Africa’s Energy sector soars

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The recent oil and gas finds in Africa are having a positive effect on the South African economy, as the country aims to become the main service and logistics hub in Sub Saharan Africa for national and international oil and oil service companies which operate in the region.

This is according to Steve Harley, Senior Vice President of the Energy Sector for DHL Customer Solutions and Innovations. Harley says that these energy finds provide many possibilities for South African businesses. He says that as a result of these finds and South Africa’s location and infrastructure, which is generally advanced in comparison to the rest of Africa, the company has witnessed an increase in the need for the transportation of energy-related material in the region.

In addition, the planned explorations, such as those for oil and gas in the Orange basin off the West Coast of South Africa, shale gas in the Karoo and off the Durban coast, have seen large energy multinationals starting significant investments in the country; investments that could amount to billions if local commercial discoveries are made, providing a knock-on effect for local businesses.

Harley says that forecasts expect African oil supply growth to continue over the next 25 years, with predicted ranges of growth over the period of between 0.5 million and 2.0 million barrels per day.

“Africa will need to adapt in order to keep up with the demand, as well as evolving trends in this highly competitive sector.”

He says that globally, the steady and reliable supply of energy is critical to economic activity, and due to Africa’s availability of the resource and the continent’s relative proximity to booming Indian and Asian energy markets, it is expected that the continent will see continued and steady economic growth.

“We have also witnessed an increased demand for the resource on the continent, and currently Africa is the region with highest percentage increase in oil consumption globally – 5% in 2012 versus only a 1% increase globally. This is likely to continue as many of the fastest growing economies are situated on the continent.”

Harley does warn though that, as the easily obtainable oil reserves have been depleted, that most of the new developments are either very remote or technically challenging, which brings issues of infrastructure, transportation and expertise to the fore.

“Forecasts predict that conventional oil production will decline by five percent per year. Extraction from unconventional sources is more complex and relatively more expensive from a supply chain perspective. As such, customers will need complementary expertise from integrated logistics suppliers to meet the challenges of these new geographies and technologies.”

Harley points to DHL’s recent global white paper on Maintenance, Repair and Operations (MRO) supply chain management for energy companies, which shows the oil and gas businesses will require integrated suppliers that are able to support them with end-to-end supply chain solutions. According to the white paper, logistics suppliers need to provide a global footprint in combination with local market expertise. As a trustworthy partner, they also need to drive cost and process optimization and maintain safety and compliance both on and off-site.

“This is particularly true in Africa,” notes Harley. “While the continent is showing promise, issues around infrastructure, regulatory hurdles, and lack of an integrated supply chain in most markets, can be a major hindrance for energy businesses. Couple that with the need to optimize production and improve supply chain management to enhance service and reduce cost, and you understand the need for integrated suppliers to introduce more robust metrics, optimize the inventory and find cost-effective transport solutions.”

“This highlights the need to partner with an experienced provider who has extensive knowledge on the region. DHL has an unrivalled global presence and experience to ensure partners are offered integrated solutions that address today’s energy industry challenges,” concludes Harley.

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