By Wendell Roelf and Lehlohonolo Lehana.
State owned power utility Eskom signed a long-term liquefied natural gas agreement with the Zululand Energy Terminal that will support Eskom’s planned 3,000 megawatt gas-to-power project, the two companies said on Friday.
Zululand Energy Terminal (ZET) is South Africa’s first LNG import terminal situated along the east coast in Richards Bay port.
As a result of the deal, Eskom will have open access to LNG import, storage, and regasification infrastructure.
Eskom’s planned 3,000 MW gas-fired power plant has been stalled by a court order citing inadequate public consultation.
Zululand terminal, a joint venture between Dutch company Vopak, local energy firm Reatile and state-owned Transnet Pipelines, was awarded the concession to build and operate the terminal in 2024.
ZET director Oliver Naidu said the agreement strengthened the commercial foundation for the project, which is poised to be South Africa’s first LNG terminal.
“As we move forward our focus is clear: to progress the project responsibly, meet all regulatory and environmental requirements, complete the technical and commercial work required for a final investment decision, and deliver infrastructure that supports South Africa’s future gas market,” Naidu said.
Eskom CEO Dan Marokane added that the agreement established the framework for a long-term strategic partnership to support South Africa’s GtP ambitions, which he said was needed to complement a higher penetration of variable renewable electricity.
Marokane said that Eskom’s 3 000 MW project would be pursued through a Private Sector Participation model, which would enable Eskom to leverage strategic partners, project finance, and long-term power offtake arrangements.
“Eskom will now proceed with the partner selection for the private sector participation for the construction of the power plant itself and all associated work, including the re-submission of the environmental impact assessment (EIA).”
The planned power plant will use regasified LNG as the primary fuel source over its expected lifecycle of 25 years.
South Africa is pivoting towards gas as a transitional fuel and has set aside 6,000 MW for gas power as part of its energy mix by the turn of the decade.