As South Africa scrambles to stabilise and diversify its energy resources while continuing to be heavily reliant on an ailing Eskom and its coal, which is causing devastating pollution, the country is now strongly looking at liquefied natural gas (LNG) and oil as alternatives.
Industry experts say heavy coal consumption and unreliable power generation make natural gas an attractive solution to diversify its power generation base.
Next month, South Africa will host a three-day Africa Oil and Power Exhibition conference in Cape Town. Representatives from many African countries and about 1 000 global leaders in the petroleum and power industry will attend. Themed #MakeEnergyWork, the conference will discuss the future of natural gas on the continent.
The conference embraces the entire African value chain, from upstream oil and gas operators, service providers, finance, and energy infrastructure to power generation, transmission and distribution.
South Africa is one of the focus countries as it readily presents petroleum and power opportunities, and has been identified as an influential market. Various countries will present their projects with the hope of getting funding deals signed and sealed.
Next year, Transnet is putting out a tender for the development of an LNG import terminal in Richards Bay, and the World Bank, through its International Finance Corporation, has already committed $2 million (R30.6 million) to fund the project.
Delivering his budget speech in July, Mineral Resources Minister Gwede Mantashe announced that the Coega special economic zone will be the preferred LNG importation hub. It is with this in mind that the Coega Development Corporation, the operator of the special economic zone, this week held a stakeholder networking session to prepare for the coming work and to showcase its preparedness.
The session was held in partnership with the SA Oil and Gas Alliance (Saoga), Petro Marine and Darmac.
“The purpose of the networking session was to position the Eastern Cape and indeed South Africa as a hub for gas resources, especially LNG,” Coega energy sector manager Sindisiwe Ncemane told City Press after the session. “We have looked at all energy plans broadly and we are gas-ready.”
Mlungisi Mvoko, the Eastern Cape’s economic development and tourism affairs MEC, said about 50 000 jobs will be created over 25 years.
In an interview with City Press, Mvoko said: “The Eastern Cape has the potential to create a thriving, inclusive and a job-rich oil and gas sector.
“By catalysing a gas industry alone, South Africa could see an additional 50 000 jobs created over a 25-year period, which, in turn, would stimulate a GDP growth of at least 1% from year 10.”
Key opportunities for gas include the possibility of the industry converting natural gas as a source of fuel and feedstock to ultimately unlock new industries down the value chain.
Mvoko said the gas and oil exploration at the Brulpadda gas find had opened up the south and eastern coast of South Africa as a new petroleum province.
“This will stimulate drilling activity along the Eastern Cape coast, where there are significant leads for substantial amounts of offshore gas,” he said.
Saoga director Niall Kramer said this discovery in Brulpadda, coupled with the Integrated Resource Plan (IRP) for electricity, raised great interest in South Africa from other countries.
“It will bring the Russians, Norwegians and many others, and we must be part of that establishment,” said Kramer.
The updated IRP is expected to be released to Cabinet this month. It is the guideline for the energy generation new-build programme, and it is believed that natural gas will also cater for the increased demand for access to affordable energy sources.
“As it goes before Cabinet in September, the IRP is an important policy as it defines the amount of gas and coal that go into the electricity mix. Once that certainty has been given, the ball will start rolling,” said Kramer.
A few years ago, Coega started to look at economic options to bring natural gas into the South African market.
For example, it has already set up the R3.5 billion Dedisa power peaking plant near Mossel Bay, which generates 335MW. The diesel-fired plant is designed in a way that it can be converted to allow for combined cycle, gas-fired technology.
“When all is said and done, at the heart of it all is that we must make sure the impact is not only felt by Coega or government, but that it is something for the people in the province and South African as a whole,” said Ncemane.