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SA ‘missing out’ on $1,3bn in dry dock revenue

SA will miss out on more than $1,3bn in service fees from ships and oil rigs operating in sub-Saharan waters during the next six years because the country does not have the dry dock facilities that the maritime industry has been begging the state to invest in for almost a decade.
This opportunity loss was revealed in a report prepared by the Norwegian Marine Technology Research Institute, known as Marintek, on behalf of a task team created to investigate the business case for investment in dry dock and marine services infrastructure related to the oil and gas sector at the port of Saldanha.
"We had to present a business case and market opportunity to Transnet National Ports Authority (TNPA) to show them why we need these facilities and we have been very conservative in our estimates," Steve Hrabar, a director of the South African Oil and Gas Alliance (Saoga ), said yesterday.
Marintek projected the value of SA’s potential in the market based on the "scheduled inspections with its associated and planned repairs, maintenance and upgrades", the report said.
The task team that commissioned the study is comprised of Saoga, TNPA, the Department of Trade and Industry and the Western Cape provincial government, Mr Hrabar said.
According to the report, 603 vessels would be operational in the sub-Saharan region over the six years from January 1 this year. Over the same period, SA would benefit from less than half of the value of the projected services required due to lack of investment.
Since 2003, Saoga has been pushing the TNPA to invest in a dry dock at the port of Saldanha. The industry body has laid out the need for a facility large enough to fit two oil rigs at the same time. These are about 80m wide.
The total investment would be worth about R3bn, Mr Hrabar said, and work would need to include a dedicated quay "where we can do rig repairs and maintenance", and an onshore base that would comprise a duty-free warehouse where rigs could store spare parts, chemicals and foodstuffs.
Most operators are chartering jumbo jest from the US and Europe and flying them to Angola and Nigeria to supply their rigs. "It is a very expensive business," Mr Hrabar said.
Earlier this week, Transnet CEO Brian Molefe said the state-owned logistics company was committed to restarting the work that had been done to ensure investment in dry dock facilities. "We will start afresh and make sure that we do it faster this time," Mr Molefe said.
SA needed two dry docks, however, one to service the oil and gas rig market and another to service the very large vessels that call near Richards Bay and carry oil, coal and iron ore. A 2001 tender for a dry dock to be built to service the very large oil tankers and ore carriers, was issued, but despite firm interest from investors locally and from China and South Korea, the tender was never awarded.
Mr Hrabar said the closest facilities available to oil rigs to access repair and maintenance services in the Atlantic Ocean were in Malta, Spain and Galveston, Texas. Each day a rig is out of service is expensive as daily rates are about $300000 and tug services to tow the rig to be serviced cost $125000 a day. Galveston is a 21-day trip from the west coast of Africa.
Transnet has been loath to invest in dry dock facilities as its priorities have been directed towards the more urgent need to address the investment backlogs in rail, which have limited SA’s exports of iron ore and coal.
"We hope to have the final report next month and we will say, ‘Now please can we act on it?’," Mr Hrabar said.
Source: Business Day