Commenting on the suitability of the Richards Bay Industrial Development Zone (RBIDZ) for the location of South Africa’s first LNG gas terminal, Muzi Shange, RBIDZ Chief Operations Officer gave three fundamental reasons for the IDZ location as a key point.
Shange was speaking as an authoritative panel member during a recent gas webinar entitled “The Role of Gas in South Africa’s Energy Transition” that included Steve Nicolls, member of the Presidential Climate Commission, Tord Johnnson, Wärtsilä Energy, Keith Webb, RMB and facilitated by Jaco Human, Industrial Gas Users Association.
“The RBIDZ is the ideal location for the LNG gas terminal as it has existing infrastructure, access to a deep-water port of Richards Bay and is the termination point for Lilly gas pipeline which connects gas users to the ROMPCO gas pipeline which currently brings gas from the Pande and Temane gas fields in northern Mozambique to Sasol’s Secunda plant in Mpumalanga and onward to the Durban conurbation.
“Despite the delays on the release of Government’s long awaited Gas Masterplan which the industry trusts will give clarity on the future of LNG in South Africa, particularly in regard to gas-to-power (G2P) thermal industries and transportation, we are already at an advanced stage of planning the location of the gas terminal, three potential G2P producers (3GW) and associated reticulation to other users.
“The recently released 2023 Integrated Resource Plan clearly indicates that G2P is an integrated part of the country’s future energy mix with G2P expected to provide 6GW of flexible power by 2030. The characteristics of both open and the more efficient combined cycle gas turbine power plants means that a) they can run on a variety of fuels including natural gas, diesel and soon on hydrogen or ammonia, and b) unlike coal fired power stations, they can be switched on and off when needed, providing peak lopping, continuous or part load power when demand dictates.
“While the source of gas is currently being hotly debated – whether from offshore finds such as Total Energise Luiperd prospect or from existing producers in the Middle East, RBIDZ is an ideal location and we are currently working on feasibility studies ahead of investment proposals for the terminal and the downstream reticulation.
THE IMPLICATIONS OF THE GAS CLIFF
“The recent announcement by Sasol to gas users connected to the Mozambiquan supply that the resource to them will be terminated by 2026, now referred to as the gas cliff, could be catastrophic for existing users who rely on gas as their primary source of energy. Yet this situation presents another compelling argument for the terminal location in the RBIDZ. While the current flow of gas is from Secunda to Richards Bay is via the Lilly pipeline serving customers along the route, there is no reason why, when the flow of Mozambiquan gas is terminated, imported gas cannot use the existing pipeline flowing in the opposite direction!
“Although small by world standards, our gas economy is significant contributing some R300 – R400 billion to the fiscus annually while supporting 70 000 jobs. Developing an enlarged gas economy will rapidly contribute to this but right now investors, potential gas customers, and onshore developers of our own gas resources are waiting for a steady green light from Government.
TIMELINES
“While there is much that needs to be done to secure South Africa’s gas future – sources of supply, gas aggregation – matching demand and usage logistics with supply and ultimately cost determination, our primary focus is on the logistics of managing the gas supply point and the reticulation to gas users in the IDZ. With that in mind we estimate that given the green light now, a functioning gas terminal could be fully operational by 2028 with costs estimated at approximately R500-million. Reticulation and a scaled-up Lilly pipeline would add up to an additional R1-billion investment. These numbers are not daunting to would be investors but clarity is required on the way forward and the role of private investors in what will become a strategic industry” he explained.
All panellists agreed that the issue of developing a gas economy is high complex with many potential stakeholders having differing vested interests and the shadow of global aspirations of net zero climate considerations by 2050 weighing on investment decisions and risks on what some might see gas as a stranded asset.
Structuring such an economy is another imponderable – government control or private sector involvement, concessions and operating licences – the list goes on and how will our major export markets respond to our apparent delay in carbon reduction in energy production?
The imminent release of the Gas Masterplan is not seen as the panacea but will, it is hoped, provide some clarity on the way forward, concluded Shange.
BIOGRAPHY
Muzi Shange – Chief Operations Officer – Richards Bay Industrial Development Zone
A seasoned professional with experience in both public and private sector, and expertise in energy and water infrastructure, economic development, strategy development, geomatics, and environmental sustainability.
Former Head of Strategy & Economic Regulations – Air Traffic Navigation Services
Founder and Former Managing Director – Accruetech Energy Group
Former COO – Department of Mineral Resources and Energy
Former Chief Business Analyst – Eskom Holdings
Former Director at Spatial & Land Information – Water Affairs and Forestry
Former President of the South African Rights of Way Association (SARWA)
QUALIFICATIONS:
Master of Business Administration
Master’s Degree – Environment & Development (Land Information Management)
Post Graduate Diploma General Management
National Diploma – Land Surveying
