South Africa could receive its
first exports of liquefied natural
gas (LNG), as an alternative
source of energy, by early in the
next decade.
This follows the Department
of Energy’s announcement of
the preliminary information
memorandum (PIM) for the
LNG-to-Power Independent
Power Producer (IPP)
Procurement Programme.
“The LNG-to-Power
programme will see SA invest
US$3.6bn in a 2 000-MW
power plant at Richards Bay
and an additional 1 000-MW
plant at Coega,” said
Luke Havemann,
senior associate
at legal firm
Bowmans’
Cape Town
office in the oil
and gas sector
group.
Addressing
delegates at a Bowmans
seminar focusing on ports and
harbours held in Johannesburg
last week, he pointed out that
earlier this year South Africa
had been identified as one of
the three most attractive LNG
markets in sub-Saharan Africa
due to “the size of its domestic
power market and a push to
diversify away from coal”.
Havemann added
that other push factors
for the LNG-to-Power
programme included
delays in developing
South Africa’s own gas
reserves as well as the
opportunity to capitalise
on current low LNG
prices.
“The alternative of
piping gas from the
Rovuma
Basin in
Mozambique would cost twice
as much,” he commented,
adding that the deputy director
of the Department of Trade
and Industry, Garth Strachan,
had indicated recently that SA
was preparing to import up to
three million tonnes of LNG
per annum.
The head of
the IPP, Karén
Breytenbach,
said that the
initial focus
would be
on creating
marine-based
floating
storage
regasification
units (FSRUs),
due to their
affordability,
quicker
operation
time and the
reduced risk
of stranded
assets.
She pointed out that 1
million metric tonnes and
600 000 metric tonnes of
gas for Richards Bay and
Ngqura respectively had been
forecast per annum, with the
infrastructure costs amounting
to an estimated R25 billion.
Breytenbach emphasised
that the biggest project cost
would be the procurement of
gas over the 20-year power
purchase agreement (PPA) to
be signed with state-owned
power utility, Eskom.
She noted that the IPP Office
was looking at how best to
hedge this out over a period
due to currency
fluctuations,
with gas most
probably to be
procured in US
dollars.
The next
step in the
process will
be the issuing
of a request
for proposals
(RFP) which
is expected to
be announced
next month
(November),
followed by
a request for
qualification
(RFQ) in April next year.
The final RFQ is expected by
August 2017.
According to Andrew Pike,
head of ports, terminals and
logistics corridors at Bowmans,
work on the FSRUs should start
by 2019, if “all goes according
to plan”.
INSERT & CAPTION
The LNG-to-Power
programme will see
SA invest US$3.6bn
in a 2 000-MW power
plant at Richards Bay
and an additional
1 000-MW plant at
Coega.
– Luke Havemann
