South Africa’s plans for an LNG hub at Richards Bay

Transnet's Richard Bay port. Credit: Transnet
Transnet's Richard Bay port. Credit: Transnet

South Africa’s state-owned port, rail, and pipeline company Transnet is planning a multi-million dollar liquefied natural gas (LNG) storage and regasification terminal at the port of Richards Bay, and is looking for private sector partners to invest in and operate the facility.

“The investors will own a majority stake in a planned special purpose vehicle (SPV). Transnet and other state-owned companies will also participate in the SPV. The facilities are expected to be operational by 2024. However, the target timeline is dependent on Transnet being able to secure the necessary regulatory approvals,” said Jabulani Sithole, Transnet executive manager for growth and diversification.

The project is still in its infancy. So far, Transnet has signed a cost-sharing agreement for a feasibility study with the World Bank’s International Finance Corporation (IFC), which has committed USD2 million to the study.

The feasibility study will also investigate repurposing existing Transnet pipelines to carry natural gas to inland markets. Virtual pipelines via rail and road, scheduled to be operational by 2024, are also part of the plan.

“Ports and pipeline infrastructure are a long-term investment and we have to plan for this, with liquefied gas being a major catalyst to boost the country’s economy, especially for industrial users who are mainly located on the upper eastern half of South Africa. Transnet has identified significant industrial demand for natural gas and opportunities to leverage its ports, pipelines, and rail assets to facilitate private investment in gas infrastructure for South Africa,” said Gert de Beer, Transnet chief business development officer.

Although Transnet will not commit to a final cost, the terminal alone could cost between USD120 million and USD220 million, depending on its size and sophistication.

Richards Bay is the closest South African port to Mozambique, which is in the process of unlocking its substantial offshore gas reserves, estimated at 42-47 billion m3 of liquified natural gas.