THE long process of establishing a Liquefied Natural Gas (LNG) import facility at Ngqura is underway. As one of the Top 12 Presidential Priority Infrastructure projects identified in March this year at the Sustainable Infrastructure Development Symposium South Africa (SIDSSA), the project receives preparation support through Infrastructure South Africa and the Industrial Development Corporation. The LNG Terminal in Ngqura is also registered as a Strategic Integrated Project (SIP).
Transnet National Ports Authority (TNPA) said last week, 25 September, that it has approached the market for an Environmental Assessment Practitioner (EAP) to conduct the Environmental Impact Assessment (EIA), encouraging interested parties to submit proposals for the envisaged LNG terminal at the Port of Ngqura.
The Request For Proposals (RFP) process will see the appointment of a service provider contracted to assess the environmental compliance and sustainability of the proposed LNG terminal. As a first step in the development process, this involves conducting a detailed analysis of ecological and local regulations to determine critical environmental authorisations. These include a seismic survey, marine ecology, climate change impact assessment and socio-economic assessment to support the project.
Timelines are on the fast-track. The RFP for the EIA closes on 30 October and TNPA said an RFP for pre-feasibility studies is planned to be issued during the 2024/25 financial year.
A new energy era
There are currently no LNG reception terminals in South Africa and, of the 170 worldwide, only 11 are in Africa.
Mandated to develop the country’s port capacity, TNPA is in the process of developing major LNG terminals at the ports of Ngqura, Richards Bay and Saldanha.
At Richards Bay, TNPA has appointed a joint venture between Vopak and Transnet Pipelines (TPL) to develop and operate what is being called the Zululand Energy Terminal (ZET). Phase 1 of the ZET is aiming for completion in 2028 and includes a 170,000 m3 Floating Storage Unit (FSU) and an onshore regasification facility with a capacity of 2 million tons per annum (MTPA) of LNG.
Phase 2 could be completed as early as 2032-35 and will include an LNG tank with a 220,000 m3 capacity, potentially replacing the FSU and an increased regasification capacity of 5 MTPA.
TNPA said last week that it is in the process of concluding a Terminal Operator Agreement (TOA) with the state-owned Strategic Fuel Fund (SFF) to build and operate an onshore LNG regasification facility at the Port of Ngqura for 30 years. TNPA said the TOA was the outcome of a Section 79 process and directive issued by the Minister of Transport.
TNPA sector specialist: oil and gas, Linda Myeza explains that the capacity of the Ngqura LNG facility will serve the Eastern Cape off-take demand with the initial demand being for Gas to Power (GtP) customers and other industrial users.
The LNG terminal will be located adjacent to the port’s eastern breakwater. Deputy port engineer, Luxolo Dodi says the location of the berth is such that the port can accommodate the development of other initiatives in the Port Development Framework Plans (PDFP) concurrently.
Dodi says TNPA expects construction work to be completed on the LNG berth by 2028/9. “The terminal should be operational not long after that, as the developer can work simultaneously on the Floating Storage Unit and regasification system,” he says.
The capacity of the new facility is not specified but TNPA has allocated a ballpark budget of R2,1 billion for port infrastructure design and construction.
Dodi explains that, at the Ngqura plant, the SFF is responsible for the operation and interaction with the market to secure offtake contracts. “They will be the main drivers of offtake. The baseline market is GtP, and we will have additional offtake as the market grows. For example, if there is demand for fuelling LNG-The LNG berth at the Port of Ngqura could be operational as early as 2028. This picture is of the powered vessels … and industry, we will accommodate that going forward.”
Myeza points out the importance of timing among the various stakeholders. “We are building the terminal now, but the off-takers need to build their facilities on time. It is very complex and there is a lot of interdependence. By the time we are finished, they have to be ready.”
The Ngqura LNG terminal operator, the SFF is part of a new energy company introduced by the President earlier this month. In a policy statement, President Ramaphosa said the new state-owned petroleum company, the South African National Petroleum Company (SANPC) has been formed following the merger of the CEF subsidiaries, iGas, PetroSA and the SFF. It concludes a process started by the Department of Mineral Resources and Energy in November last year.
In a media statement, the SANPC said that the new company will be incorporated as a subsidiary of the CEF until the National Petroleum Bill is promulgated into law.
“With the combined strengths of the three subsidiaries, a solid financial position, and robust stakeholder support, the SANPC is well-positioned to leverage [the market] benefits and seize the R95 billion market opportunity,” the state-owned company said.
Demand for gas
Myeza says there is a positive outlook for market demand for LNG in South Africa and the country only has one importer currently, Sasol, which brings in LNG via Mozambique.
“We know from industry usage that there is a need for LNG as an energy mix, for both commercial use and decarbonisation reasons,” he says.
The Industrial Gas Users Association of South Africa (IGUA-SA) has been warning of the looming ‘gas cliff’ that the country faces when Sasol cuts off its supply in mid-2027. The other major market segment is the thirst for gas to fuel power plants.
South Africa imported the majority of its 4.7 billion m3 of gas consumption in 2023 from Mozambique and it needs to find alternative supply to fuel industrial users and for GtP plants.
The GtP power programme as per the IRP 2019 and Draft 2023 includes both Eskom and Independent GtP generation. There is a total of 3,000 MW with 2,000 MW out in the market as the RFP for Gas Independent Power Producer Procurement Programme (GASIPPPP. The remaining 1,000 MW, earmarked for Coega Zone 13, will be issued in the later stage.
Sasol and Eskom
Meanwhile, Eskom and Sasol signed a Memorandum of Understanding (MoU) on 20 September to collaboratively explore and research potential future LNG requirements.
The collaboration aims to determine the potential volumes that South Africa requires to establish a viable LNG import market along with the enabling infrastructure and will be facilitated by government-to-government relations where necessary, they said in a joint statement.
The MoU, under which Sasol and Eskom will collaborate to drive an intensive initial phase of research and planning, was signed with the full support of the Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, who delivered the keynote address at the signing ceremony.
“We have made it clear that we are serious about LNG solutions for the country, and that our demand for gas across both industrial and energy frontiers will unlock these solutions,” said Minister Ramokgopa.
“This collaboration between our two energy champions – one public, one private – will provide a data-driven and commercially sound basis for gas-fed industrialisation and for us to explore the well-worn path to lower carbon energy that the global north has already taken by scaling gas to power.
Gas has emerged as the second-largest contributor to global electricity production, experiencing rapid growth as many countries shift from coal to gas in their energy mix to enable positive implications for climate change, as gas typically emits less CO2 per unit of energy.”
The research findings from the first phase of the Sasol-Eskom collaboration will guide the necessary role players and investors required to offer the best prospects for South Africa’s energy market, while outlining the challenges associated with the long-term commitments required for LNG imports, Sasol and Eskom said.
LNG Facts
- LNG stands for Liquefied Natural Gas. It is natural gas that has been cooled to a liquid state, at about -162°C, for shipping and storage.
- LNG takes up about 1/600th the volume of natural gas in its gaseous state.
- Despite its cold storage temperature, LNG is not explosive unless mixed with air in specific proportions.
- The first commercial LNG plant was built in Cleveland, USA, in 1941.
Many LNG terminals have the capacity to power millions of homes for a day with just one tanker’s load. - The largest LNG terminal in terms of capacity is Ras Laffan in Qatar.
Source: www.asap.nl
