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The front-end engineering design (FEED) for the Beluluane Gas Company (BGC) liquified natural gas (LNG) import terminal project – being developed by Southern African energy group Gigajoule, French energy multinational TotalEnergies, and Mozambican natural gas distributor Matola Gas Company (MGC) – has been completed, adding another key milestone to the project. Mozambique’s State-owned gas company, ENH, a shareholder in both MGC and Rompco (the gas pipeline that runs from Mozambique to the industrial heartland of South Africa) has a share in the project.
The project will meet the growing energy demand in both Mozambique and South Africa by utilising MGC’s existing gas pipeline network that will be upgraded to increase its capacity to supply the full capacity of Rompco. Natural gas will be available to industries and power generation projects.
Gigajoule CEO Jurie Swart explains that the Government of Mozambique awarded the LNG import concession to BGC and approved the construction of a new, 28-inch pipeline linking the terminal to the existing MGC transmission network two years ago, after many years of prefeasibility studies. The concession includes the operation of a permanently moored floating storage regasification unit (FSRU), marine infrastructure, and a new high-pressure gas pipeline.
The project is critical for energy security in the region. There is insufficient natural gas to meet the current demand for market growth and the power generation needs in Southern Africa, which is set to worsen as output from the Pande and Temane gas fields start to decline within the next three to five years. This shortage is exacerbated by the urgent need to transition away from coal as a fuel source and to complement the volatility of renewables.
The gas infrastructure will connect the FSRU to a new 2 000 MW gas-fired power plant to be located in Matola, Mozambique, which is well situated on the Southern African grid and able to supply industries with cleaner, dispatchable power at a market competitive tariff.
The project includes an onshore LNG Truck Loading Facility (TLF) capable of supplying customers by road transport who are not situated close to the pipeline distribution network. Preliminary studies indicate that the TLF can compete with alternative fuels for gas transported up to 1 000 km from Matola.
“The TLF will enable industries and independent power producers to obtain natural gas, even in areas not near the natural gas infrastructure. This becomes all the more important since the announcement of the 100 MW Electricity Regulation Act amendment earlier this year,” notes Swart.
The project is located next to the existing MGC infrastructure and is only 90 km away from the Rompco pipeline. “This proximity to the existing gas infrastructure saves building a new supply line to Gauteng, drastically reducing transport costs to gas users,” he says.
“We are already signing up customers for the BGC project, which is now further advanced than what has been previously announced. The project could deliver gas by 2024; however, this is dependent on the commitment by the market,” he emphasizes.
As proposed in the Integrated Resource Plan 2019, by 2030 the South African grid capacity could comprise 33% solar photovoltaic and wind power plants. However, capacity should not be confused with actual electron flow, and renewable power plants, even when coupled with battery storage, are not completely reliable.
“Although the BGC partners are supporters of an energy transition and decarbonisation – which is non-negotiable – the sun does not always shine and the wind does not always blow. Thus, gas-fired power plants are the most cost-effective alternative to balance the variability of renewables and to maintain a constant, dispatchable power supply to the grid. We cannot throw the baby out with the bathwater and forget the pressing need to create good quality industrial jobs in our region and to get our economies moving,” says Swart.
He adds that natural gas as fuel for power generation is also considered to be much cleaner than coal since natural gas combustion produces zero particulate emissions, zero sulphur dioxide, and 60% less carbon dioxide.
While natural gas is not a completely green power source, it is the cleaner option for supporting the development of renewable energy and transitioning away from coal dependence. What is left of the Pande/Temane fields will not provide for this transition.
“Final investment decision is expected mid-2022, depending on the level of off-take secured at that stage. The FEED has now been completed and approved; final environmental reports compiled; and all development processes, licenses, and approvals are on track, while commercial engagements with the market have already kicked off with first commitments signed,” remarks Swart.
Finally, he stresses that there has been no impact on the project as a result of the unrest in the north of Mozambique, explaining that the BGC terminal will be supplied from TotalEnergies’ global LNG portfolio, meaning that there will be no supply challenges once the LNG terminal is online.