3 September 2014 | Ludovic Aldersley, ICIS Markets Reporter
South Africa’s state-owned oil company, PetroSA has terminated long-running plans for a floating storage and regasification unit (FSRU) in the Southern Cape but is turning to other import location options, it said on 26 August.
The feasibility study for a 1.5mtpa FSRU proposed in the Vleesbaai or Voorbaai area of Mossel Bay was completed towards the end of last year but was said to be “technically and commercially challenging”, according to US-headquartered engineering contractor, WorleyParsons.
The “severe” meteorological and oceanographic conditions in Mossel Bay “would inevitably increase the logistical and overall gas supply costs of the project,” PetroSA said.
WorleyParsons completed further technical studies this year which looked specifically at the commercial and technical costs of ensuring continual year-round regasified LNG send-out from late 2018 or early 2019 - an unresolved issue that had been highlighted in the feasibility study.
With rough maritime conditions making it difficult to ensure a targeted terminal availability rate of 96% for cargo arrivals, PetroSA had widened WorleyParson’s work to incorporate options for up to 1mtpa of additional onshore storage, a source close to the project told ICIS.
The increased project costs combined with the political momentum to align it with ongoing developments in the country’s Gas Utilisation Master Plan (GUMP) have not diminished the need for PetrosSA to secure fresh feedgas for its nearby gas-to-liquids (GTL) plant at Mossel Bay.
In the face of declining local natural gas production, PetroSA had earmarked 600,000tpa of LNG to feed into the GTL facility as well as 650,000tpa for the 740MW Gourikwa power plant belonging to state-owned electricity utility, Eskom. PetroSA was due to launch two tenders for LNG supply and the provision of an FSRU this year.
“We will now go back to the drawing board, and evaluate other long-term feedstock options [for the southern cape],” PetroSA CEO, Nosizwe Nokwe-Macamo said.
PetroSA declined to comment on the other feedstock options available but more clarity on the country’s gas supply and demand outlook is expected with the final draft publication of the Department of Energy’s GUMP due by the end of September.
With most of the proposed combined cycle gas turbine and open cycle gas turbine plant located near the five main port areas of Saldanha, Mossel Bay, Port Elizabeth (Coega), Durban and Richards Bay, sources in the country say there is scope for more than one FSRU project or a more consolidated approach.
Integrated energy and chemical company, Sasol, which is the sole provider of imported Mozambican gas from the eastern border, is understood to be keen on developing an LNG project closer to a growing 2,200km transmission network in the east around Durban and Richards Bay.
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