Relief is in sight for the beleaguered gas industry as the National Energy Regulator has issued two licences for the development of much needed infrastructure on the West Coast that will increase liquefied petroleum gas (LPG) imports to help alleviate the shortage in the country.
Development is set to take place in Saldanha Bay after Sunrise Energy was granted a licence to construct a marine loading facility, a transfer pipeline and a storage facility. The second licence was awarded to Avedia Energy to construct a transfer pipeline and a storage facility.
The sector welcomed these developments to improve the supply of LPG – used for households cooking and heating. Current supply largely depends on local oil refineries which have limited capacity.
The regulator member responsible for Petroleum Pipelines, Dr Rod Crompton, told the Weekend Argus that phase 1 of the Sunrise Energy development would begin in September and was scheduled for completion in December 2016 while the first phase of the Avedia Energy facility was already in progress, to be completed at the end of this year.
The head of security supply at the South African Petroleum Industry Association, Siganeko Magafela, said the persistent LPG shortage was as a result of limited import-friendly infrastructure in the country and oil refineries that have a set production capacity.
Magafela said the Engen Petroleum Refinery in Durban was currently undergoing a planned shutdown and the South African Petroleum Refineries (Sapref), also in Durban, had just reopened following a shutdown. He said the country’s refineries had limited capacity which necessitated import of LPG from neighbouring countries.
Sasol spokesman Alex Anderson said LPG shortage was unavoidable in winter as more people used the product for heating. To add to the gas industry’s woes the Competition Commission has been conducting an inquiry into the supply and distribution of LPG to determine whether there was price fixing in the sector, among other matters.
The inquiry, now in its tenth month, comes in the midst of widespread supply shortages of LPG and allegations of possible price collusion and tampering with the demand of the product. According to the Commission there are features of the LPG sector that may prevent, distort or restrict competition.
Last month the Weekend Argus reported that the major gas resellers had increased the price of gas cylinders simultaneously by the same price.
lLPG-producing refineries include South African Petroleum Refineries,Engen Petroleum Refinery, both in Durban, Sasol Gas Synfuels in Secunda, Petroleum Oil and Gas Corporation of South Africa (PetroSA) in Mossel Bay, Chevron in Cape Town.