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.