Uncharted territory

Guy Lundy, Odgers Berndtson Principal

With an increasing amount of international interest in the exploration of Africa’s oil and gas industry, a lack of skills can hamper growth and development in this sector.

The Ibhubesi Gas Field on the West Coast, Brulpadda site on the South Coast, the Karoo and just North of South Africa, Kudu Gas Field in Namibia are just some of the names in the discourse surrounding the exploration of South Africa’s oil and gas industry.

With the phenomenal economic activity that would accompany the successful harvesting of these resources, a lack of sufficient skills in the industry remains a challenge that needs to be addressed. BBQ was afforded the opportunity to speak to Odgers Berndtson Principal, Guy Lundy, about the oil and gas industry and what our skills challenges are at the moment.

Moving beyond South African borders to take a more encompassing look at oil and gas exploration across the continent, Lundy points out that we are seeing exciting new finds in both familiar and unfamiliar territory.

“The traditional exploration hotspots in Sub-Saharan Africa have been countries like Angola, Nigeria and South Sudan. However, exciting new areas for offshore exploration include Mozambique, Ghana and Tanzania, particularly in gas exploration, where new finds are in the process of transforming their economies. There is significant growth in new finds, with international exploration companies starting to work in unusual countries like Kenya and Uganda.

In South Africa, new offshore exploration is taking place off the South Coast, where PetroSA continues to look for new gas and Total has just started exploration on their Brulpadda site. Off the West Coast, Sunbird Energy is progressing negotiations with Eskom for a gas purchase agreement to enable them to exploit their Ibhubesi Gas Field.

Further north, the Namibians are still looking to exploit the Kudu Gas Field and bring gas onshore to produce electricity that they hope to sell to surrounding countries. In the Karoo, the interest in shale gas remains high, with it being highly likely that exploration will eventually begin. If the estimated deposits are as high as they are thought to be, then the potential for a complete change in the country’s economy will likely override environmental objections,” Lundy says.

The Mineral & Petroleum Resources Development Amendment Bill, which was passed by parliament just before the election in May this year, could however put further exploration on hold according to Lundy. “The Bill has not been signed by the President and has put any activity on hold until more clarity is provided. If this very onerous Bill is passed into law in its current form, it is highly unlikely that South Africa will have any further exploration by international companies,” he says.

Lundy highlights the more immediate opportunities to be in the oil and gas service sector, with South African firms being able to provide repair facilities, supplies and other services to exploration companies operating on both the West and East Coast. In this regard he refers to the promulgation of the Saldanha Bay IDZ with expressly the service sector in mind, aiming for it to become an oil and gas service hub for Africa.

Beside the Mineral & Petroleum Resources Development Amendment Bill, Lundy sites skills shortages, especially in senior positions, to be one of our biggest challenges. He makes reference to the fact the skills shortage is however prevalent in the oil and gas industry globally, meaning that these professionals become exceedingly expensive to employ and that companies around the world want to employ from the same pool of people.

“The fact that we have never had an exploration industry to speak of in South Africa, makes the shortage of senior experienced South African skills in the industry acute. If exploration takes off in South Africa, we are very likely going to have to import senior skilled individuals, which will mean that Home Affairs will need to make it easier for them to get work permits.

“Especially engineering skills – petroleum engineers, subsea engineers, geologists, people with experience in building pipelines, etc. The shortage is severe globally because of the fact that in the 1980s and 90s the oil price dropped so low that oil companies retrenched thousands of people, which meant that university students saw no future for them in the oil industry and chose not to study engineering disciplines that would be applicable to the industry. As a result there is a shortage of experienced people in the 35-55 age group. This will eventually become easier as the new young graduates come through, but it is going to be uncomfortable for a while still,” Lundy says.

Transformation in the oil and gas industry has been a slow process, but according to Lundy things are starting to change quite rapidly, with an encouraging embrace of black graduates by existing companies. “Unfortunately historically most of the experienced engineers who worked on projects like Mossgas were white, so most of the experienced and senior local skills in the industry are older white men. However this is changing quite rapidly, as the young engineers coming out of universities are a much more diverse bunch and companies are doing a lot to develop young black graduates. It will take time, but this will change the nature of the industry in future,” he says.

Looking at what our schools and higher education institutions can do to assist in the development of these skills, he says that schools should encourage children to consider engineering, especially petroleum engineering, as a career choice, so that they consider studying appropriate courses when they get to university. University, in his opinion, should publicise petroleum-related courses of study widely in order to encourage students to consider them

“Companies can also work closely with the education institutions to publicise the career, and they could have in place long-term plans to skill up younger engineers through skills transfer from their older expats (which many already do),” he says.
Adding to the shortage of skilled professionals in the industry is the so-called ‘brain drain’. Lundy links this to the curtailed exploration efforts made in the 1980’s in places like Mossgas, where many skilled individuals were left with little or nothing to do. “They were offered good jobs elsewhere in the world and have gone there to earn lots more money,” he says.

The topic of skills transfer and investments from international parties is another important aspect that Lundy highlights. He suggests the creation of an environment that is favourable to international activity and says this should be one of government and corporate’s main focusses with regards to the industry.

“Foreigners are the ones who have developed international exposure and diverse skills, particularly in offshore drilling. The very high capital cost of this sort of work, and the very high risk, means that exploration companies have to have the most experienced people they can find in this area. As is the case elsewhere in the world, government should tie the issuing of visas to a commitment from the company that they will undertake skills transfer activities.

“Our leaders in government need to understand that the oil and gas industry is completely global, in terms of investment opportunities and skills, and they need to ensure that we have an environment that is able to compete with countries elsewhere. Politicians, officials and business leaders must develop a common understanding of how we want to develop our industry and must find ways that will work for all to exploit our assets to everyone’s benefit,” he concludes.

Nilo Abrahams

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Issue 83


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