Multinational energy firm, Shell, said that by utilising liquefied natural gas (LNG) resources to replace the current diesel at Eskom’s open cycle gas-turbines (OCGT), the country may be able to restore capital costs associated with the LNG import terminal.

Eskom spent close to R11 billion, almost triple than their allocated budget, on diesel fuel in 2013/14 to power the Gourikwa and Ankerlig plants.

With the latest coal silo disaster at Mejuba, Eskom has hinted that they may need to turn to OCGT to support the demand during the high maintenance summer period, sources said.

At a briefing on Wednesday, John Shoobridge, Shell LNG business development manager, was confident in saying that the concerns over the infrastructure costs of a LNG terminal would not compare to that if the plants continue to operate on diesel instead of gas.

The location and type of terminal selected would determine the final costs, engineering news said.

Researchers at PetroSA confirmed that offshore conditions off Mossel Bay were not conducive to a regasification unit or floating storage.

The capital costs of the gas terminal were estimated between US$375-million to US$510-million according to PetroSA. They were identifying alternative sites for the development of the terminal, Engineering news reported.

Shell has been looking at areas close to Saldanha Bay, Coega and Richards Bay where Shoobridge acknowledged the potential for the terminal to enter into a possible public-private partnership, engineering news reported.

‘South Africa is very concerned about its balance of payments. Well . . . displacing the current amount of diesel that is being burnt at the OCGTs . . . can save us as much as $100-million per year’, he added.

With much optimism, Shoobridge said that South Africa had the capacity to implement an LNG import in a 3-5 year period where adjacent gas-fired plants could be developed, engineering news reported.

Unlike coal or nuclear, gas-fired plants could be developed a lot quicker and at a much lower cost, he added.

The Department of Energy’s Gas Utilisation Master Plan (Gump) has incorporated LNG imports into their plans which was supposed to have been released in June but is still pending, engineering news reported.

The GUMP initiative should be pushed especially since the gas market can be incorporated into the energy mix within a short time frame compared to other resources, engineering news reported.