Exxon Mobil signs deal to supply liquefied natural gas to South Africa

Exxon Mobil has signed a preliminary deal to supply liquefied natural gas to Zululand Energy Terminal, which will be South Africa’s first LNG import facility once built, the companies said on Wednesday.

The planned terminal is part of South Africa’s pivot away from coal-fired power generation, which accounts for the bulk of its electricity supply.

Reuters reported in March that the Zululand Energy Terminal (ZET) hoped to strike a deal with Exxon Mobil on LNG supply.

Exxon Mobil’s participation helps reinforce the importance of Richards Bay port, where ZET is being built on South Africa’s east coast, as an entry point for LNG and supports plans to unlock a “competitive and sustainable gas market”, said Oliver Naidu, ZET director.

Exxon Mobil has identified South Africa as a priority market and wants to grow its LNG supply to more than 40 million metric tons per annum (mtpa) by 2030.

“This agreement reflects Exxon Mobil’s global LNG experience and our commitment to support South Africa’s energy security with a reliable supply,” said Andrew Barry, chairman of ExxonMobil LNG Market Development Inc.

Earlier this month, South African state power utility Eskom signed a long-term LNG agreement with ZET to support a planned 3,000-megawatt gas-to-power plant project.

Phase 1 of the terminal includes a floating storage unit and an onshore regasification system with a capacity of around 3 mtpa, or 400 million standard cubic feet of gas a day.

• Phase 2, which will bring the project’s total expected cost to $1 billion, will introduce extra regasification capacity and storage onshore, boosting total volumes to 4.5 mtpa, or about 600 million standard cubic feet a day, Naidu said.