Eastern Cape’s gas-to-power hub plans on track

MAY 25, 2016

The Eastern Cape’s plan to host a gas-to-power hub is well advanced with Coega IDZ now clearly the province’s preferred location for the development says the Department of Economic Development, Environmental Affairs and Tourism (DEDEAT) MEC Sakhumzi Somyo.

Somyo made the announcement following the release by the Department of Trade and Industry (thedti) of the country’s eighth industrial policy action plan last week. 

In the plan, thedti says it intends to use gas as a pillar of industrialisation, setting the scene for South Africa to become the hub for the regional oil and gas services sector in sub-Saharan Africa.

Somyo says this pronouncement sets the scene for the Eastern Cape to ramp up its plans to become an epicentre for the hub.

He refers to the province’s “game-changing” potential shale gas reserves, extensive oil and gas exploration opportunities off its coast, the world-class Nqgura port which could be used to leverage gas imports and exports, and the conversion of the Dedisa Power Plant at Coega.

He adds that there is advanced industrial capability in Nelson Mandela Bay and the Coega IDZ; both are also an important offtake market for the gas hub.  Furthermore, Coega is home to the DEDISA substation, which is vital infrastructure for injecting large amounts of power into the grid.

Coega, as the preferred site for the gas-to-power hub, has led the charge and continues to press ahead with preparations, having undertaken environmental studies for four sites which it has identified for a power plant and land-based liquid natural gas (LNG) terminal, amongst others.

It has also completed the preliminary work for a combined cycle gas turbine (CCGT) power project in the IDZ, integrated the LNG receiving infrastructure within the deep-water port of Ngqura.

“Our track record speaks for itself.  We have invested significant time and effort into making our oil and gas strategy a contender and backing it up with a solid business and technical analysis,” he explains.

Although ongoing, another DEDEAT study affirms the Eastern Cape’s strategic thrust to harness these strengths and focus on gas-to-power, and industrial and commercial offtake.

This study already has provided the Department with a deeper understanding of how it can unlock gas to power and industrial and commercial offtake.

“Clearly, gas-to-power is a game changer.  Its impetus, when it comes to fruition, will be felt across the entire socio-economic spectrum. Conservative estimates put the number of jobs to be created at 8,400 jobs in the construction phase; another 150 jobs will be created during the operational phase of the gas-to-power plant - a lifespan which is conservatively put at 30 years. More jobs will also result from associated industrialisation and local content supply, as envisaged in IPAP.

“Furthermore, the anticipated benefits for industry are sizeable. Not only in securing energy for business operations but also for creating noteworthy business opportunities for global and national players, and of course our local players too.” 

Somyo welcomes the Department of Energy’s recent pronouncement that it intended to “encourage upstream investment in regional and indigenous sources (through exploration and production)” of the 3,126 MW to be generated from natural gas (including liquefied natural gas or LNG) and another 600MW through gas-fired power generation.

“It should be noted that collaboration is paramount to our success in this project. Amongst the important stakeholders include the Department of Energy, National Treasury, Eskom, Central Energy Fund and Transnet.                                                        

“A strong co-operative framework, utilising the best skills that the public sector can offer, has laid a foundation for making good progress on a strategic project for the country,” says Somyo.

He says the coming months will be telling.

“We have plans in place to ensure that we can tick as many boxes as possible so that the right people and the right infrastructure aligns at the right time so that when that time comes, the province is optimally positioned,” he ends.