Promoting the development of South African-based industry serving the global oil and gas market
Can you imagine an all-encompassing web resource that gives you instant access to all of your region’s oil and gas players?
An engine that houses the information you need on all upstream operators and service companies alike?
Warwick Blyth, Executive Director of the South African Oil and Gas Alliance (S.A.O.G.A..), spoke with IRJ about how the alliance is working to make this project, amongst others, a reality.
Their mission statement: “To promote the development of South African-based industry serving the global oil and gas market.” Their plan: To overhaul, improve and develop communications, technology, networking and promotion of South African oil and gas operators both amongst the local industry and to an international audience.
“The issue of communications is probably one of the key things we need to work on. We’re dealing with an industry base that really values having an umbrella body and I think it’s important that we communicate well with them,” Blyth says.
“Being able to leverage the technology we have is very important. I see the website as a critical way of getting information out there, being available to people, and it’s an area I see growing in the future as we make a lot more information available.”
Blyth’s tech-savvy background is a huge helping hand to the S.A.O.G.A.’s mission. After graduating from the University of Cape Town with a degree in computer science, Blyth spent many years working around the globe in strategic consulting, notably working with major oil and gas players during his time at Strategic Decisions Group (S.D.G.), of San Francisco, California.
“I had been in the strategic consulting world for about eight years by the time I finished with S.D.G. That work involved general strategic consulting across a variety of industries but I focused on oil and gas practise more and more as time went on. For the most part, the work there was with the super majors—the Shells and Chevrons and so on—and really working on the big front-end upstream decisions: the investment decisions, new asset decisions, licensing decisions, at the very earliest stages of these big projects,” he says.
“Our role was to facilitate these processes and the analysis around these top level decisions, which often involved working with various engineering and asset teams and various multi-disciplinary teams within those oil companies.”
Blyth and his family moved back to their native Cape Town in 2000, where he joined a couple of consultants who had started a small consulting firm in Cape Town called P.S.P. Icon.
“I was a partner in that firm and a part of building it up over the last eight or so years. I came into the South Africa Oil and Gas Alliance this year,” he says.
The history of the S.A.O.G.A.
The S.A.O.G.A. began within the Department of Economic Development and Tourism of the Western Cape government.
“Around 2000 and 2001, S.A.O.G.O was doing quite a lot of work to identify industrial sectors that had high potential for growth and were significant in the local economy,” Blyth explains.
“One of the sectors they identified was the oil and gas services sector. It’s important to make a distinction here between the companies that service the upstream world and the actual upstream operators themselves, because we actually have a small domestic industry and a number of upstream operators.”
The department identified a core group of companies which were supplying a bulk of the oil and gas services to both the local operators and operators working in West Africa.
“In this, they initiated the formation of what was then called the Cape Oil and Gas Supply Initiative, then a couple of years later, it morphed into the South African Oil and Gas Alliance as we realized that there are a significant number of oil-and-gas-focused companies in other parts of the country,” Blyth says.
“I think that the formal formation of the alliance was in 2004. It was incorporated as a non-profit entity with a board that is drawn from industry and some of the key public sector players, such as the provincial government, which is still a major funder of the oil and gas alliance. That’s how the alliance began and it still has a bit of a flavour of being an industry association on the one hand, and an arm of an economic development agency on the other.”
Blyth highlights the diversity amidst the oil and gas companies within the region and says that while the original cluster of companies spotted was, “the obvious ones operating out of the ports,” the local industry has a great more besides those.
“We’ve got a very big marine repair and supply-and-life extension industry that which repairs everything from ships to rigs. We’ve got good dry-docking facilities, so there’s a whole cluster of companies built around that which do the actual work, then another whole hinterland of companies that supply the components and provide the various services related to that. I think that Cape Town is a de facto hub of West African logistics operations for the oil industry, a lot of things come through here,” he says.
“Then there are the companies that are operating directly into offshore West Africa. There are fabrication companies here that are fabricating components and all sorts of companies that are supplying various services and components to the industry.”
The S.A.O.G.A. gets to work
In tackling the monumental task of representing and promoting the rich and varied oil and gas industry in South Africa, the alliance has adopted a three-pronged plan of action known as: “program areas.”
Blyth says the first of these areas is centred on marketing and business promotion.
“We have a role in promoting global knowledge of the fact there is a supply capability based here which a lot of companies use, and also we are looking to promote our companies in the global marketplace for services. There’s a whole range of activities around that,” he says.
The South African Oil and Gas Directory is the S.A.O.G.A.’s key project in this area and can be found at www.oilandgassa.com, however this is not the alliance’s only focus.
“We’re also quite involved in a couple of major conferences. The Offshore Technology Conference in Houston is something we’re usually present at, as well as the various bilateral trade missions that go on between South Africa and countries such as the U.S., European countries and Malaysia, inbound and outbound,” Blyth continues. “We’re also increasingly looking at more direct linkage to the procurement managers in the industry.”
The S.A.O.G.A.’s second program area is one that Blyth calls “building industry capability.” “In this area we start to come back to some of our economic development roots. We actually have a mandate to build up the capacity and capability of our local industry in order to become more competitive. There’s a whole range of things involved in this, and one of the key items at the moment is something I call ‘public policy liaison’—which is lobbying in some respects,” he says.
One example of the alliances’ work in this area is the ongoing issue of the ports in South Africa.
“[The ports] are controlled by a public company that’s owned by the government, and our industry is very dependent on investment in these ports for both the facilities they need, and the sort of services delivered. There have been some issues in recent years so we have quite a strong role in working to get changes made there,” Blyth explains.
“There are also some issues with tax codes—which are not as friendly as some other countries’ tax codes in the oil and gas industry. Tax changes are a key point for us to lobby on, and work with the authorities to get the tax issue recognized.”
The term “building industry capability,” describes the S.A.O.G.A.’s underlying goal in the efforts made under this component perfectly. Blyth says a general aim of the alliance is, “getting the industry to network with each other and work together a little more cooperatively, using the classic economic clustering idea.”
“The third broad program area is industry skills development. It’s somewhat related to capability development, but because it’s such a major part of what we do with regards to activities and budget, I think of it as a separate program,” he explains.
“This involves working with small companies, particularly as South Africa is going through its transformation from being a white-controlled economy to being one that is more broadly spread. We have a role in helping small black empowerment or black businesses to emerge and enter the supply chain. We’re also beating the drums around things like oil and gas standards which need to be adhered to, and to help companies get up the curve, become I.S.O. compliant and reach important standards.”
S.A.O.G.A.: The next step
Blyth says that in the work of the S.A.O.G.A. today, the key public sector players are the South African Department of Trade and Industry (D.T.I.), the Public Enterprises ministry, the Provincial Government of the Western Cape and the City of Cape Town. “We need to work quite closely with them to deal with public policy issues,” he says.
“They’re sort of advisory, but also partners in terms of some of the public policy issues which need to be addressed. They’re also a key partner in our conferencing and trade activities so they fund us, and we work with them on organizing those events and pulling the missions together.”
By all accounts, the S.A.O.G.A. missions are coming together very well. Looking short term, their missions consist of following the three broad program areas—and delivering on all of the projects encompassed by those.
“I’d really like to get the oil and gas directory up to a critical mass with a lot of traffic going through the site. There are also a couple of public policy issues, notably around making sure that we can offer really superb facilities in our ports. The services that our companies are offering, in that respect, are really well supported. I think that the public policy agenda around that is quite high on my list of immediate things,” Blyth explains.
“Then of course there’s our skills development program. That’s already a big part of our critical mass and I want to see that broaden out into a deeper program that is more integrated with what industry is doing, in order to really meet the skills needs for the industry.”
Blyth’s longer-term vision for the S.A.O.G.A. and the local industry it supports is “to actually build a local industry here into a really thriving and sustainable cluster that is on the map globally, has companies which can offer competent services, and encourages people to come here for those services.”
The recent growth and success of the alliance is a strong indication of the big things yet to come from this exciting industry association.