LNG carrier
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Downstream liquefied natural gas (LNG) distributors and infrastructure developers lie in wait for the right opportunities and enabling environment to build a gas economy and create jobs in South Africa, while government continues to debate solutions.
One such potential developer is LNG Hub, which believes government is well aware of the need to lower emissions and meet green goals, but remains paralysed by indecision owing to bureaucracy and many different agendas.
Because LNG is a “new” fuel source to the South African market, it is challenging to navigate the bureaucratic process while ensuring there is equal opportunity in the private sector to import and produce LNG, the company says.
“All these factors contribute to government providing mixed messages to the public. However, there has been promising progress with the introduction of the Gas Master Plan and potential projects that could be implemented,” LNG Hub CEO Stephen Rothman points out.
He adds that South Africa does not have time to waste, considering its critical power shortages and its already being behind on the global move away from heavy fuel oils (HFOs), which the country still imports on a daily basis.
The country’s major reliance on coal also increases the pressure to adopt transition energy sources, but seemingly not enough to lead real movements away from these energy sources, LNG Hub states.
Slow government decision-making and implementing is not new, Rothman says, highlighting that South Africa has often been “late to the party”. He refers to the example of diesel uptake as a mainstream fuel, which also took a long time before it eventually boomed and, to date, most trucks still use diesel.
“We are in a country where it takes time to penetrate the market owing to our global position and the South African market’s conservative nature.
“We are seeing some key players in the industrial sector that are serious about transitioning away from high carbon-based energy sources and are leading the drive towards natural gas and other hybrid solutions, such as a combination of solar and natural gas.”
LNG Hub’s main focus is to develop the downstream LNG industry, creating a network of supply throughout South Africa. The company stands ready to use LNG sources from West Africa, Mozambique and possibly South America.
It sees significant opportunity to integrate African supply, as well as African demand for natural gas.
Rothman believes there is great opportunity to unlock African countries with large resources of natural gas, with the South African market to benefit from more stable pricing and independence from European, Asian or US supply.
“South Africa can mitigate volatile pricing in this manner and be involved with the supply right from source onto site.”
LNG Hub has contracted with various supply sources, including Mozambique, to complement supply from West Africa, which means it is not solely dependent on one source that can be vulnerable to bouts of any sort of disaster in the country.
The company says it is feasible for South Africa to switch to natural gas that is readily available from other African countries, while it develops its upstream capabilities.
World Economic Forum Nigeria VP Yemi Osinbajo says gas as a transition fuel for African countries is absolutely crucial, not just for an effective energy transition but also for economic growth.
He deems natural gas as the only pathway for Africa to transition out of more hazardous fuels such as coal and HFO.
“Instead of looking to first-world countries for cut-and-paste environmental answers, we should be focusing on the solutions right on our doorstep,” Rothman concurs.
Besides, once more of South Africa’s wind and solar energy comes online, LNG can effectively function in combination with these renewable energies, to mitigate intermittency, he adds.
Through its turnkey energy sourcing, distribution and supply solutions, LNG Hub strives to make the transition easier for the country, from non-sustainable and interrupted energy sources to clean, readily available and dependable energy.