R20bn plan to import gas

Coega possible – but Saldanha favourite

COEGA is one of several sites being considered for a possible R20-billion liquefied natural gas (LNG) import facility, it was reported yesterday. Others possibilities are Saldanha Bay on the west coast and Richards Bay in KwaZulu-Natal.

The Department of Energy is expected to decide on the terminal and its location next year.

But Saldanha has already emerged as the favourite site for the investment as the port there “ticks all the right boxes”, a Western Cape government official said in an interview with international news agency Reuters.

The terminal is among options the government is considering to diversify energy sources from coal and ease power shortfalls.

Several companies – including Shell, Mitsubishi and Sasol – are expected to bid for 3 126 Megawatt (Mw) gas-to-power projects in the first quarter of next year, when exact details will become known.

Yesterday, LNG project manager at the Western Cape provincial government Fernel Abrahams said building such a facility made economic sense as it would help improve energy security.

Pointing particularly to the advantages of Saldanha Bay, Abrahams said studies around ocean conditions, demurrage and market growth showed “it is technically feasible to land gas here”.

He said the plan would be to build an import facility at, or close to, Saldanha Bay with pipelines supplying enough gas for power plants to supply thousands of industrial users and homes stretching to Cape Town, about 150km away.

Abrahams said Angola and Nigeria were among likely source markets for the LNG.

In terms of overall location, analysts said, South Africa was close to oil and gas strikes offshore of Mozambique and Tanza- nia, as well as fields from Africa’s top two oil producers, Nigeria and Angola. Faster to install than nuclear or coal-fired plants, the proposed terminal would allow authorities to take advantage of favourable global LNG prices.

South Africa plans to add 9 600MW of nuclear power in the next 15 years, estimated by analysts to cost as much as $100-billion (R1.4-trillion).

Abrahams said the proposed LNG project would also supply gas to Eskom.

Eskom wants to convert Ankerlig and its sister OCGT plant, Gourikwa, to use gas to cut its operating costs.

Oil and gas specialist lawyer Luke Havemann said it was unclear if South Africa would first pipe gas overland from Mozambique or import LNG rather than exploit its own domestic shale gas resources.

It is estimated that South Africa has the world’s eighth-biggest shale reserves, but no exploration licences have yet been granted. – Reuters