State-owned energy companies from South Africa and Mozambique have exercised their rights to buy the 30% stake in the Rompco natural gas pipeline that Sasol is selling, the companies said.

Petrochemical firm Sasol said last month it was selling the stake in the Rompco pipeline from Mozambique to South Africa to a consortium of investors including Reatile Group for an initial amount of R4.15bn.

But that deal was subject to pre-emptive rights on the shares held by existing shareholders iGas, a subsidiary of South Africa’s Central Energy Fund, and Companhia Moçambicana de Gasoduto (CMG), a subsidiary of Mozambique’s Empresa Nacional de Hidrocarbonetos.

iGas and CMG will now increase their stakes in Rompco to 40% each from their current level of 25%. Sasol, which is trying to shed assets to pay off debt, will reduce its shareholding from 50% to 20%.

The transaction will be fully funded from past and future dividends generated by the 865-kilometre pipeline, the Central Energy Fund and Empresa Nacional de Hidrocarbonetos (ENH) said in a joint statement.

“Having both governments as majority shareholders of the cross-border pipeline is strategic, since the pipeline is the single source of gas to the South African market,” ENH chief executive Estêvão Pale said.

Sasol said in a statement: “We can confirm that Sasol has received pre-emptive rights notices and will now review the notices. We believe that the successful partners will add significant value to this important regional energy asset.”

THE PORT of Richards Bay has been identified as one of three ports to support Transnet’s natural gas strategy, which seeks to provide storage and import facilities for South Africa’s growing natural gas sector.

In the short-to-medium term, the port will support the liquefied natural gas (LNG) power generation facilities and in the longer-term, LNG import facilities.

Portia Derby, the chief executive of state-owned rail, port and pipeline company Transnet, led a stakeholder engagement session on Friday where she shared the plan for the port of Richards Bay with the local government, business community and traditional leadership within Umhlathuze and the surrounding areas.

The port of Richards Bay, which lies 160km north of the port of Durban and 46km south of the port of Maputo in Mozambique, is a strategic industrial port, responsible for exporting commodities such as coal, chrome and magnetite.

Transnet said it planned to relocate its liquid bulk operations from the Port of Durban to the Port of Richards Bay to support the former’s transformation into a regional water container hub port.

Ayanda Shezi, Transnet’s spokesperson, said, “The port of Richards Bay is already well-equipped and located to take advantage of the migrated volumes. Liquid bulk lease sites and berths have already been identified in the South Dune precinct in the port for the relocation of the liquid bulk terminal.”

For coal exports, Richards Bay remained the primary coal export channel in South Africa. Transnet also said it aimed to maintain export coal targets as it worked to realise its carbon neutral targets over time.

Transnet planned to increase capacity for the handling of chrome ore and magnetite in the Port of Richards Bay as it remained the primary port of export for these commodities and was complemented by the port of Maputo as a secondary export channel.

Transnet said it would continue to engage with stakeholders for the growth and development of Richards Bay and its local communities.

In addition to normal port activities and operations, the port has a key role in the economy of the uMhlathuze Municipality, embracing the towns of Empangeni and Richards Bay, with its growing industrial base.

The port enjoys a strategic relationship with the Richards Bay Industrial Development Zone, which is situated in close proximity to the port, a prime industrial business and trade hub, attracting export-orientated investors as one of the leading Special Economic Zones.

Regarding LNG initiatives, Department of Mineral Resources and Energy Minister Gwede Mantshe said in his recent budget vote they were committed to developing the gas industry into the local economy. Mantashe said an environmental impact assessment study had been done for three gas-to-power plants of 1000 megawatts each to enable gas to power projects in Special Economic Zones.
The request for proposals would be issued in the third quarter of the 2021/22 financial year. An estimated total capital investment for 15 projects currently under construction, as licensed by the National Energy Regulator of South Africa, is R8.9 billion. From these projects, at least four of them with a value of R6.3 billion were expected to be completed by the end of this year.

Developments of regional gas-fields would lead to natural gas becoming a more important fuel in South Africa. Due to the availability of natural gas in neighbouring countries, such as Mozambique and Namibia, and the discovery of offshore gas reserves in South Africa, this was likely to lead to the gas industry in South Africa undergoing rapid expansion.

In addition to coal, gas and LPG, South Africa produces about 930 000 tons of natural gas and 104 860 tons of associated condensate.

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Tlou Energy is focused on delivering Gas-to-Power solutions in Botswana and southern Africa to alleviate some of the chronic power shortage in the region.  Tlou is developing projects using coal bed methane (CBM) natural gas. 
​Botswana has a significant energy shortage and generally relies on imported power and diesel generation to fulfil its power requirements.  As 100% owner of the most advanced gas project in the country, the Lesedi CBM Project, Tlou Energy provides investors with access to a compelling opportunity using domestic gas to produce power and displace expensive diesel and imported electricity.
The Company is listed on the Australian Securities Exchange, London’s AIM market and the Botswana Stock Exchange and is led by an experienced Board, management and advisory team including individuals with successful track records in the CBM industry.

Since establishment, the Company has significantly de-risked the project in consideration of its goal to become a significant gas-to-power producer.  The Company flared its first gas in 2014 and has a 100% interest over its Mining Licence and ten Prospecting Licences covering an area of ~9,300 Km2 in total.  The Lesedi and Mamba Projects already benefit from significant independently certified 2P gas Reserves of ~41 BCF.  In addition, 3P gas Reserves of ~427 BCF and Contingent Gas Resources of ~3,043 BCF provide significant additional potential.

The Company is planning an initial scalable gas-to-power project.  Following successful implementation of this first scalable project, the Company looks forward to evaluating longer-term prospects for the delivery of electricity generated from CBM in Botswana to neighbouring countries.

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A black-empowered consortium that includes companies with extensive gas-to-power experience has made a formal submission to the Department of Mineral Resources and Energy (DMRE) in which plans for power generation plants capable of adding between 300 MW and 3 300 MW to South Africa’s grid within 12 to 36 months are outlined.

The offer has been made in response to a request for information (RFI) released by the DMRE in December in an effort to inform an upcoming ‘Risk Mitigation Power Purchase Programme’, which will seek to address an immediate supply deficit of 3 000 MW with solutions that can be “grid connected in the shortest time at the least possible cost”.

The closing date for the RFI was January 31 and the DMRE has given itself a month to evaluate the proposals and design a procurement process.

Engineering News has not yet been able to confirm the number of submissions made ahead of the RFI deadline, nor what solutions have been proposed. It is understood, however, that the DMRE received a strong response, with hundreds of potential bidders having descended on the Centurion headquarters of the Independent Power Producer Office at the end of January to hand-deliver their proposals.

​One of the responses seen by Engineering News is an offer made by a consortium named Mhlathuze Energy, which derives it identity from the Zulu name for the river that meanders through Richards Bay, in KwaZulu-Natal – the proposed location for its project.

The consortium includes black economic empowerment company Phinda Power (a member of the Newlyn Group), Japanese multinational Marubeni and liquefied natural gas and gas-to-power specialist Golar Power.

Mhlathuze Energy’s proposal provides for the rapid deployment in Richards Bay of 300 MW (up to a maximum of 1 200 MW) of emergency power generation capacity that could be operational within 12 months of financial close.

The solution would involve the deployment of General Electric- (GE-) supplied mobile aeroderivative gas turbines. The solution would require the importation of liquefied natural gas (LNG) supplied through a floating storage regasification unit (FSRU) and the construction of the LNG marine import infrastructure.

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​In June 2017 Italian oil and gas company ENI committed to investing $10-billion on the building of Coral South, a floating liquified natural gas (FLNG) project off the Rovuma basin in Mozambique, the world’s first ultra-deep-water FLNG facility. 8

In June 2019, Mozambique LNG (led by US-based Anadarko) committed $20-billion on the development of integrated offshore and onshore gas fields, through LNG, in the Rovuma basin, east of Palma, and in December 2019, Rovuma LNG (led by ExxonMobil and ENI) is expected to commit $30-billion to develop the same.

Each of these projects marked the largest investment of its kind in Africa, only to be overtaken by the next. The chance for Mozambique to grow its $14-billion economy and repay its government debt, now sitting at 100% of GDP, is a once-in-a-lifetime opportunity.

Standard Bank, which is heavily involved in Mozambique’s gas sector, says the Rovuma LNG project alone has the capacity to boost GDP by between $15-billion and $18-billion per annum and contribute $5-billion annually to the fiscus and create 323,000 employment opportunities – with LNG as a whole potentially facilitating real GDP growth of 8% to 10% over the next 30 years.

While it is not yet clear to what extent South Africa will benefit from a new source of LNG – prices will have to be negotiated on competitive terms – local companies can benefit from the sheer volume of work underway in the northern neighbour.

“A $128-billion capex spend over a decade is a major opportunity for SA business to physically supply the projects (and associated investments),” says Paul Eardley-Taylor, southern Africa head of oil & gas at Standard Bank.

“SA could export goods and services to Mozambique, investors could form companies in partnership with Mozambique nationals,” he says.

There will also be opportunities for SA human capital working on the LNG projects and other domestic gas investments as employees, contractors, manufacturers, service providers and consultants.

Standard Bank has committed to finance part of the Anadarko project (which has been acquired by French petrochemical giant Total) and also plans to finance part of the ExxonMobil project due to be announced later in 2019.

This could then see South Africa’s Export Credit Insurance Corporation, a dti subsidiary, underwriting part of this investment, Eardley-Taylor says.

“This could secure market access for SA companies of over $500-million. And the same could apply if SA companies are involved in Rovuma LNG.”

At a recent Mozvest conference held in Cape Town, speakers noted the limitations of Mozambique’s infrastructure to handle projects of this nature.

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​The acting head of the Independent Power Producer Office (IPPO), Advocate Sandra Coetzee, says “time is of the essence” for finalising South Africa’s gas-to-power (GTP) plans in light of the prospect of possible electricity supply shortages arising from the underperformance of Eskom’s coal fleet.

Coetzee, who was appointed in July, says gas will definitely play a role in South Africa’s transitioning electricity system, as it offers the flexibility required to complement variable renewable energy plants. In addition, GTP plants can be built relatively quickly and have lower emissions than coal-fired stations.
Speaking at a seminar hosted by Nedbank and EE Publishers, she acknowledged that gaps remained in South Africa’s gas policy framework and indicated that Eskom’s weak financial position also posed procurement challenges, with the utility remaining the single buyer of power produced by independent power producers (IPPs).

In addition, South Africa did not have sufficient domestic gas resources to supply GTP plants, as well as existing and future industrial users, and had yet to build the infrastructure needed for the import and processing of liquified natural gas (LNG).

However, the imminent promulgation of the updated Integrated Resource Plan (IRP), together with the fact that a ministerial determination was already in place for the procurement of over 3 000 MW of GTP capacity by 2030, meant that South Africa was not entirely constrained by the absence of a coherent framework.

The draft IRP envisages the first 1 000 MW of GTP capacity being introduced into the South African grid by 2024, with a further 2 000 MW to be added by 2027.

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Bulk liquid storage operator Bidvest Tank Terminals’ (BTT’s) R1-billion mounded liquefied petroleum gas (LPG) storage facility in Richards Bay, KwaZulu-Natal, is set to house the largest tanks in the world and is expected to greatly enhance LPG supply in Southern Africa once completed, the company has indicated.
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The facility will store LPG on behalf of independent LPG specialist Petredec, which ships the fuel from the US and the Middle East. LPG is produced as a by-product in the oil refining process.

Petredec sought an import facility specifically on South Africa’s East Coast, and Richards Bay was seen as the most suitable port to handle this capacity. Being able to receive larger shipments also makes product handling more cost effective, reducing overall logistics costs.

The port is also on Petredec’s shipping route and in close proximity to the main rail and road logistics routes going inland, particularly as most of the LPG will be used in Gauteng, the Free State and the North West. This logistics infrastructure is also of high quality.

The project, currently under construction, was initiated at the end of 2017 and is slated for completion in July 2020. It is expected to increase LPG supply in South Africa by 200 000 t/y, half the country’s current consumption of about 400 000 t/y.

Replacement Energy Source
BTT and Petredec are confident that there is demand for LPG, BTT MD David Leisegang tells Engineering News.

The companies believe that the greatest demand will stem from LPG’s use as a replacement energy source, such as a substitute for wood or paraffin for heating and cooking. The use of these energy sources is still quite prevalent in South Africa, especially in informal settlements and areas where there is not any reliable access to electricity.

Leisegang emphasises that the health benefits of LPG are “considerable”, compared with the energy sources mentioned, as are its safety credentials, as “many of the fires in informal settlements are [the result of] cooking with these sources of fuel”.

LPG has been identified by the World Bank as the most environment friendly of all fossil fuels; therefore, the facility is expected to assist in providing a viable, reliable, safer and more environment- friendly energy alternative.

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Energy solutions company Novo Energy on Friday launched a R130-million large-scale natural gas compression facility at the Highveld industrial park, in eMalahleni, Mpumalanga.

The facility provides cleaner, and more reliable and cost-effective energy, compared with coal and other petroleum products.

At the launch, CEO Andri Hugo said the facility would play a significant role in helping to unlock South Africa’s power constraints, while also reducing carbon intensity.

“South Africa is a coal-based economy with about 77% of electricity generated from coal and a large portion of transportation fuels derived from the same source. Add to that the large percentage of industrial processes that use coal and you have an entire industrial sector built around cheap coal and electricity.

“But we depend heavily on imported resources for our hydrocarbon supply and this has resulted in exposure to international energy supply uncertainty, issues of reliability and price volatility,” he pointed out.

He added that although South Africa’s gas market is small, accounting for only 3% of the energy mix, the inherent benefits have the potential to change the economy by stimulating economic growth, development stability and job creation.

“Africa has been blessed with an abundance of resources, including minerals, energy, natural resources and human capital. A combination of these, through industrial activity, can address most of the socioeconomic challenges we face.

“Natural gas will play an important role in our energy mix through power generation, thermo-industrial applications and transportation and the vast natural gas discoveries on the continent will provide the key to unlocking our gas economies,” Hugo further pointed out.

Novo business development manager Justin Austin, meanwhile, said natural gas was the simplest hydrocarbon available, making it suitable as a feedstock for fertilisers, plastics and energy applications.

Natural gas can also be used as a heating fuel for industrial, commercial and residential applications, steam generation and direct heating applications, natural gas-run vehicles and power generation, he pointed out.

The eMalahleni gas compression station is Novo’s thirteenth – and its largest – such facility.

Austin said the most important application for natural gas going forward would be for power generation in remote locations, especially for remote mines that do not have grid accessibility and are using diesel as an energy source.

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The UK yesterday hit a milestone of running without coal power for three days in a row – the longest coal-free period in the country since the 1880s.

It started on Saturday morning and ended on Tuesday, according to National Grid, hitting a total of 72 hours and 10 minutes.

Without coal on the grid, 33 per cent of the UK’s electricity came from gas, 20 per cent from windpower and 24 per cent from nuclear.

Then there was 8 per cent from imports from France and The Netherlands, 7 per cent from solar, 6 per cent from biomass, 1 per cent from hydropower and 1 per cent from pumped storage.

Coal accounted for less than 7 per cent of Britain’s energy mix last year and the government is to phase-out the fossil fuel completely by 2025.

Hannah Martin, Head of Energy at Greenpeace UK, said in response to the coal-free days: “As coal power is phased out to prevent environmental disaster, and nuclear power phases itself out through economic disaster, the government would be wise to support the cleanest and cheapest energy sources, onshore wind and solar.”

"Offshore wind has proven to be popular and able to provide affordable clean energy, as well as skilled jobs and fair bills. As we have more and more days without coal, we need to make sure it is replaced with the renewable technologies of the future."

UK power generator Drax may be able to end its coal-fired power operations ahead of the government’s 2025 deadline.

The company’s CEO believes Drax’s biomass and gas-fired power operations, coupled with battery storage, are capable of replacing any coal closures ahead of time.

“We’re exploring options for repowering our remaining coal units to use sustainable biomass and gas which we believe could help us to become coal free even earlier than the 2025 deadline,” Drax chief executive Will Gardiner said. 

Drax has converted three of its six power plant units to burn wood pellets and plans to convert a fourth unit to biomass later this year. Drax said it could replace the remaining two units with gas plants and up to 200 MW of battery storage. 

You can track the live mix of renewables, fossil fuels or imports used in Britain's energy mix through the University of Durham's website at www.durham.ac.uk/dei/dashboard

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