First LNG hub to be established at Coega

In his speech at the Africa Oil Week 2019, the Minister for Mineral Resources and Energy Gwede Mantashe urged investors to pursue investment opportunities in the proposed Liquefied Natural Gas (LNG) Hub at the Coega Special Economic Zone (SEZ) in the Eastern Cape.   

“The call by the Minister is certainly in line with the various activities the Coega Development Corporation (CDC) has been undertaking in the past couple of years and months to advance its Gas readiness capabilities,” says Sandisiwe Ncemane, CDC Project Development Manager- Energy.

“Within the next couple of weeks, the CDC will be engaging various stakeholders, both within the private and public sector and inviting them to the Coega (SEZ) for a tour of the proposed site(s) and update them on progress thus far,” highlights Ncemane.

With an established market for Liquefied Natural Gas (LNG) within Coega, over the years, the CDC in collaboration with the Eastern Cape Provincial government has put in place extensive Gas Market Analysis and preparation to enhance Coega’s readiness for the implementation of high-impact Energy programmes towards an Integrated Gas Economy. 

“The Coega SEZ is one of the most advanced in terms of preparations for the LNG Hub and is the ideal location for the associated gas to power programmes. One of the critical game-changers for the CDC is the cost factor. The 342MW Dedisa Power Peaking Plant currently in operation within the SEZ, has existing environmental authorisation for a 400kV transmission line between the plant site and the Dedisa substation which reduces the costs of the gas to power project for investors quite significantly” adds Ncemane.

Another factor is that CDC, as early as 2006 undertook at least five (5) environmental impact assessment (EIA) studies supporting the gas-to-power solution.

“EIA studies were concluded for rezoning of land in the SEZ, the establishment of a 400kV transmission line between the plant site and the Dedisa substation, including the marine pipeline servitude EIA which is currently underway.”

“Further, the 2015/16 DMRE and Transnet feasibility studies include the liquefied natural gas (LNG) terminal at the Port of Ngqura, identifying several berth options for its deep-water seaport adjacent to the Coega SEZ. As part of the Coega Environmental studies, in 2019, a draft scoping report was prepared for an integrated LNG terminal and gas to power solution at Coega,” adds Ncemane.

“We are also encouraged by the recent comments attributed to the Transnet Chief Business Development Officer, Gert de Beer on Transnet’s “support & commitment of resources to the LNG Hub intended for Coega,” highlights Ms Ncemane.

The Coega SEZ has a world-class infrastructure; it has prime and serviced land that is available to host key gas-to-power projects with spin-offs for other sectors. In addition, the approved Coega Infrastructure Master Plan is in place.  It defines services corridor from the LNG Project site to Dedisa substation as well as good access via National Road (N2) and ancillary road network.

The short-term outlook is to import liquefied natural gas (LNG) to trigger the Gas economy, which would stimulate the exploration and production of indigenous gas resources in the Eastern Cape.

Case for the Eastern Cape (EC)

The significance of the EC is that it is endowed with the possibility of onshore and offshore gas, gas-driven power generation, and gas importation, handling, trans-shipment infrastructure, as well as industrialisation. Potential recoverable quantities of indigenous natural gas are in the order of 20 trillion cubic feet onshore (shale gas), and 26 trillion cubic feet offshore.

The recent deepwater drilling in Brulpadda (approximately 1 billion barrels) in the Southern Outeniqua basin could potentially unlock enough fuel to supply South Africa’s refineries for almost four (4) years.

It has the potential to unlock a value chain of marine/ maritime services located at Coega SEZ which could in turn trigger opportunities eastwards and small harbours along the Wild Coast. In line with SA’s developmental programme, indigenous gas extracted in this province must be beneficiated within the country’s shores, maximising the economic benefit yielding within the region. The EC, through the Department of Economic Development Environmental Affairs & Tourism (DEDEAT), has provided various gas support initiatives organized in a coherent framework and are well-positioned to drive enablers for a gas economy. DEDEAT has initiated a strategic framing process for the provincial oil, gas and maritime complex, which has provided much impetus, clarity and support for the socio-economic development of the gas industry.

“In the broader perspective, the LNG Hub at the Coega SEZ is perfectly located as it opens up a Gas corridor towards the East & West coast, and is a response to the recently gazetted South African Integrated Resource Plan (IRP2019), which makes provision for additional 1000 MW gas-driven power by 2024,” adds Ms Ncemane.

  • Currently at the Coega SEZ, within the energy sector, there is a multitude of operational investors, as a demonstration of the hard work, efforts and opportunities available in the Eastern Cape. Some of the projects include the Dedisa Power Peaking Plant (Zone 13) – the 342MW Power Peaking Plant, located in the Coega Special Economic Zone is an R3.5 billion Foreign Direct Investment. The project has been operational since September 2015 and created over 1490 jobs during its construction phase.
  • Wind Tower Manufacturing (Zone 3) – wind tower assembling plant R310 million investment located at the Coega SEZ. Created over 390 jobs during construction.
  • Lay Down Area (Port precinct/Zone 1) – abnormal cargo related to the REIPPP programme (Logistics). This is an R9 million investment that has contributed to the distribution of wind turbines throughout the EC.
  • A renewable energy project – the first commercial wind turbine in South Africa valued at R1.2 billion.