LNG Market in South Africa
The realisation of the potential natural gas reserves within the SADC region, and especially the potential held within South Africa for indigenous gas, represents a significant opportunity to boost economic growth, employment, and investment. In addition to providing strategic security of supply for electricity generation, the development of these gas reserves will provide significant investment opportunities in South Africa and the region in economic infrastructure and new energy opportunities for industrial, commercial and residential applications and fuel switching.
South Africa’s Department of Energy (DoE) aims to, through the LNG to Power IPP Programme, develop the gas industry and maximise the socio-economic benefit to South Africa, while also striving to balance this outcome with the country’s energy security and diversity requirements. The LNG to Power Programme has been initiated by the Department to achieve the current Determination’s objective of a total of up to 3 000MW of Capacity from the gas-fired power generation facilities.
According to previous studies that were conducted, South Africa’s potential demand for gas in SA can be up to 870 PJ (~25 bcm) by 2032.
Potential developmental impacts for South Africa’s industrialisation could be large:
- Gas-fired power generation alone could use > 100 PJ and add around ZAR 140 billion to GDP;
- Industrial demand could be > 1 200 PJ, transport > 148 PJ and residential/commercial < 40 PJ.
- At the right price, gas-based downstream industries (e.g. steel and petrochemicals) could add ZAR 110 billion to GDP and create 230 000 jobs.
LNG Market Size in South Africa:
The African LNG market holds 7.1% of proven global gas reserves and is expected to contribute nearly 10% of global production growth through to 2024.
Major pipelines in South Africa:
- ROMPCO pipeline: This 865 km pipeline from Temane in Mozambique to Secunda in South Africa is jointly owned by Sasol, the Mozambique government and the South African government.
- Lilly pipeline: Transnet owns this 600 km pipeline from Secunda to Durban;
- Sasol pipelines: Sasol owns several gas pipelines originating in Secunda and reaching destinations such as Johannesburg, Ekurhuleni, Pretoria, Sasolburg, and Emalahleni.
- The Southern Karoo area could be a reserve of 485 trillion cubic feet, which would make it the fifth-largest shale gas field in the world. The Area of the Karoo depicted in the below image is clearly contained predominantly within the borders of South Africa.
Sources of natural gas in southern Africa:
- PetroSA gas production: The offshore shallow gas fields supplying the gas-to-liquids facility of PetroSA has been producing since 1991.
- Pande and Temane gas fields: These onshore Sasol gas fields has been producing since 2004. Statistics show that their gas production has been steadily increasing.
South Africa’s Integrated Resource Plan (IRP):
The integrated resource plan is currently being updated and is likely to include a higher proportion of gas. A number of gas options are being considered, including South Africa’s own modest offshore resources, LNG imports, a gas pipeline from Mozambique, shale gas, and coal bed methane. Although no detailed assessment, prioritization, sequencing, or timing of these options has yet been decided, it is clear that South Africa will use much more gas in the future.
South African Projects in the pipeline:
- The National Development Plan (NDP) envisages that by 2030 South Africa will have an energy sector that promotes economic growth and development through adequate investment in energy infrastructure. The plan also envisages that by 2030 South Africa will have an adequate supply of electricity and liquid fuels to ensure that economic activity and welfare are not disrupted and that at least 95% of the population will have access to grid or off-grid electricity.
- Transnet State-owned freight logistics firm Transnet plans to launch a tender next year for South Africa’s first terminal to import liquefied natural gas (LNG) at Richards Bay port (Coega IDZ), with first gas expected to land in 2024.
- Palma–Johannesburg, the estimated pipeline tariff for a 36-inch pipeline from Palma to Johannesburg is $3.20 per MMBTU. This would result in a delivered gas cost of $5.70‒10.90 per MMBTU, depending on how the commodity gas is priced. Given the size of the South African market, aggregating substantial power and nonpower demand volume seem feasible, and this could make a pipeline from Palma to South Africa an attractive proposition.
In support of the vision for the South African gas programme, government has developed an LNG to Power IPP Procurement Programme. This programme will serve as an anchor for the gas infrastructure required for the establishment of a gas market in South Africa. The introduction of gas into the South African economy will lower the country’s carbon emissions not just from the electricity generation but also from the energy sector as a whole, including the transport sector.
South Africa aims to, through the LNG to Power IPP Programme, develop the gas industry and maximise the socio-economic benefit to South Africa, while also striving to balance this outcome with the country’s energy security and diversity requirements. The LNG to Power Programme has been initiated by the South African Department of Energy to achieve the current Determination’s objective of a total of up to 3 000MW of Capacity from the gas-fired power generation facilities in South Africa.
Sources:
https://www.gov.za/about-sa/energy
https://www.gov.za/about-sa/energy
https://www.bizcommunity.africa/Article/
