Renergen eyes South Africa’s clean energy space with LNG in transport
Renergen, a South Africa-focused energy company, is spearheading the country's transition towards cleaner and more sustainable fuel alternatives. With a focus on LNG, Renergen is working on transforming the country’s transport sector while addressing environmental concerns and promoting economic growth.
The Australia and South Africa-listed company, through its subsidiary Tetra4, recently signed agreements with Cape Town-based transport company Timelink to supply LNG and displace a significant portion of diesel in the latter’s line-haul fleet. Renergen has been receiving numerous inquiries from logistics firms eager to tap into the advantages of lower emissions and cost savings associated with LNG. Renergen's commitment to LNG as a viable and sustainable fuel source is underscored by its Virginia gas project.
“We are receiving many calls from logistics companies at the moment looking to take advantage of the lower emissions and cost savings of LNG over diesel,” said Renergen CEO Stefano Marani. “We are in no rush, and will evaluate who will benefit from the remaining capacity of Phase 1 [of Virginia project], after which all other clients will need to wait for Phase 2.”
The company operates the Virginia Phase 1 liquefaction plant, which was commissioned last year, and produces around 50 metric tons/day of LNG, while Virginia Phase 2 will see this increase to about 680 mt/day, or 940,000 diesel liter equivalent/day. Virginia Phase 2 is planned to be operational in 2026. Renergen in June 2022 signed a preliminary agreement for a loan of up to $500mn from the US International Development Finance Corp. for the second phase of the Virginia project.
The Virginia gas project comprises various gas fields across Welkom, Virginia and Theunissen in South Africa's Free State. Their natural gas is very pure, according to Renergen, with an average methane content of more than 90%, but they also contain some of the richest helium concentrations recorded globally.
Building LNG infrastructure in South Africa
Setting its sights on establishing a comprehensive LNG infrastructure network, Renergen plans to develop multiple fixed LNG filling stations across South Africa. These stations will be strategically placed along major highways, effectively connecting the country's key economic hubs. By doing so, Renergen aims to facilitate the adoption of LNG as a fuel and provide an accessible and sustainable energy solution for South Africa's trucking industry.
“The number of filling stations is arguably less important than the routes we intend to cover, which will include the local highway network, namely the N1, N2, N3, N4, N5 and N11 which effectively join South Africa’s largest economic hubs by road,” Marani said.
“The country has a disproportionately large fleet of trucks relative to the size of its economy, mainly due to crumbling railway infrastructure. As a result, we see a particularly outsized opportunity to support the logistics sector with a shift from diesel to a cleaner LNG given the country’s challenges around energy insecurity and lack of alternative cleaner energies,” he added.
While currently being the sole supplier of LNG for trucks in the country, Renergen believes that the shift from diesel to LNG holds significant promise. The advantages of LNG-fuelled trucks include reduced emissions, cost savings, and improved energy security, presenting a case for the logistics sector to embrace this cleaner energy alternative.
Beyond the transport sector, Renergen is currently supplying LNG to ceramic industries and Ardagh Glass. The company plans to extend its reach to serve many more industrial customers once Victoria Phase 2 liquefaction plant is ready.
While there are no immediate plans to source gas from other fields, the Victoria project's scalable nature suggests the potential for a significant future.
“At this stage we have no plans to expand beyond the Virginia gas project. As it stands, our Phase 2 project only covers 14% of the production right area, so we believe there is significant scalability,” Marani said.
Plans for US listing
Looking to expand its operations and secure additional funding, Renergen is preparing for a potential initial public offering (IPO) in the US and listing on the Nasdaq stock exchange in 2023. The company submitted a draft registration statement on Form F-1 to the Securities and Exchange Commission (SEC) in late 2022. The proposed listing and capital raise are expected to commence after the SEC completes its final review processes.
Marani said the US listing will provide Renergen access to deeper pools of capital and help attract investors with an in-depth understanding of energy markets.
The timing, number of ordinary shares represented by American Depository Shares (ADSs) to be offered and their price in the IPO have not yet been determined.