Energy major ExxonMobil has signed a liquefied natural gas (LNG) supply deal for what is expected to be South Africa’s first LNG import facility. The project is also inviting expressions of interest (EOI) from contractors to advance its buildout.
The Zululand Energy Terminal (ZET) project is being developed as a joint venture between Vopak Terminal Durban and Transnet Pipelines.
According to project developers, the terminal is intended to serve as ‘South Africa’s primary gateway for LNG’ while diversifying the country’s energy infrastructure.
ZET Director Oliver Naidu believes the ExxonMobil deal will strengthen the project, which is to be built at Port of Richards Bay in KwaZulu-Natal.
“ExxonMobil’s participation helps reinforce the importance of Richards Bay port as an entry point for LNG and supports plans to unlock a competitive and sustainable gas market,” said Naidu.
The company has identified South Africa as a priority market it seeks to expand its global LNG portfolio to more than 40 million tonnes per year by 2030.
Meanwhile, the EOI will enable qualified engineering, procurement and construction contractors to take part in delivering the project.
This will be followed by an official request for information and a request for proposal, both of which are designed to assess contractor capabilities and promote fair and open participation.
“Successful contractors will be expected to support local supplier participation, skills development and the utilisation of local labour,” stated ZET.
South Africa’s Transnet National Ports Authority signed a 25-year agreement with ZET for the development of the terminal last year.
TNPA also plans to develop an onshore LNG regasification at the Port of Ngqura in the Eastern Cape. The project will be developed under a 25-year terminal operator agreement with Ukwanda LNG.
The partners plan to invest around R22bn ($1.3bn) into the project, while TNPA will invest a further R2bn ($123m) to develop a dedicated LNG berth.
Drone view of Durban harbour, one of South Africa’s busiest ports in Durban ©REUTERS/Shiraaz Mohamed
Global commodity trader Vitol said it is backing a consortium planning to build a $3bn gas-fired power station and LNG import facility at the country’s east coast, Durban port.
Earlier this month, state-owned utility Eskom and ZET signed a deal to supply gas to a planned 3,000 MW gas-fired power project.
The project forms part of broader efforts to mix up South Africa’s energy portfolio and reduce dependence on ageing coal-fired plants operated by Eskom.
The overreliance on these plants, which provide most of the country’s electricity, is a driving factor behind widespread loadshedding – an ongoing period of national power outages beginning at the end of 2007.
Phase one of the terminal will comprise a floating storage unit and an onshore regasification facility with capacity to handle around three million tonnes of LNG annually, equivalent to approximately 400 milion standard cubic feet per day (mmcfd) or 11.3 million cubic metres per day.
According to Naidu, a planned second phase would increase total project costs to around $1bn, expand capacity to 4.5 million tonnes per year and lift daily gas throughput to about 600mmcfd through additional onshore storage and regasification infrastructure.
South Africa faces growing gas supply concerns as output from Mozambique’s Pande and Temane fields declines and Sasol prepares for reduced pipeline imports later this decade.
LNG imports are increasingly seen as critical to meeting industrial and power-sector demand, although rival import projects at Richards Bay, Coega and Saldanha Bay have struggled to secure anchor customers and long-term supply agreements.
