Oil & Gas

09 Dec 2021

South Africa Embraces a Gas Economy to Drive Energy Security

09 Dec 2021  by   

100% Black-owned energy infrastructure company DNG Energy’s first delivery of LNG gas to commercial customers in South Africa marks the start of a new phase for the country’s gas economy.

As the South African Government’s Department of Forestry, Fisheries and Environment refused environmental authority for floating gas-to-power plant in Richards Bay (on the East coast of the country), gas got the South African nod of approval in a different format and location.

It took DNG seven years of planning to secure the permitting and licencing to start a virtual gas pipeline. Last year they received final authorisation from the Transnet National Ports Authority to begin bunkering operations in the Port of Coega in the Eastern Cape. The company has deployed a 125,000cbm-capacity floating storage unit to support LNG bunkering operations. They have also completed terminal infrastructure at Algoa Bay.

The infrastructure will be used to offer ship-to-ship transfers for international trading ships as well as for onshore LNG transfers via road and pipelines. DNG Energy has also started working on LNG proof of concept projects with various partners in the private and public transport industries.

At the launch announcement, the company’s CEO, Aldworth Mbalati, said their commercial LNG operations brings them closer to their vision of achieving energy security in South Africa. “This has been a long and complex journey with numerous barriers to surmount, from security financing to obtaining regulatory approvals. Our success shows that we have the capabilities in Africa to energise a brighter future,” said Mbalati.

Growing a gas pipeline across sub-Sahara Africa

In an exclusive interview with ESI Africa Mbalati said they wanted to eventually grow a virtual gas pipeline across sub-Saharan Africa, though no final investment decisions have yet been taken. “We are looking at bunkering in Nigeria, Ghana and Namibia,” said Aldworth.

He believes marine bunkering will become an important part of the virtual pipeline as it is “way safer than a ship that is permanently anchored on the coast. Who wouldn’t want to reduce climate change, to make sure marine life is safer?” he asked.

DNG Energy is working with a mining customer to provide LNG for their vehicles, power requirements and cooling. The third aspect is around creating a heat exchange where the regassing of the LNG on-site creates cool air that could perhaps be used for air conditioning underground.

Mbalati says they also have an industrial customer who beneficiates steel and they want to target big industrial users who would both use LNG in their processes and need to create their own power supply on-site. Showcased at the launch in Johannesburg were various partners from the transport sector ranging from Marco Polo Buses, Volvo and Imperial long-haul trucks.

The role of gas in the energy transition

Morena Sithole of Masana Petroleum Solutions said at the launch that he saw in DNG Energy’s first commercial shipment of LNG the start of the energy transition being pushed forward despite slow policy development around fossil fuels.

“In the past, we might have waited for regulation or clarity around some of the guidelines or incentives but now we see that transition is being driven by industry because we are seeing the value of sustainability on two fronts. From the clean environment perspective and sustainability in the sense of operation costs,” explained Sithole.

Mbalati agreed that bringing LNG into the country creates new jobs, could help South Africa meet greenhouse gas emission targets and would drive economic growth as new markets and opportunities are created.

“Because you are getting gas in a liquid format it allows you to get it to consumers who wouldn’t ordinarily use gas because they are not next to a pipeline. It gives people options. There are a lot of things the gas economy could bring about in terms of secondary jobs, the support sector, servicing of LNG trucks,” he suggested.

Gas from Africa

As more options become available in the near future across Africa, Mbalati says DNG Energy is keen to buy LNG directly from Angola and Mozambique. They have also “struck up a good relationship” with Nigerian companies. “it is imperative that we promote Africa trade and make sure that instead of taking our money elsewhere, we circulate it on the continent,” he said.

In other news, exploration company Kinetiko Energy said the third of their gas wells at the Korhaan Project in Mpumalanga has been successfully spudded. While significant rain and electrical storms over the past two weeks have caused drilling delays, Korhaan-4 well is expected to start drilling in the next few days. Korhaan-5 will start running casing soon to prepare to start the drilling process. Further drilling on Korhaan-3 is expected to resume in January 2022.

The five-well project at Amersfoort, Mpumalanga is expected to eventually produce gas from coal methane beds for an offtake facility planned onsite.


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