[Premium] SA Minister Revives LNG/Power Programme

South Africa’s energy minister Jeff Radebe broke his silence May 16 on the country’s seemingly-stalled gas-to-power programme.

He told MPs in Cape Town in a budget vote speech that the programme is being rekindled: “The Gas to Power Programme was started two years ago and a substantial work has been done in relation to the required studies at the different ports, most important in Richards Bay and Coega." 

“I have thus instructed the IPP (Independent Power Producers) Office to resuscitate the programme, and take a lead in engaging with the different stakeholders (so) that the country is working towards a single goal,” Radebe added.

“The initial phase of the Gas to Power Programme will utilise imported LNG whilst looking at the options related to the regional gas and the domestic shale gas in the long term," he continued: "The result will be to stimulate the development of a gas demand in South Africa whilst providing a market for the expected domestic shale gas.”

The gas to power programme is expected to initially cost $3.7bn, with two port-based LNG imports terminals at Richards Bay and Coega, along with gas-fired plants of 2,000 MW and 1,000 MW respectively.

Offshore vessels (FSRUs) will be used to receive, convert and store imported LNG. In time, the programme may be extended to a third port, Saldanha Bay.

Radebe also said that he hopes that there will be substantial investment in the energy sector in South Africa.  

President Cyril Ramaphosa recently announced a target of $100bn in overall new investments for the country, and Radebe told MPs he hopes a quarter of this will come to the energy sector.

In another development, Radebe said his team will meet their colleagues from Mozambique to discuss a new pipeline to bring gas from northern Mozambique to the south of that country, and then into South Africa – nothing that his country has imported gas from southern Mozambique for over a decade. Officials from both countries will meet later this month to prepare a roadmap for a joint programme. Radebe said there could be a role for both state and private investment.

Developers of Rovuma offshore gas, such as Eni but also Anadarko, privately see parastatal plans to build a giant pipeline as a distraction from their key objective of monetising the gas through LNG exports to world markets by the mid-2020s, and paying royalties to the host government Mozambique; their sentiment is that South Africa could have spent the past two years developing its own LNG import plans.

Radebe went further: “We are firmly of the view that together with our Mozambican counterpart, we need to develop an infrastructure programme, which will allow the gas to be beneficiated through projects such as a Gas to Liquids [GTL] plant and other petrochemical facilities in Mozambique as well as a pipeline from Rovuma [offshore gas] to the south of Mozambique, which in our view would enable construction of gas to power projects in both countries.”

Energy minister Jeff Radebe (c) John Fraser