South Africa’s Transnet National Ports Authority (TNPA) has signed a 25-year terminal operator agreement with Ukwanda LNG, to develop an onshore liquefied natural gas (LNG) regasification facility at the Port of Ngqura, in the Eastern Cape.

Ukwanda LNG is a JV between Tamasa Energy Group and the State-owned Strategic Fuel Fund, and operationalisation of the full terminal, with a yearly capacity of 3.6-million tons, is targeted for 2035.

However, the initial phase of the project will comprise the deployment of floating LNG storage and regasification infrastructure that is expected to result in gas supply before 2030.

The project has a reported investment value of about R22-billion, with TNPA to invest an additional R2-billion to create a dedicated LNG berth.

“The project features the establishment of a temporary floating unit,” TNPA said in a statement.

“Included in the scope is the construction of permanent onshore infrastructure to supply gas to off-takers, industry, data centres and independent power producers to enable the production of about 3 500 MW of electricity within the Coega Special Economic Zone,” the statement added.

The agreement was signed at a function presided over by Transport Minister Babara Creecy, who issued the Section 79 directive to the TNPA, authorising the SFF to build and operate an onshore LNG regasification facility within the port.

“The conclusion of this agreement reflects our collective commitment to delivering LNG to the South African market as an alternative energy source, in line with the country’s energy security requirements and broader just energy transition imperatives,” Creecy said in her address.

South Africa’s Integrated Resource Plan (IRP) for electricity has allocated 6 500 MW for gas-to-power (GtP) for development by 2030; a target that is seen as highly ambitious given that significant infrastructure still needs to be built to facilitate the importation of LNG.

The IRP has allocated a total of 16 000 MW of GtP for introduction into the electricity system by 2039.

South Africa is currently running inaugural bidding round to procure 2 000 MW of GtP, with the deadline for bids submissions being May 29.

However, it is also assessing the prospect of again postponing coal plant retirements given delays to the introduction of gas and increasingly long lead times for securing GtP turbines.

The International Energy Agency said in a report published on May 28 that strong demand in the US and Middle East was limiting the availability of turbines for near-term deployment elsewhere in the world.

Last year, TNPA  signed a separate 25-year terminal operator agreement with Zululand Energy Terminals (ZET) for the development of an LNG import terminal at the Port of Richards Bay, in KwaZulu-Natal.

ZET is a joint venture between Vopak Terminal Durban and Transnet Pipelines, and a target commercial operation date of 2028 has been announced.

Tamasa Energy Group's Professor Anna Mokgokong said the agreement reflected a shared belief in the strategic value of the project for South Africa’s energy future, logistics capability and economic development.

“For the Eastern Cape, this project represents infrastructure that can unlock jobs, skills development, local participation and renewed economic momentum, while supporting energy security and South Africa’s broader transition to a more diversified, lower-carbon energy mix,” Mokgokong added.

Transnet Group CEO Michelle Phillips said that by formalising the terminal operator agreement, TNPA was not only executing its landlord mandate, but actively constructing the foundational infrastructure necessary to support industrial growth and facilitate the delivery of reliable, lower-carbon energy into the national grid.