Opportunities in East Africa as region enters Production Development Phase

Four East Africa countries among them Mozambique, Tanzania, Uganda
and Kenya are headed to the development phase as they draw closer to
exploit their oil and natural gas reserves providing an opportunity for
investors to dive in and benefit from the projects worth billions of
dollars.

According to George Wachira working with Petroleum Focus Consultants
this phase provides opportunity for players in various fields including
engineering, logistics and field services, financial services, materials
supply amongst others.

On the engineering and construction field Wachira sees the greatest
opportunity for local large mature contractors who can bid directly and
participate in the projects independently.

“Some experience has been achieved through the ongoing exploration activities,” says wachira.

For smaller engineering and construction firms the opportunity is in
forging partnerships especially with oversees firms who can transfer
their expertise and technology.

Wachira says that whereas various contracts will fall to
international firms with years of experience in this sector there will
be increased use of local subcontractors even as he urges local firms to
seek training and certification.

The sheer amount of materials needed will drive up demand for logistics and field services even as there is expected to be the commencement of development drilling.

Total Uganda which is awaiting a production license for example
estimates that it will need to move over 800000 tonnes of equipment as
it starts development at Hoima which would mean about 1000 trucks a day
during the period in both Kenyan and Ugandan road.

Already a number of local companies have already dominated this space including the first listing by an oil and gas company on the Nairobi bourse.

There is also hope especially by local companies that they will receive government protection  in the supply of materials that are readily available locally the a local content legislation.

“The early enactment of local content regulations shall empower local businesses,” he says.

Other opportunities are in the financial services segment where
banks, insurance and guarantees  with various local institutions having
already entered this space.

Last week Chase bank announced that it would be providing $50 million
to small and medium enterprises wishing to venture into the oil and gas
sector.

The financing of SMEs to venture into what has so far been viewed as
an closed society has for long being identified  as a major barrier to local participation alongside the enactment and operationalization of the local content legislation.