LNG key to reduce South African emissions: DNG
DNG Energy is promoting the use of LNG for road and maritime transport, specifically for trucks, buses, and ships in South Africa. Last month it received South Africa’s first-ever consignment of LNG. The shipment arrived from Rotterdam.
The company has commissioned South African Shipyards in Durban to build an 8,000 metric ton LNG barge that will be moored at Coega. It is planning to build LNG dispensing stations and retrofit existing ones. On December 6, it secured approvals from the country’s energy regulator to import and store LNG at five sites. The company can now operate LNG storage facilities in Eastern Cape, Gauteng, Mpumalanga, and Western Cape.
In an interview with NGW, DNG CEO Aldworth Mbalati speaks about the company’s future plans, the opportunities that the South African market offers and how LNG must be a part of the solution to ensure that the new build investments the country makes today have as low emissions as possible.
DNG Energy recently received South Africa’s 1st commercial shipment of LNG. Where will this LNG be used?
Yes, we are pleased that we made history in democratic South Africa by being the first black company to bring the first commercial LNG into the country. The first consignment will be used in various sectors of our economy, including the transport sector. South Africa is pushing to diversify its energy sources away from coal, which supplies more than 90% of its electricity and to expand capacity to reduce power cuts that have hit growth.
The company is promoting the use of LNG in the transportation sector in South Africa. Can you tell us which segment in the sector holds the biggest promise: personal vehicles, commercial vehicles like taxies or heavy trucks?
The biggest segments are commercial vehicles and long-haul trucks. Long-haul trucks are the backbone of South Africa’s commerce; they move goods throughout the country. As a result, they are the largest net users of fuel and replacing diesel with LNG holds the biggest promise. This also aids in the reduction of carbon emissions. The taxi industry moves millions of people on South African roads, and as a result, servicing these sectors will allow us to impact the industry in a noticeably big way.
How do you see the demand for LNG in the maritime sector in South Africa? Tell us about your Port of Coega project.
South Africa’s geographic position is at the second busiest shipping lane in the world (Algoa Bay). There are over 57,000 opportunities that go past Algoa Bay each year. This gives us the opportunity to supply LNG to thousands of vessels passing by the port and this also makes South Africa be a prime bunkering spot for LNG fuel.
Catering to the transportation sector will require infrastructure such as import terminals and then LNG stations. Tell us about the LNG infrastructure that the company is building in South Africa? How many LNG stations do you plan to build in the coming years?
We are looking at developing our own sites, and we are planning to retrofit existing sites. In terms of terminals, we have our first floating storage unit, or our first floating terminal that will be commissioned by the end of Q1 next year in the port of Coega and we have three other ports that are under development in terms of developing infrastructure.
Is the company also planning to sign medium- and long-term LNG supply deals?
Yes, that we are. We are planning to buy LNG under long-term contracts that will be able to give our customers the comfortability that we have long-term supply in place and predictability from a pricing perspective.
Tell us about the company’s various marketing/partnership models when it comes to promoting LNG in the transportation sector?
LNG has a big opportunity to replace heavy polluting fuels. We believe that bringing LNG to the country is indeed a pathway towards energy transition.
Does LNG/gas enjoy cost advantage vis-à-vis liquid fuels such as petrol and diesel in South Africa?
In the context of the current energy transition sought by the South African government, it represents an excellent alternative to reduce greenhouse gas emissions and help combat global warming. And consumers have an advantage of about 50% cost saving.
What kind of LNG demand do you see in the South African transportation sector say five years down the line?
We believe that in five years, there will be at least 60 petajoules of gas demand in the market. DNG Energy believes LNG must be a part of the solution to ensure that the new build investments the country makes today, which will be the legacy for the coming decades, have as low emissions as possible. It is expected that in 2040, natural gas is expected to be second only to coal as the world’s most widely used fossil fuel, according to IEA's Momentum Scenario.
According to IEA's Momentum Scenario, in 2040, natural gas is expected to be second only to coal as the world’s most widely used fossil fuel.
Is the company also eyeing markets beyond South Africa? If yes, which are?
Yes, we plan to continue growing in Nigeria and the Southern African Development Community Region. We plan to explore opportunities in Sub-Sahara Africa.