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Contracts Awarded to Advance Plans for South Africa’s First LNG Terminal

South Africa
Richards Bay will be the location of South Africa's first LNG terminal with pipeline conenctions to Durban (Transnet Pipelines)

Published Feb 11, 2025 5:25 PM by The Maritime Executive


Efforts to develop the first LNG import terminal in South Africa are continuing to make progress with 2026 now targeted for a final investment decision. A terminal operator agreement was signed which provides for the design, development, construction, and operation of the terminal which would be located at the Port of Richards Bay on the Indian Ocean coast of South Africa.

Transnet Pipelines, a division of the state-owned group and that operates nearly 2,000 miles of pipelines, has formed a joint venture with Vopak Terminal Durban, part of Royal Vopak, for the planned LNG terminal. Transnet National Ports Authority appointed the joint venture known as Zululand Energy Terminal in August 2024 to develop and operate the LNG terminal. It followed the first RFP which was awarded in January 2024.

Zululand has now executed a 25-year concession for land in Richards Bay to be used for the terminal. The company has full rights to the land designated for the terminal and reports it is a key step in the process.

According to the companies, the LNG terminal is a pivotal development in South Africa’s efforts to ensure energy security as the country faces a looming “gas cliff” and the gradual decommissioning of coal-fired power stations. The terminal will support flexible power generation while fostering industrial growth in KwaZulu-Natal and beyond. 

The project calls for the development of a floating storage unit with a capacity of 135,000 to 174,000 cbm which would be supported by an onshore regasification unit. In the second phase, they plan to replace the FSU with onshore storage.

Zululand Energy Terminal reports it is in an advanced stage of its capacity allocation process, with negotiations ongoing with a select group of potential customers. It initiated an RFP in September 2024 to identify key stakeholders critical to the project’s success. With the new agreements, it reports it can proceed with binding agreements with potential customers. A final investment decision is expected in 2026, contingent on customer commitments.

Royal Vopak has been active in South Africa since 1997. It owns and operates two terminals in the country and expects to leverage its expertise to develop this new project.

Transnet in August 2024 also asked for expressions of interest from companies for a second project to support the LNG terminal. It plans to transition the existing Lilly Gas Pipeline which connects to Durban from transporting Methane Rich Gas to regasified LNG. Lilly currently transports approximately 500 cbm of MGR annually and has key offtake points along its route. The LNG project they report will benefit from the industries connected to the Lilly Pipeline.

Officials have said this LNG terminal project represents a significant milestone for South Africa. They highlight that it will provide the infrastructure necessary to meet growing energy demands, support the energy transition, and stimulate economic growth. South Africa will join a growing number of countries around the world working to develop LNG import capabilities.