Exxon Mobil is eyeing projects in South Africa which it views as a top destination for liquefied natural gas (LNG), a senior gas executive said at an African energy conference in Cape Town on Tuesday.
The U.S. is the world’s top natural gas producer and the largest LNG exporter and could entrench its dominance with several new projects coming online, which could exacerbate a gas glut by 2030.
South Africa has been in talks with rival LNG producer Qatar as it looks to secure supplies for its industry as imports from neighbouring Mozambique, which supplies the bulk of gas via pipeline, start to run dry, the electricity minister said previously.
“We’ve identified South Africa as one of the most top priority markets to seed long-term LNG sales into the country,” said Shahrukh Mirza, Exxon Mobil’s vice president of LNG market development and origination.
“That means that you have to build or enable LNG import infrastructure with partnerships for you to do that.”
Studies by the U.S. oil major suggested South Africa would need anywhere between 6 and 7 gigawatts of new gas-fired power plants, Mirza said, as the country moves away from coal-fired power plants to cleaner forms of energy, including wind and solar power.
In May, South Africa offered to buy LNG worth billions of dollars from the U.S. over a 10-year period as part of proposals to secure a new trade deal. However, after several unsuccessful attempts to propose a trade agreement, U.S. President Donald Trump in August imposed a 30% tariff on imports from Africa’s most developed economy.
Exxon Mobil affiliates previously signed a memorandum of understanding with Dutch firm Royal Vopak to collaborate on a feasibility study to assess the commercial and technical aspects of an LNG regasification terminal in South Africa.
Vopak and partner Transnet Pipelines were selected last year by South Africa to develop and operate an LNG terminal at the Port of Richards Bay for 25 years.
“We believe that’s the start, we believe there is going to be a requirement for more and we want to be in that (space),” Mirza said.
(Reporting by Wendell Roelf Editing by Marguerita Choy)