South Africa Roadmap Backs 'LPG First'
The South African government has warned that a failure to speed up the country’s gas economy could hold back industrial development.
The warning came May 8 with the launch of a new roadmap, the Industrial Policy Action Plan (IPAP) 2017-18 to 2019-20, by trade and industry minister Rob Davies (pictured below) who told a press briefing: “The gas economy is an area of ongoing work and further new emphasis.”
However the IPAP report suggests that the first stage of expansion of South Africa’s use of gas by industry will focus initially on imports of Liquid Petroleum Gas (LPG) – rather than imported natural gas or LNG.
Photo credit: South Africa's Dept of Trade and Industry
“LPG has an important role in the early-stage development of broader gas markets in South Africa,” it notes. “Not only does it introduce more gas into the energy mix, but also provides South African industry with an opportunity to develop its capabilities with respect to the design and production of gas storage and transmission technologies - which will be extremely useful once more gas (as Liquefied Natural Gas) is introduced into the energy mix.”
The report says that low prices have meant that LNG has become “an essential way for developing gas markets around the world, and therefore it is a good time for South Africa to be importing LNG: "If security of supply can be proved, it is envisaged that LNG/Natural Gas would displace …fuels such as heavy fuel oil, medium fuel oil, paraffin, diesel and LPG in industrial applications."
South Africa’s industrial sector is under “severe pressure”, especially its energy-intensive industries, the IPAP report notes, calling on the country’s Department of Energy to complete its gas-to-power procurement process “as urgently as possible” or risk losing the potential benefits of LNG/gas imports: “Abundant and cheap natural gas resource has the potential to revive previously stagnant industrial sectors and develop new industries.”
Looking at the long-term, it notes that many oil majors hold “significant acreage both inland and around (offshore) South Africa’s coastline.” While exploration is on hold, the Trade and Industry Department says it is preparing “for the moment when exploration and production activities re-commence.”
South Africa’s gas supplies are mainly imported via pipeline from Mozambique, as recent offshore exploration by state E&P firm PetroSA has been disappointing. The Pretoria government has recently agreed to start issuing exploration licences ahead of potential fracking in the Karoo desert region.
John Fraser