ExxonMobil, Vopak Mull South African LNG Terminal

ExxonMobil and the Netherlands' Royal Vopak have signed a memorandum of understanding on potentially building a LNG regasification terminal in South Africa, Vopak said on December 15.

The agreement covers a joint feasibility study to assess the commercial, technical and regulatory aspects of the project. They will also evaluate the infrastructure needed for South Africa to benefit from LNG, in terms of providing reliable, cost-effective energy and reducing emissions. Vopak noted these benefits could be achieved by repurposing older coal-fired power plants and converting peaking power plants. LNG could also be used in industry, Vopak said.

"ExxonMobil is excited to work with Vopak to evaluate innovative approaches to bring competitive LNG projects to South Africa," ExxonMobil LNG Market Development president Irtiza Sayyed said in a statement. "As a gas industry leader with strategic access to LNG supplies around the world, ExxonMobil is well-positioned to supply cleaner, reliable energy to power South Africa in the future."

Vopak has been working in South Africa for 25 years and is "committed to enhancing [its] terminal network in the country with sustainable infrastructure solutions," Vopak LNG president Kees van Seventer said. Vopak has interests in LNG regasification projects across the world, including in the Netherlands, Mexico, Pakistan and Colombia. It has a terminal that handles petroleum products and chemicals in South Africa's coastal Durban city.

South Africa published an electricity infrastructure development plan last year that called for an expansion in gas-fired generation by 1,000 MW by 2023 and 2,000 MW by 2027. But the country is expected to keep coal as a key part of its energy mix, given its abundant reserves.

Domestic gas supply is dwindling, and authorities have warned this could mean that the Mossay Bay gas-to-liquids (GTL) plant controlled by state-owned Sasol might have to close. The government is counting on the development of recent offshore discoveries by France's Total to help bolster production.