Building on a 133 Year Legacy of Uninterrupted Natural Gas Supply.

Egoli Gas understands the concerns surrounding the future of natural gas supply in South Africa. Sasol’s intention to exit the external natural gas consumer market expressed towards the end of 2023, coupled with the eventual limitations of the Pande and Temane fields in Mozambique, has understandably caused some uncertainty.

While Sasol’s intention may have seemed sudden, industry players, including Egoli Gas, were made aware at the start of the Mozambique-to-South Africa pipeline project in 2004 of the limitations of supply from the Pande and Temane fields. With this foresight, Egoli Gas has been engaged in continuous discussions with its current natural gas supplier and other stakeholders with the capability to supply natural gas in various forms.

Egoli Gas wants to assure our customers that we are well-positioned to navigate this transition and maintain an uninterrupted supply of natural gas. We are confident in our ability to meet the future energy needs of our customers and to ensure that gas supply will not be shut off for any extended period, except for occasional maintenance requirements.

This commitment stems from our 133-year legacy of reliable gas supply service. Since 1892, Egoli Gas has been a trusted partner in Johannesburg and more recently Gauteng's and KZN’s energy landscape, and we are dedicated to continuing this tradition for many years to come.

Looking ahead, we are committed to continuing our uninterrupted service to our clients. Our confidence in the future of natural gas supply is rooted in the below developments:

1.Confirmation of Supply from Pande and Temane Fields to mid-2028

We have assured supply of gas to our clients from the current Pande and Temane fields up to until at least mid-2027 with the assurance that our supplier will continue to supply the external natural gas consumer market. Beyond this period, capital will be spent to prolong the supply of gas from the fields until at least mid-2028. With this, we can anticipate that our supplier may then implement an additional tariff or increase their gas price to recoup the capital spent in extending the life of the field.

2. Progress in Discussions with Possible Suppliers for Gas beyond mid-2028

We are excited about the future of Liquefied Natural Gas (LNG) in South Africa. Our parent company, Reatile Group (Pty) Ltd, is heavily invested and involved in the Zululand Energy Terminal (ZET) project in Richards Bay (see https://www.zululandenergyterminal.co.za/) through its shareholding in Vopak Durban Terminal.

ZET is on track to begin operations by mid-2028, providing crucial infrastructure for receiving, re-gasifying, and delivering natural gas into the Transnet pipeline (Lilly pipeline).This pipeline currently transports gas from Sasol Secunda’s operations to Durban, passing near Empangeni, close to Richards Bay. A new pipeline, up to 14 kilometres long, will be constructed to connect the regasification facility to the Lilly pipeline. Additionally, the flow of the Lilly pipeline will be reversed in that section and eventually increased to supply sufficient gas to the Gauteng market, which is how Egoli Gas will receive its natural gas.

We assure customers that the introduction of re-gasified LNG into the pipeline network will have little to no impact on end-user equipment.

 

The project has a two phased approach:

  • Phase 1 up to mid-2028:a Floating Storage and Regasification Unit (FSRU) with a capacity of 108 PJ (2 000 000 ton) per annum.

  • Phase 2 post 2028:the project will have an on-shore storage and regasification unit, this capacity will be ramped up to 270 PJ (5 000 000 ton) per annum.

We note with encouragement other efforts underway to increase the supply options for natural gas into South Africa. Total Energies is looking to import LNG through an FSRU to be based at the Matola Harbour in Maputo, Mozambique. The ZET and the Matola projects are both excellent candidate ports as they are close to the existing gas pipeline network that is currently being used to supply South African customers.

3. Vopak’s Extensive Experience in LNG terminal operations: a catalyst for making LNG imports a reality

It is encouraging to witness the growing momentum within the industry toward LNG importation. We are optimistic about ZET coming into operation through Vopak’s extensive experience in LNG terminal operations. This expertise bolsters our confidence in the timelines we have outlined.

  • • Vopak has two operating LNG terminals in the Netherlands. Vopak has operated the on-land based Gate LNG terminal in Rotterdam since 2011 in partnership with Dutch Gasunie and the FSRU-based LNG hub in Eeemshaven with the same partner since September 2022.This FSRU based terminal was constructed and brought to beneficial operation in the record time of six months.

  • • Vopak also has a 60 percent stake in the Altamira LNG terminal in Mexico, which it jointly operates with its partner Enagas. The partners acquired this facility, which has been operating since 2006, in 2019.

  • • Vopak has a 49 percent share in Colombia’s only FSRU-based LNG import facility in Cartagena, which it jointly operates with its partner Promigas through their JV company Sociedad Portuaria El Cayao (SPEC LNG) operates. The FSRU started operating in 2016 and has a throughput capacity of 4 billion cubic meters per year

  • • Lastly, Vopak is a joint operator in the Engro Energy FSRU-based terminal in Pakistan in which it has a 44 percent stake. This Engro Energy Terminal Pakistan (LNG) is the first LNG import facility in Pakistan and began operating in 2015.

4.Additional factors to consider making LNG importation feasible

The success of LNG imports requires careful planning and a strong foundation.

 

  • Anchor client: It is global practice for LNG terminals to be anchored by a single large gas user, like an Eskom power station, for example. This ensures that the project to construct the terminal, as well as the contracting for LNG supply is financially feasible. These contracts are already in discussion for ZET.

  • Aggregator: Additionally, the importation of LNG requires an aggregator. The aggregator is the party that will contract with suppliers of LNG as a single entity and contract with end users of natural gas for their demand. A successful aggregator needs to have a very strong balance sheet as they have to assure both the supply side and the off-take side of the continuous flow of natural gas. LNG supply contracts usually require terms like take-or-pay, sureties and multi-year terms. It is clear that the entity that becomes the aggregator for South Africa’s gas demand, as there initially can only be one, should be experienced in a number of fields like international contracting, fuel importation and demand management and contracting. Egoli Gas will align itself with an aggregator that meets all of these criteria and has the ability to negotiate pricing on an economies of scale basis.

Egoli Gas understands the vital role natural gas plays in Gauteng and KwaZuluNatal's energy mix. We are committed to providing a seamless transition to LNG, ensuring continued supply and stability for our customers. Please feel free to contact us for more information on info@egoligas.co.za.