Political revolution in South Africa, combined with business revolution in the international petroleum industry, has begun to shift the direction of South Africa's national oil company, Soekor.
The company sharply reduced its payroll in second half 1993 and streamlined its organization. And it has announced an exploration licensing round for second quarter 1994 to encourage foreign participation in the country's petroleum resource development.
But much more dramatic change is on the horizon.
The next big signal will come from South Africa's general election, scheduled for Apr. 27. Soekor is governed by a board of directors appointed by the minister of Mineral and Energy Affairs, and it's likely a new government will determine Soekor's future after the election.
"Whoever takes charge of the new South Africa will have an asset in Soekor that should be fully utilized," M.J. Heuser, Soekor's chief executive, told Oil & Gas Journal in Cape Town last month.
Strategy could change after Apr. 27, Heuser said. "Soekor can't carry on as South Africa's sole explorer. It must shift to include the role of promoter to encourage participation by international oil companies."
As of early last December, political parties most likely to win the election had not shown much interest in discussing Soekor's future. However, a meeting with the African National Congress was held Dec. 7 to discuss exploration potential and the licensing round.
Although a shift in strategy is indicated, the change won't take place immediately.
For the next 2 years or so, Soekor will continue its one rig operation, following up selected prospects and appraising reserves. Using only the one rig to drill the 3,000 m wells limits activity to about seven wells/year. Soekor owns another semisubmersible rig that is managed by Foramer and presently drilling off Vietnam.
"At the same time, we'll go out with the licensing round in June 1994, with a goal of getting four companies 'on line' by June 1995," Heuser told the Journal.
Heuser told the Sub Saharan Oil and Minerals Conference in Cape Town late last November that international companies will be invited to bid in the upcoming offshore licensing round. Several exploration data packages have been sold.
The first license awards off South Africa attracted majors and independents alike, and the first offshore well was drilled in 1969.
Kudu field in Namibia, which was under South African administration, was soon discovered by Chevron/Regent and Soekor. But politics and more attractive prospects elsewhere caused foreign companies to withdraw from South Africa. The last internationally financed well was drilled in 1976 off the west coast.
During the coming 2 years, Soekor will concentrate on South Africa's southern coast. "We might drop over to the Pletmos basin for a well or two," Heuser said. "And there are prospects in the Algoa basin that might be opportunities for farmouts."
The southern Outeniqua basin also offers a good chance for oil discoveries in water depths beyond the 300 m line, Heuser said. "Oil prone source rock" was found in one well drilled in deep water off the west coast.
Soekor will invite participation in development as well as in exploration prospects, Heuser said. Developments must be economic, returning a "reasonable internal rate of return," currently considered to be 15%.
To date, 22 oil and gas fields have been discovered in South Africa.
STRATEGIC DIRECTION
"In the long run," Heuser said, "Soekor would be wise to extend its activities beyond South Africa. But for the time being, we need to further develop South Africa's oil and gas potential."
An earlier attempt to enter the foreign arena failed because of a lack of capital.
Currently, Soekor's only activity outside South Africa is in Mozambique and Zimbabwe where technical assistance and training are being provided.
Will Soekor be privatized?
"First, we are aiming for self funding," Heuser told the Journal. "But in the longer term, we might well be privatized. We certainly want to reduce dependency on government funding."
Soekor is currently supported by South Africa's Central Energy Fund.
The recent major reorganization is a response to conditions and trends common to the international petroleum industry. Soekor already has reduced staff by 40% from 830 at the end of July 1993 to 500 by the end of the year and an additional reduction to about 400 employees is likely. About 140 staff members were transferred to Mossgas.
"We want to operate in the most cost effective way," Heuser said.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
