South Sudan and its future

The newly-formed government of Africa’s newest state, South Sudan, has pledged its support for the development of the private sector in the country. It has ambitions to promote growth and economic development through public-private partnerships and dialogue with existing business leaders in the country.

This ambition was made clear at a workshop that was organized by the South Sudan Business Forum (SSBF) in partnership with the International Finance Corporation (IFC) of the World Bank Group in September 2011.  Elizabeth Majok, the Undersecretary in the Ministry of Commerce said “The President himself is committed to nurturing the private sector; the private sector should now play its role and spur economic growth in the country”.  Their plans include passing four Bills that “when enacted, will play a major role in streamlining the business environment in South Sudan” she concluded. 

The challenges

There are many, some are weighty.  The legacy of 22 years of internal strife has taken its toll. South Sudan has a real hurdle to overcome in skills development, they urgently need educated and trained workers needed to run the new government.  Estimates of the literacy rate show only 27 percent, one of the world’s lowest which means that it will be a long road.    

A new complication is that Juba, the present centre of government and industry, is too small and the government intends to build a new city and relocate the capital to Ramciel, 250 km northwest of Juba.   This is causing some consternation in business circles, especially with Kenyan companies that are installed in Juba.

In its early days of independence the country is still struggling with security issues and also with rampant inflation.

Trade with Kenya and other neighbouring states

Lack of rail infrastructure is hampering many growth initiatives as is problems accessing routes through the Khartoum. This landlocked country has the disadvantage of no access to a port although it clears most of its imports through Mombasa in Kenya.  80% of South Sudan’s trade is with East Africa countries, the leading country is Uganda (also landlocked) closely followed by Kenya.

However, talks are continuing with the oil majors to connect to the main fuel pipeline from Eldoret to Mombasa which would improve export opportunities to Kenya, Uganda, Congo, Rwanda, Burundi, Tanzania and Ethiopia.

The banking sector in South Sudan is quite lively, the government is taking a state in one and the Family Bank of Kenya are making a play for another.  The four main banks are potential acquisitions for the more established finance houses in the East Africa region who can see $$ signs.

It is expected that South Sudan will apply for membership of the East Africa Community (EAC) as early as next year.     


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A petroliferous place – Gabon

The oil industry continues to dominate the industrial sector in Gabon providing around 40% of GDP. The statistics vary somewhat, but it is clear that Gabon is heavily dependent on its petroleum industry. There are many players, the global oil majors, the outsource oil field service organizations, drillers and marine services companies that are active there, both onshore and offshore.  The Ogooue Delta complex is a proven hydrocarbon province, where over 2,000 MM bbl of oil and 900 Billion cubic feet (Bcf) of gas have been discovered since the 1960s.

The Oil sector and crude quality

The oil sector in Gabon is dominated by exploration and production making up 95% of the activity, the other 5% is invested in refining and research and development.  There are five types of crude oil produced in Gabon, ranging from a medium to relatively heavy oil with a low level of sulfur. This crude is similar to the "Arab light". The principal types of crude oil currently produced are :

Mandji Blend produced by Elf Gabon and Perenco

Rabi Light (Elf Gabon)

Gamba crude blended with Rabi-Echira crude (Shell’s Rabi blend)

Lucina Blend produced by Perenco

Oguendjo/Breme Blend (Perenco in the South)

The State receives oil revenue on the basis of sources : taxes on oil company production, rental fees on exploration permits based on the area covered, and dividends paid by the oil companies.

Recent activity

The Etame field, a major source of crude, is a joint venture operated by Vaalco Energy and is in partnership with Addax, Sasol, Tullow Oil and other minority interests.  Harvest Natural Resources has announced two offshore discoveries in 2011 which are in appraisal phase. Panoro Energy has struck oil, also offshore, following an extensive drilling campaign recently.

Exports

Oil exports are growing steadily due to the growth in investment from international oil and gas companies such as Total and Shell and many other medium-size explorers. Gabon can look forward to long-term relationships with these multi-nationals which have taken up 25-year agreements with the Government. The bulk of these exports are destined for the USA, France, Netherlands and UK.  The only refinery in Gabon, part owned by Total, is run by the Société Gabonaise de Raffinerie (SOGARA) in Port-Gentil and only has a capacity of around 21,000 barrels per day. And it has incurred losses for the last five years.  Gabon is likely to benefit from the supply problems in Libya during the next few years.  

Working in Gabon

Gabon has a high income per capita compared to other African countries, almost four times that of most nations. Although the locals would say that the cost of living in Gabon is quite expensive, expatriates will find it fairly reasonable except for imported products and telecommunications services.  Although Libreville is the capital, much of the activity in this sector is centered around Port-Gentil.   


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Outsourcing of Jobs in the Mining Industry

The mining service industry in Africa is growing at a rapid rate partially due to the global economic uncertainty that plagues the mainstream mining exploration companies.

Mining Service Companies
Firms involved in supplying contract mining services may carry out major or minor parts of a mining operation on a fee or contract basis on behalf of the more established multinationals. To be able to do this successfully they need to have a strong and flexible talent management process that can deliver the skills in the right place at the right price.

There is a certain amount of risk involved as their performance is highly dependent on the extent of mining activity especially in Australia, Africa and Canada. Fortunately their fortunes are safe for now as the rising prices and growing demand for minerals have led to a mining boom over the past five years. Mining services companies come in many guises and operate at every point in the supply chain. Service providers like these must ensure that their assets and resources are utilized effectively so that they can maximize their profits in the good times.

Contract employment
There is a vibrant market for mechanical and mining engineers, mine managers, exploration geologists and environmental specialists for open cast and underground contract mining projects in Africa.
Support roles on a contract basis are also offered in functions such as finance, supply chain, procurement and human resources. These opportunities are made very attractive to recruit the best available talent. There has been a surge in recruitment of qualified artisans on a contract basis at very attractive remuneration packages due to the shortage of qualified and skilled tradespeople. The number of artisans qualifying per annum is not enough to satisfy the market. Low salaries whilst training and a poor level of education in science and mathematics are cited as contributing factors. Especially in demand are diesel mechanics, pipe-fitters, plumbers and electricians, boilermakers, welders and maintenance managers, all of whom can earn good salaries on a contract basis.

The expat life

However, many contract positions are based in strange and remote locations on mines so this life is not for everyone. First timers are counseled about the challenges and care is taken to make sure that the appointment will work out for both parties. The impact of tax, both at source and at home and the cost of living in-country can cause difficulties that need to be managed by the employer, sometimes with requiring compensating pay. The United Nations assigns a “hardship factor” to countries which is often used in the mining and oil sectors to define pay and benefits as incentives. In addition, assimilation into the culture may be difficult especially if the family comes along and a foreign language is involved.

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Investment in gold mining is increasing in Africa

With the economic and political turmoil at present, in the developed markets in particular, currencies are volatile and gold is regarded as a safe haven. Investors turn to gold in times of uncertainty as it can be traded anywhere at any time. With the current gold price being $1786 per ounce and a more than 200% increase over 5 years, it is probably safer than most currencies, even with short term fluctuations.

Gold is forecasted to reach $2000 per ounce before the end of 2011 by many experts including Philip Klapwijk, CEO of Thomson Reuters GFMS a London-based metals consultancy.

Listed Canadian gold mining companies are discovering deposits in Africa. Although they have a presence on all continents, Africa now accounts for about 17 percent of their foreign assets, a 6% increase over the last ten years. Canada is the leading investor in mining in Africa after South Africa.

Peter Koven of the National Post of Canada newspaper is a commentator on Canadian activity in the mining sector. He recently reported share price jumps by some of the established mining companies, such as Orezone Gold Corp., that are active in Burkina Faso in West Africa. There have been many takeovers either completed or in progress involving Kinross Gold Corp. Red Back Mining Inc and Crew Gold Corp.

Matthew Zylstra, a Northern securities analyst, wrote that “in particular, companies located in West Africa and with larger resource estimates are commanding higher premiums as they are seen as more likely to be takeover targets.” Among the juniors, he stated that Axmin Inc. and Banro Corp. trade at the lowest multiple of enterprise value to total resources. Among the producers, First Uranium Corp., Great Basin Gold Ltd. and Endeavour Mining Corp. are priced “most favourably”, he said.

However, it is not plain sailing for new entrants. There are many areas of conflict and endemic violence to deal with, particularly within the mineral rich deposits areas in West Africa. Canadian companies do not have an untarnished reputation in managing these challenges. Besides volatile regions such as DRC, they are present in Madagascar, Tanzania and Ghana. 91% of Canadian investments in Africa are located within eight countries, including South Africa where the main investments are.

South African mining houses such as Goldfields and Anglo Gold Ashanti are present in Ghana and Mali. The supervisory board chairman of German-listed Pearl Gold told Reuters in an interview that “gold mines in Mali are an underexploited treasure trove for commodity investors”. Mali is certainly one of the most promising locations for gold mining at present,” Robert Goninon said in the same Reuters interview. “Other countries like Guinea, Ivory Coast, Burkina Faso, Mauritania and Ghana offer lucrative gold mining opportunities too”.

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Expatriate Jobs in Oil and Gas

If you have always wanted to work in a leading multinational oil and gas organization, now may be the time to look into it. Expatriate life can be challenging and exciting especially when working within a global leader in this industry. It is also very rewarding, the pay is excellent, the benefits very generous and they really look after your welfare.

There are always opportunities available in this industry, even in times of economic challenge. Companies are expanding their scope, both on-shore and off-shore, as well as developing further in their traditional exploration areas. Top jobs are available in Central Asia, particularly in Kazakhstan, throughout Central and West Africa and in other developing regions in Asia.

In the upstream sector, the exploration and production companies and their sub-contractors are always looking for both specialists in engineering and technical disciplines as well as support staff. Technical specialist roles include drilling, process flow, seismic testing at all levels of experience. Petroleum engineering professionals and those in geosciences are in short supply and may attract a premium salary or additional bonuses. There are also openings for people in the conventional business functions of finance, marketing, logistics and telecommunications.

The downstream sector, the refining and marketing petroleum companies and their associates, have opportunities across a wide range of business skills. They need chemical engineers, construction and pipeline specialists, supply chain managers and traders. Language skills in either French or Portuguese are additional recommendations when applying for jobs in Africa, both in upstream and downstream.

There are many recruiting companies offering oil and gas jobs on behalf of clients but you need to select an established and experienced service provider. There are some pitfalls that can be avoided. Choose a company that understands the global expatriate business environment and one that and can respond to your personal needs when you are looking for jobs in the oil and gas sector.