South African power utility Eskom signed a heads of agreement with Zululand Energy Terminal (ZET) to facilitate the development of the nation's first liquefied natural gas (LNG) import terminal. This terminal will serve as the primary fuel source for a planned 3,000-megawatt gas-to-power plant located in the Richards Bay Industrial Development Zone in KwaZulu-Natal. The agreement positions Eskom as the foundation customer for the terminal, which will provide open access to LNG import, storage, and regasification infrastructure at Berth 207 in the Port of Richards Bay.
The project is designed to operate for 25 years as a mid-merit plant and is classified as a Strategic Integrated Project under South Africa’s Infrastructure Development Act, reflecting significant government backing, including the presence of Electricity and Energy Minister Kgosientsho Ramokgopa at the signing. The development aligns with South Africa's Integrated Resource Plan 2025, which allocates 3,000 MW of gas-to-power capacity to Eskom. ZET, a joint venture between Royal Vopak, Reatile Group, and Transnet Pipelines, was selected in 2024 to develop and operate this terminal.
Eskom's motivations for the deal include strengthening energy security, reducing diesel consumption by replacing less efficient open-cycle gas turbines, and addressing a projected shortfall in domestic gas supply, referred to as the "gas cliff," as Mozambique’s Pande and Temane fields decline. The project will be developed through a private sector participation model, utilizing project financing and long-term power offtake agreements. This framework is expected to enhance the project's bankability and signal confidence in LNG as a crucial component for South Africa's energy future, supporting grid stability and industrial growth. Separately, ExxonMobil has identified South Africa as a priority market for LNG, eyeing future supply opportunities and estimating a need for 6-7 GW of new gas-fired power plants in the country.
