SA's first LNG import terminal gassed up in new Eskom-Zululand agreement
South Africa’s gas-to-power programme is, well, cooking with gas as Eskom and Zululand Energy Terminal (ZET) have signed a heads of agreement (HOA) to establish the framework for a long-term strategic partnership.
Zululand Energy Terminal director, Oliver Naidu (left) and Eskom group executive for strategic delivery, Alfred Seema, seal the deal with a handshake. Image supplied.
“Eskom will assume ‘foundation customer’ status at the proposed Zululand Energy Terminal, which will provide open access to liquefied natural gas (LNG) import, storage and regasification infrastructure, underpinning Eskom’s planned 3 000MW gas-to-power programme,” Eskom and ZET said in a joint statement.
Coming to fruition
At the signing ceremony, Eskom and Zululand Energy Terminal reaffirmed their commitment to make progress on the necessary regulatory approvals, long-term commercial contracting approach and structuring, and the infrastructure development required to bring the project to fruition.
ZET is a joint venture between Vopak Terminal Durban, which is owned by Royal Vopak (a company with its head office in the Netherlands), Reatile Group Proprietary Limited (a South African company) and Transnet Pipelines (a division of Transnet SOC Ltd).
ZET was awarded a concession by the Transnet National Ports Authority (TNPA) to develop, construct, operate and maintain the LNG terminal.
The partnership represents a significant step in advancing South Africa’s gas infrastructure ecosystem. It also supports national efforts to diversify energy supply, strengthen energy security and enable economic growth.
Backed by the Department of Electricity and Energy, the Department of Transport and Transnet, the project will help facilitate gas-to-power development, providing the flexible and dispatchable generation capacity required to complement renewable energy, maintain grid stability and support the country’s long-term energy transition.
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Regasified LNG
Eskom’s Richards Bay 3,000MW gas-to-power project is to be constructed and operated in the Richards Bay Industrial Development Zone (RBIDZ) in KwaZulu-Natal.
The Eskom Richards Bay Project envisages the importation and consumption of regasified LNG as the primary fuel source of the power plant.
The lifecycle of the power plant is expected to be 25 years, and the power plant is planned to operate primarily as a mid-merit plant.
It is designated as a Strategic Integrated Project in terms of the Infrastructure Development Act 23 of 2014 and by the Integrated Resource Plan (IRP) 2025.
The project will be developed through a Private Sector Participation (PSP) model, leveraging strategic partners, project finance, and long-term power off-take arrangements.
The downstream power plant represents a large-scale capital investment, attracting international capital and accelerating industrial development within Richards Bay.
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A significant milestone
"Gas is being used as a bridge fuel to support the transition to a low-carbon energy system. These gas plants are designed to complement intermittent renewable sources like solar and wind, ensuring reliable 24/7 power, while clean energy technologies are being developed and introduced onto the grid.
"The availability of dispatchable power is at the very heart of the energy transition, and industry cannot operate without it as it forms the backbone for renewable energy integration into the grid.
"Securing ‘foundation customer’ status at the Zululand Energy Terminal provides a critical enabler for our 3,000MW gas programme, with the intention of a long-term contracting approach to minimise volatility and support system reliability while aligning with the IRP 2025 objectives,” said Eskom’s group chief executive, Dan Marokane.
Meanwhile, Zululand Energy Terminal director and project owner, Oliver Naidu, said the signing marks a significant milestone for ZET, as it advances its role in supporting South Africa’s energy future.
“As one of our anchor customers, Eskom’s participation demonstrates growing confidence in LNG as an enabler of energy security, grid stability and industrial growth.
“This agreement strengthens the commercial foundation of the terminal, and we look forward to building a long-term partnership as we progress towards a terminal use agreement, financial close and the delivery of South Africa’s first LNG import terminal,” said Naidu.