Guy Clarke, SBU Head of Oil, Gas & Related Products, tells Cape Business News the oil and gas industry in Africa currently attracts more than 70% of total foreign direct investment to the continent and it’s estimated that more than 50% of Africa’s oil and gas reserves has yet to be discovered. Europe and the USA are increasingly focusing on Africa with a view to reducing reliance on Middle Eastern supplies.

“Against this backdrop it’s inevitable that the oil and gas industry will play a fundamental role in Nepad. The IDC intends to support this development simultaneously promoting indigenous participation as well as the role of South African companies and BEE in the rapidly developing industry”, Clarke says.

The past year was the first full year of operation for the newly created strategic business unit (SBU) for Oil, Gas and Related Products and its first initial efforts led directly to the approval of IDC participation in three significant oil and gas projects in Africa.

• Provision of a US$20 million project finance facility to the multi-billion US dollar Nigeria LNG project, in which Shell is a major shareholder.

• Investment of US$10 million in quasi-equity and equity in the Ogbelle JV in Nigeria, together with a Nigerian indigenous player, and

• Investment of US$250 000 in seed capital in Osprey, a London-based company initiated by the founders of Energy Africa, focused on oil and gas investment in Africa.

He says a major challenge is to promote South Africa as a source of supply of goods and services to the African oil and gas industry as a rival to suppliers based in Europe and the USA.

According to Clarke, while IDC only participates in significant projects outside of South Africa, within the country finance is also available to small and medium sized companies, pointing out that the provision of funding packages of R1 million and upwards is within the IDC’s ambit.

Financial assistance is offered in the form of a range of short and medium-term market-priced facilities, including equity, quasi-equity and debt finance. These products are tailor-made to suit each unique project and the needs of each particular client.

BEE support will also feature prominently. The IDC’s Western Cape manager Lizo Ntloko points out that financial approvals to empowerment firms have grown from less than 20% in number in 1999 to almost 50% during the past financial year. “Ideally one would like to see the same pattern in the oil and gas industry”, he says.