South Africa has established a gas industrialisation unit for importing LNG to use as fuel for power generation.
This move is aimed at reducing South Africa’s dependence on coal-fired power, the department of trade and industry deputy-director general Garth Strachan said at a presentation in Cape Town. The unit will initially focus on importing LNG and eventually seek to tap domestic sources of natural gas.
"We have to ensure that oil and gas industrialisation has to be one of the pillars of industrialisation going forward," said Strachan.
The country plans to add 3,126MW of capacity between 2019 and 2025 under the gas-to-power programme. According to Energy Aspects analyst Trevor Sikoriski, this could require annual LNG imports of around US$530 mn. He also predicted that while there are many options available, “the most competitive supply" for South Africa will be from Nigeria, Angola, the US and possibly Qatar.
Houston-based Cheniere is among companies interested in supplying to the programme, which will require annual shipments of at least 3 mmt.
According to Strachan’s statement, the new government unit, which is awaiting final approval from the Energy Ministry, may consider regional gas supplies from Mozambique and Botswana. Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos expects Anadarko Petroleum Corp and Eni SpA to make final investment decisions on LNG export projects later this year.
South Africa has also recently announced plans to create a legislation for the production and transportation of natural gas, paving the way for the development of shale-gas reserves in the country’s semi-desert Karoo region.