Transnet is forging ahead with plans to establish a natural gas network in SA, even though the market demand does not yet exist.
Speaking at a seminar hosted by the Industrial Gas Users Association of Southern Africa, Transnet’s chief business development officer, Gert de Beer, said work by the state-owned logistics monopoly on a natural gas network project is at an advanced stage with aim to reach bankability by March 2020. If all goes to plan, first gas could land in SA in 2024.
The work centres on Richards Bay as a Liquefied Natural Gas (LNG) import terminal, with a Floating Storage Regasification Unit — a special ship moored offshore — as the most likely option, and involves using existing pipelines to transport the gas inland. Transnet has also committed that the project will not have to be underwritten by the state.
“We are going momentum,” De Beer said. “If we can bank just the base use of infrastructure, we will spend the money in anticipation for the latent demand and the growth path of the gas industry.”
Though the government has expressed its ambition to develop SA into a gas economy, it is yet to produce an enabling policy framework that can kick-start the sector.
Currently, natural gas is piped into SA from Mozambique, the bulk if which is used in Sasol’s operations with a number of industrial users also dependent on the feed stock. However, the source of the Mozambique gas is running dry and industry is urgently seeking out alternatives.
According to Transnet, the pent-up demand for gas in SA is estimated to be double the 190-million gigajoules that exists now.
Though an inconceivable venture for a private sector outfit, Transnet’s “build it and they will come” approach is made possible by its developmental mandate to unlock and accelerate economic growth ahead of demand, and by its sizable balance sheet.
De Beer said once a bankable business case is approved, regulatory approvals must be obtained if the project is to live on. De Beer warned that the success of the project may also be influenced by different regional strategies that demand similar or competing infrastructure.
There are also other projects in the works that could facilitate the import of gas into SA, including the LNG hub in Coega, as designated by the government, as well as the Matola import terminal in southern Mozambique, which is close to the existing pipeline that brings gas into SA.
But De Beer and other industry experts say it’s not a matter of one or the other. “It’s not a question of Richards Bay or Coega,” he said. “Both will work. The economic development of the Eastern and Southern Cape as driven out of Coega will happen.”
Johan de Vos, MD of Gigiajoule, the majority shareholder in the Matola Gas Company, said he believes SA needs four import terminals in the long term. “Matola, Richards Bay and Coega — and let’s think about Saldanha again,” he said.
Ed Cameron, Sasol senior vice-president for alternative gas supply, said the gas game is all about anchor load with some diversified offtakers. Sasol could be that critical anchor load for SA gas, Cameron said.
“I see a deal space, where we can put something together that will be good for Southern Africa, good for SA,” he said. “The key is going to be to talk turkey. We will all have to be courageous and take the first steps and enable this development.”