February 16, 2024 [ET Energy World]- South Africa’s first LNG import terminal at Richards Bay will cost over 7 billion rand ($372 million) and aims to import 2 million tonnes per annum, double the initial amount slated, a senior official at logistics firm Transnet told Reuters.
The government in January awarded a long-term concession for the liquefied natural gas (LNG) project to a consortium led by Dutch terminal operator Vopak VOPA.AS, as it eyes at least 6,000 MW of new gas-to-power projects to reduce record electricity outages.
The LNG terminal, situated along South Africa’s east coast, will initially import 2 million tons per annum (mtpa) of LNG by 2027 before ramping up to 5 mtpa, said Linda Myeza, oil and gas sector specialist at Transnet National Ports Authority (TNPA).
“It is north of 7 billion rand overall, the whole total project and TNPA will be co-investing,” said Myeza.
Vopak declined to comment.
The 2027 timeline meant the project, the first of three planned coastal gas import hubs, would not come onstream in time to help avert a potentially crippling gas shortage in 2026, industry officials said.
Petrochemical firm Sasol SOLJ.J sent notices last year warning its methane-rich gas supply would end from June 2026 as its gas fields in Mozambique deplete.
Sasol transports almost all South Africa’s gas needs of 190 petajoules per year from neighbouring Mozambique to its Secunda plant via the Rompco pipeline. Synthetic gas then leaves Secunda via Lilly pipeline for customers in the eastern coastal region of KwaZulu Natal.
“Is it too little? No. Is it too late? Yes,” Jaco Human, chief executive at the Industrial Gas Users Association of Southern Africa (IGUA-SA), said of the LNG import plans.
SUPPLY WORRIES
The CEO of Ardagh Glass Packaging Africa, which has turned to trucked LNG to help fuel its plants, said a gas supply crunch, if it happens, “would precipitate a national crisis”.
“Unlike the reduction of power during load shedding, there will be zero supply of this fuel source and operations will likely close,” Chief Executive Paul Curnow said, referring to power outages locally known as “load shedding”.
The TNPA said Richards Bay LNG project will be fast tracked to meet its 2027 import target.
New LNG import hubs were also planned at Ngqura and Saldanha Bay deep-water ports, Myeza said, while four other ports are being considered to host small and medium-scale LNG facilities to expand gas uptake.
IGUA-SA said the more advanced TotalEnergies-backed Matola LNG project TTEF.PA in Mozambique was the best option to secure supply by 2026.
“The fittest horse is the LNG Matola terminal. Richards Bay will come at some point in time, but it is unlikely to be this decade,” Human said.
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