Cost of South Africa's first LNG import terminal pegged at $372 mln-plus

Koninklijke Vopak NV

14/02/2024 08:15

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      Richards Bay LNG one of three import mega hubs
    

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      Looming gas shortages worry industrial users 
    

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      Mozambique's Matola terminal an option for gas supply
    

  
    By Wendell Roelf
       CAPE TOWN, Feb 14 (Reuters) - 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.
($1 = 18.8109 rand)

 (Reporting by Wendell Roelf; Editing by Olivia Kumwenda-Mtambo
and Miral Fahmy)
 ((wendell.roelf@thomsonreuters.com; +27 21 461 3523;))