just
over $80.
In Africa this is affecting
freight volumes as governments
run out of reserves and put the
squeeze on imports.
At the height of the oil boom,
the governments of Angola,
Nigeria and Chad drew 70%
or more of their revenues from
their oil sector.
Plunging revenues forced
these governments to slash
spending, freeze construction
of new projects and delay the
payment of civil servants’
salaries.
This has had a knock-on effect
on the demand for project
cargo.
Spending power by
government, mines and
consumers has also been
affected by related movements
in other commodity prices,
which have dropped on average
by 10 to 50% from their 10-year
averages. For example, in early
2015, iron ore prices were
down 50% and rubber prices
down 37% from their 10-year
averages.
Red tape is also putting
the plug on hopes for a quick
injection of investment into the
oil and gas sector.
Mozambique’s hopes of
becoming the world’s third
largest liquefied natural gas
(LNG) exporter after Australia
and Qatar by
the end of this
decade have
been bogged
down by
legislation.
Further up
the coast oil
companies
seem to be
in little rush
to exploit
reserves
in Kenya,
Tanzania,
Ethiopia and
Uganda where
costs are
high due to a
combination
of geology
and lack of
infrastructure.
With the
current oil
glut it may
well be more
profitable to “bank” the oil
and gas by leaving it in the
ground until world prices
recover.
Logistics suppliers to the
industry will be keeping a
close watch on developments.
INSERT
With the current oil
glut it may well be
more profitable to
“bank” the oil and
gas by leaving it
in the ground until
world prices recover.
CAPTION
An oil rig berthed where the new container
terminal is now being built in Walvis Bay. The
rig operation will move to Berth 1 at the far
end of the quay wall.
