R1bn LPG import storage plan

Petredec and Bidvest reach agreement on bigger tank terminal by 2019

LIQUEFIED petroleum gas (LPG) company, Petredec has entered into an agreement with bulk liquid storage operator Bidvest Tank Terminals for the development of a new R1 billion LPG import and storage facility at Bidvest’s existing site in Richards Bay.

The Competition Commission earlier this year identified inadequate LPG import and storage infrastructure among factors holding back the growth of the LPG industry in South Africa.

In a report on the market inquiry on competition in the LPG sector, released in April this year, the Competition Commission said in order to encourage the sustainable supply of LPG throughout the year, the focus of this sector should be on constructing larger import and storage facilities.

South Africa normally relies on imported LPG when demand outstrips supply or when local refineries are undergoing maintenance shut-downs.

The commission said LPG was normally imported from international traders such as Petredec and Geogas.

The traders supplied imported LPG to wholesalers, who in turn on-sell to end user customers.

LPG usage in South Africa is largely skewed towards industrial and commercial users who account for approximately 85 percent of consumption, with household users consuming the remaining 15 percent.

Bidvest said on Friday that the 22 600 ton storage facility would be the region’s largest pressurised LPG import terminal, featuring four mounded tanks, each capable of storing more than 5 500 tons of gas, guaranteeing year-round availability.

“Despite growing demand in domestic and regional markets, the LPG imports have historically been hampered by high costs resulting from South Africa’s small coastal terminals and distance from major supply hubs.

“The commissioning of this new large-scale facility – also capable of seaborne re-exports to neighbouring countries – will unlock previously unattainable economics resulting in lower supply prices to the local market,” Bidvest said.

With the breaking-of-ground planned in September this year and an estimated 27-month con- struction schedule, the facility would be operational in the fourth quarter of 2019.

The company said 24-hour road tanker and railcar loading facilities would ensure constant supplies 365 days a year, enabling local LPG marketers to guarantee product availability to their customers throughout South Africa.

Bidvest said Petredec already supplied most of South Africa’s imported LPG and investment in large, dedicated infrastructure was the only way to increase the fuel’s popularity and bring lower prices to consumers.