South Africa issues RFI for LNG terminal

South Africa's state-owned Central Energy Fund (CEF) has issued a request for information (RFI) to assess the potential for establishing the country's first LNG import and distribution terminal at the Ngqura (Coega) deepwater port in the Eastern Cape.

The CEF and its partners, state-owned logistics firm Transnet and the Coega Development Corporation (CDC), will work together to create the LNG hub as well as related infrastructure in the adjacent Coega Special Economic Zone (SEZ).

Last year, department of mineral resources and energy (DMRE) minister Gwede Mantashe announced that Ngqura would be the initial hub for a planned LNG importation programme. Hence the project is being developed under the auspices of the DMRE.

A floating storage and regasification unit (FSRU) has been identified as the preferred terminal configuration for LNG import and distribution, according to the RFI document seen by Argus. The unit's proposed preliminary functional requirements include 170,000m³ of LNG storage and more than 4mn ton per year (mtpa) regasification capacity.

The preferred FSRU ownership model is to lease or charter a vessel for a 20-year period, along with an operator, the RFI says. "However, this has yet to be finalised, therefore respondents are also invited to propose alternative FSRU ownership models."

Given that the FSRU will be the main component of the terminal, it is proposed that the FSRU operations team should be responsible for all the project infrastructure, both floating and fixed, it says.

Responses to the RFI will further inform the possible appointment of an engineering, procurement and construction (EPC) contractor to develop gas infrastructure.

The RFI also seeks a response from a potential gas aggregator who can take charge of LNG imports and distribution. But "the aggregation component is strictly an inquiry, and no contract or agreement will arise by responding to this component," the CEF says.

The RFI contemplates an "unbundled" approach for the FSRU, terminal operator, fixed infrastructure and the gas aggregator, respectively. But the CEF and its partners will also consider a "bundled" approach for all or some of the components, if the benefits of such an approach for the end user are clearly indicated.

Interested parties must submit their responses to the CEF by no later than 3 December.

The RFI aims to establish if current and future regional gas demand will be sufficient to support a midstream LNG import terminal, along with road loading and pipeline infrastructure.

The CEF sees initial gas demand in the Coega precinct potentially coming from the 340 MW Dedisa open cycle gas turbine (OCGT) that is being reviewed for a diesel-to-gas conversion, as well as from a yet-to-be constructed 1GW gas-fired power plant that will be operational by 2024.

The DMRE plans to issue a request-for-proposal (RFP) towards the end of February 2022 for independent power producers (IPPs) to contribute 3GW of gas−generated electricity, of which at least 1GW will be allocated to Coega.

A further 5 PJ/yr in gas demand is expected to come from current and future industrial users, along with heavy fuel oil off-shore bunkering demand that peaked at 1mn t/yr pre-Covid-19 and will need to be replaced with cleaner fuels.

In addition, the CEF sees gas demand coming from the planned 450 MW Karpowership and 200MW Mulilo-Total power projects. Turkish firm Karpowership and the Mulilo-Total consortium were selected as preferred bidders under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), which is aimed at alleviating South Africa's near-term electricity supply crisis by fast-tracking 2GW of new capacity.

Both projects are currently going through a financial closure process, according to the CEF. The deadline for bidders under the RMIPPPP to reach financial close was extended to 27 January 2022. Originally, the "non-negotiable" deadline was set as 31 July.

Meanwhile, South Africa's environment ministry is yet to decide on Karpowership's appeal against its refusal to grant environmental authorisation for the firm's proposed offshore gas-fired power projects, including the one at Coega. It was due to make a decision on 5 November, but is now in the process of appointing an independent expert to assist environment minister Barbara Creecy in making a determination.

By Elaine Mills