Saldanha development ramps up SA’s participation in offshore oil market

SOUTH AFRICA’S first fabrication yard for offshore oil and gas structures was officially handed over to the operator, Grinaker LTA, by German industrial group, MAN Ferrostaal AG, at the port of Saldanha last week. Carrying a price tag of some 30 million Euros, it is the largest project yet to materialise within the framework of the South African National Industrial Participation Programme, funded by MAN Ferrostaal as part of its offset obligations through the SA Navy’s purchase of three submarines from the German Submarine Consortium, The 220 000m2 complex, for which a capacity upgrade is already in the planning stage, will manufacture components for offshore platforms – in particular bridges, booms, decks, modules and subsea completions – moving toward complete offshore modules (platforms). Until now, production platforms for the oil and gas industry have been manufactured solely in Europe, the Middle East, the US and South-East Asia, lead times currently standing at six years. The Saldanha site will decrease lead times and delivery periods of its products to a fraction of the time compared to existing yards. Dr Matthias Mitscherlich, chairman of the executive board of MAN Ferrostaal AG and a board member of MAN AG, says the facility provides a valuable platform for the South African industry, not just Grinaker LTA, to participate in the growing West African and international offshore oil and gas market. He notes that when development got underway in 2004, the demand for and viability of the facility was modelled against US$22 a barrel of oil, expecting a rise to US$30 per barrel of oil. “We have now recently witnessed the runaway cost of crude testing US$90 a barrel, without any associated decline in the demand for oil due to cost.” Expectations are that crude will soon hit the US$100 a barrel level. Of note is that 99% of all materials and equipment for the Saldanha offshore fabrication centre were sourced within South Africa, 50% of the total project spend went to BEE companies and 15 out of 20 companies contracted during the construction phase were from Saldanha itself. Dr Mitscherlich also announced another significant new MAN Ferrostaal development, construction of a service hub for the repair and maintenance of oil platforms in the port of Cape Town, for which a lease has yet to be concluded with Transnet.