SA creating unit to import gas for power plants: Regional suppliers Mozambique, Botswana being considered

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SA creating unit to import gas for power plants: Regional suppliers Mozambique, Botswana being considered

9:31 CAT | 23 May 2016

SA is creating a unit to import liquefied natural gas (LNG) for power plants as suppliers, including Cheniere Energy, await fuel tenders for annual shipments of at least 3-million tonnes.

The Gas Industrialisation Unit will initially focus on importing LNG as SA seeks to reduce its dependence on coal-fired power, Garth Strachan, a deputy director-general at the Department of Trade and Industry, said on Monday. Eventually, the unit will also seek to tap domestic sources of natural gas, he said.

“We’ve got to ensure that oil and gas industrialisation has to be one of the pillars of industrialisation going forward,” said Strachan.

Houston-based Cheniere is among companies interested in supplying SA’s gas-to-power programme, which plans to add 3,126MW of capacity between 2019 and 2025.That could require annual LNG imports of about $530m,according to Trevor Sikorski, an analyst with Energy Aspects in London.

Almost anyone with gas was looking for demand at the moment, but the most competitive supply for SA would be from Nigeria, Angola, the US and possibly Qatar, Sikorski said.

The new government unit, which requires final approval from the Energy Ministry, will consider regional gas supplies from Mozambique and Botswana, Strachan said. Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos expects Anadarko Petroleum and Eni to make final investment decisions on LNG export projects later this year.

SA also announced plans last week for legislation to clarify rules 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.

Source: Bloomberg