S Africa eyes LPG expansion to ease power shortages

  • Market: Crude oil, LPG, Natural gas
  • 15/07/20

South Africa should significantly grow LPG's share in the energy mix to help alleviate persistent electricity supply shortages, according to a recommendation from the ruling African National Congress (ANC).

In an advisory paper the ANC's economic transformation committee said that LPG and gas should be integrated in new housing developments to enable a shift away from using electricity for heating and cooking. This would lower peak power demand and help towards meeting the government's target of doubling LPG usage to more than 820,000 t/yr within the next five years, it said.

The paper proposes a raft of other measures to boost South Africa's energy security, including further intensifying regional integration efforts with the aim of securing access to gas in neighbouring countries and/or developing new regional generation and transmission infrastructure where needed.

South Africa is already highly dependent on natural gas imports by pipeline from Mozambique, but this will start to taper in 2023 as the Pande and Temane fields deplete. Consequently it has sought to expand collaboration with its neighbour, where Total recently resumed construction on one of the largest LNG projects in the world, which will be fed by offshore fields containing more than 60 trillion ft³ (1.7 trillion m³) of gas resources.

Investments in offshore and onshore oil and gas could make a critical contribution to energy security, the ANC committee said.

"Gas is emerging as a game changer both in terms of its role in the country's energy transition and in terms of the new opportunities it presents," it said.

In early 2019, Total made a gas condensate discovery at the Brulpadda prospect in the Outeniqua Basin's block 11B/12B off the southern coast, indicating potential resources of 1bn bl of oil equivalent (boe). This sparked renewed interest in South Africa's exploration sector, but uncertainty over a long-delayed revision of the legislative framework for petroleum exploration has held back investment.

To aid upstream investments the Petroleum Resources Development Bill should be finalised, including "the related fiscal measures that will ensure shared outcomes between the state and those granted rights," the ANC committee said.

The latest version of the bill envisages the government taking a 20pc carried interest in exploration and production projects through state-owned PetroSA. The next step towards passing the bill is for cabinet to consider the legislation, but the timeline has been delayed by the Covid-19 pandemic.

Upstream, local partnerships should ensure that South African firms develop and own energy technologies, according to the paper. Downstream, the development of new "green industries" and hydrogen technology should be incentivised, it said. The feasibility work for a new refinery complex should also be advanced, the ANC committee said.

South Africa plans to build a 300,000 b/d refinery and associated petrochemical facility at Richards Bay with the backing of a $10bn investment from Saudi Arabia's state-controlled Aramco. State-owned Central Energy Fund (CEF), which is jointly undertaking feasibility studies with Aramco, has said the refinery is unlikely to come online before 2028.


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Stalling climate finance an energy security risk : WRI

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London, 28 March (Argus) — The "best bet" to achieving global energy security is through mitigation funding and multilateral cooperation, according to the World Resources Institute (WRI). WRI highlighted that governments are funding more domestic renewable energy projects but have increased oil and gas production in the name of "energy security" at home in the years following the Russia's invasion of Ukraine. The recent rebrand of energy transition funding to energy security funding has allowed some developed nations to justify domestic oil and gas licences and drag their feet on multilateral financial commitments. This is causing "real worry" among climate-vulnerable developing nations, WRI chief executive Ani Dasgupta said. He said that although the initial "shock" to the world's energy markets after the invasion of Ukraine "quickly went away", it has triggered "real worry among poorer countries that when push comes to shove, it won't be an even game, or have a fair outcome." Developing countries have long complained about the lack of access to climate funding. Richer nations have only recently met the $100bn/yr target in climate finance to developing countries agreed in 2009, while discussions on setting a new climate finance goal for 2025 at Cop 29 in Baku in November could prove difficult. President of the Republic of Congo (Brazzaville) Denis Sassou-Nguesso said last year that the $100bn/yr in climate financing to developing countries promised by rich countries "never reached us", adding that the annual UN Cop climate conferences have become little more than a talking shop. "Just after the invasion of Ukraine, every country started to think about energy security," Dasgupta said. "In theory, good things could have happened, countries could have concluded that their best bet to getting energy security is by going renewable". But it was not the case in key consumer countries or regions, Dasgupta pointed out. China bought the majority of Russian gas following the EU's withdrawal, he said, and has since upped production at coal-fired power stations despite an "extraordinary" acceleration towards renewables set for 2023-28, according to Paris-based energy watchdog IEA . In Europe, the UK and Norway continue to award new oil and gas licences . "In the US, the fossil fuel lobby argues that the best route to energy security is to invest more in fossil fuels". But the best route is to invest in more renewables, he said. "Even if the US produces a large amount of oil and gas, it is still a traded commodity, and so you have to pay a price for it that is set globally." The US special presidential co-ordinator for energy security Amos Hochstein has also suggested in September that a widening climate finance gap could ultimately threaten global security. "We have seen the percentage of dollars spent on the energy transition outside the OECD, in developing and middle income countries actually go down instead of up…" By Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Louisiana pipeline crossing bill nears vote: Update


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27/03/24

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Baltimore bridge collapse to raise retail fuel prices


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27/03/24

Baltimore bridge collapse to raise retail fuel prices

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Louisiana pipeline crossing bill nears senate vote


27/03/24
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27/03/24

Louisiana pipeline crossing bill nears senate vote

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US breaks $79/bl ceiling in latest SPR purchase


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