South Africa’s state-run logistics company Transnet has decided to build the country’s first liquefied natural gas (LNG) import terminal at Richards Bay port. The company is expected to launch a tender next year.
The decision was made after the current supplier, Sasol of Mozambique, revealed that its supply would take a hit from 2023 due to maturing fields at Temane and Pande.
While South Africa still relies on coal for the generation of 90 percent of its electricity needs, the construction of the LNG terminal will help the country diversify its energy sources.
The cost of the project will be determined only after a pre-feasibility study. The World Bank has pledged $2 million to help finalise the design, construction, and its operation plan. The company expects the project to be completed and become operations ready by 2024.
According to Transnet, the ground-breaking initiative is intended to unlock a backbone of the country’s natural gas network infrastructure to serve existing and growing gas markets, consisting largely of industrial and commercial off-takers located in KwaZulu-Natal, Mpumalanga, Free State, and Gauteng provinces.
Transnet chief business development officer Gert de Beer told the media that, “Ports and pipeline infrastructure are a long-term investment and we have to plan for this, with liquefied gas being a major catalyst to boost the country’s economy, especially for industrial users who are mainly located on the upper eastern half of South Africa.”
He also added that, “Transnet has identified significant industrial demand for natural gas and opportunities to leverage its ports, pipelines and rail assets to facilitate private investment in gas infrastructure for South Africa.”