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Record High Prices for Petroleum Fueling Boom in S. Africa


Record prices for petroleum are fueling a boom in Africa's oil industries. They now provide nearly one-third of the oil imported by the developed world and China. The boom has also spread to industries in non-oil exporting countries. One of these is South Africa as we hear in this report from correspondent Scott Bobb in Capetown.

High oil and gas prices are fueling intense demand for equipment used to find and exploit the vast petroleum reserves off the coast of West Africa.

As a result, companies that maintain and repair the oil industry's huge off-shore equipment are working overtime.

Because of the demand, equipment that was retired is being reactivated and upgraded to work in deeper waters where new discoveries are being made. This has brought even more business to port of Capetown, South Africa.

Capetown, located at the southern tip of Africa, was historically a maintenance center for ships. But it is closer to West Africa's oil fields than are ports in Europe and Asia. So it is cheaper to send equipment here for servicing.

Salvo Cutino, marketing manager of the DCD-Dorbyl engineering company, says 80 percent of his company's business now comes from the petroleum industry.

He adds, "The clients that are drilling at the moment off West Africa, specifically the Pride International Consortium, the Saipans of this world, are moving a lot of tonnage into the Angola region. And of course Angola is quite close to Capetown so a lot of those big upgrades are coming to Capetown."

Capetown's dry dock, one of the largest in Africa, is too small to service the largest oil rigs and ships, so they are repaired while floating at port.

But because of demand, the industry is working on a $10 million plan for a giant dry dock to accommodate these behemoths of the sea.

The industry last year provided 5,000 jobs and contributed one-half billion dollars to the South African economy. The South African Oil and Gas Alliance, with 600 member companies, is trying to meet the challenges of the oil boom.

Steven Hrabar, chairman of the Alliance, says the greatest challenge to the industry is the shortage of skilled workers: "It's such a demand for skills throughout the world that every country is trying to get skilled people to the work force. And in Africa and in particular South Africa, we feel that very harshly. And what we are trying to do is trying to up-skill our people to international standards," Hrabar added.

Alliance Director Angelo Harris says his organization has launched a $30 million program to train welders, riggers, and supervisors. And it is also working to address a brain drain of engineers leaving for better salaries abroad.

Harris explains, "South Africa being strategically positioned, our competitive advantage being our political stability, sound financial environment, our engineering and fabrication and manufacturing capacity, but also South Africa being generally one of the better economies than the rest of Africa, [so] there is definitely a demand for South Africa."

Industry executives say despite the challenges they believe South Africa's production will double in the next few years.

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