PetroSA, South Africa’s state-owned oil company, said it planning to build a liquefied natural-gas terminal off the nation’s south coast that may cost as much as $510 million.
PetroSA contracted WorleyParsons Ltd., Australia’s largest oil and gas engineering company, to conduct a front-end engineering design study for the project that’s expected to be finished in September, it said in a statement handed to reporters in Mossel Bay, about 400 kilometers (249 miles) west of Cape Town. A final investment decision is due in the fourth quarter of next year, and the project will be handed over by contractors to PetroSA by the first three months of 2018.
“LNG is an enabler for any offshore or onshore finds” that may be discovered,’’ Thabo Kgogo, the company’s vice president of operations, said in an interview. “We will be looking to bring in strategic partners to do this with us.”
Fields off Mozambique’s Indian Ocean coast are estimated to hold enough gas to meet global demand for two years, with Eni SpA, Anadarko Petroleum Corp. and Statoil ASA holding exploration and production contracts there. East African gas discoveries are “very exciting” and could be used in South Africa, which is struggling to meet the economy’s demands for energy, to replace 2,750 megawatts of power-generating capacity in the Western Cape province, PetroSA Chief Executive Officer Nosizwe Nokwe-Macamo said in April.
The initial supply needed would be 1.2 million metric tons of LNG a year, Carlo Matthysen, PetroSA’s LNG project manager, told reporters. The company will issue a gas-supply tender in August or September, and Angola LNG, the $10 billion southern African plant who’s biggest shareholder is Chevron Corp., has shown interest in supplying the terminal, he said.
“It is a great time to sign LNG contracts for a start date within the 2017-20 period,” Charles Blanchard, an analyst at Bloomberg New Energy Finance, said by e-mail. The market is tight because of “massive demand” from Japan and because very few new export projects will come online from now until late 2014, he said.
PetroSA has agreed to supply LNG to Eskom Holdings SOC Ltd., the state-owned power utility that provides more than 95 percent of South Africa’s electricity, for its 740-megawatt Gourikwa station that uses diesel, according to the statement handed to reporters.
PetroSA operates a 45,000-barrel-a-day onshore gas-to-fuel plant at Mossel Bay that’s running at about 50 percent of capacity because of lower natural-gas output, Kgogo said.
South Africa in September lifted a moratorium on hydraulic fracturing, or fracking, which uses a large volume of water pumped underground to help extract shale gas, to assess an area known as the Karoo. This arid region of western South Africa may hold 485 trillion cubic feet of shale resources, U.S. Energy Information Administration data show.
Royal Dutch Shell Plc in 2011 applied to drill 24 exploratory wells in the Karoo. Permits are unlikely to be issued this year because of potential legal appeals, law firm Bowman Gilfillan said in April.
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