AFRICA’S LARGEST OIL & GAS PROJECT REPRESENTS A GOLDEN OPPORTUNITY FOR SA STAINLESS STEEL
News that construction of the $128-Billion Mozambique LNG Gas project is ramping up represents an excellent opportunity for the South African stainless steel industry to partner with Mozambican companies.
Despite a flair up of insurgency activity in the north of the country, the project remains feasible, given that analysts expect global gas demand to rise from 319 metric tons per year in 2018 to 632 metric tons per year by 2040. An additional benefit is that the gas supplied will be of high quality, require less refining and therefore be cheaper to produce than other areas of the world.
A GAME CHANGER
To keep our members fully informed on this massive project, Sassda attended an Africa House briefing prior to the COVID-19 lockdown where Development Director Roelof van Tonder described the project as a ‘game-changer’. “There are immense opportunities for South African companies that can benefit from the sheer volume of work already underway in our northern neighbour. However, the scale of these projects requires proper planning and long-term strategic response to ensure maximum benefit from the numerous contracts that will arise.”
OPPORTUNITIES ABOUND
Standard Bank Head of Oil & Gas Paul Eardley-Taylor provided additional insight on the opportunities that abound for South African companies in a recent Daily Maverick article. “A $128-billion Capex-spend over a decade is a significant opportunity for South African business to supply the projects (and associated investments) physically.
“South Africa could export goods and services to Mozambique, and investors could form companies in partnership with Mozambique nationals. There will also be opportunities for South African human capital working on the LNG projects and other domestic gas investments as employees, contractors, manufacturers, service providers and consultants. “Mozambique’s limited infrastructure to handle projects of this scale will also see new ports, roads, electricity and water infrastructure and the need to construct far more hospitals, schools and shopping centres,” Eardley-Taylor reported.
He added that Standard Bank has committed to finance part of the Mozambique LNG Anadarko project (which has been acquired by French petrochemical giant Total) and also plans to finance part of the ExxonMobil project announced towards the end of 2019.
“This could then see South Africa’s Export Credit Insurance Corporation, a dti subsidiary, underwriting part of this investment which could secure market access for SA companies of over $500-million. And the same could apply if SA companies are involved in Rovuma LNG,” he concluded.