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South Africa to name preferred bidders for gas projects in March
October 3, 2016 / 9:26 AM / in a year

South Africa to name preferred bidders for gas projects in March

* Gas-to-power projects to add 3,000 MW to grid

* Exxon, Shell among bidders for LNG, power supply

* South Africa prefers floating LNG facilities

By Wendell Roelf

CAPE TOWN, Oct 3 (Reuters) - South Africa will announce preferred bidders for multi-billion dollar gas-to-power projects by the end of March as part of efforts to diversify electricity production away from more environmentally damaging coal plants, a government document shows.

Tender documents in May last year asked consortia to submit plans to build South Africa’s first liquefied natural gas (LNG) import terminal, gas-fired power plants, storage facilities and transmission pipelines, according to a department of energy memorandum due to be released on Monday and seen by Reuters.

Exxon Mobil and Royal Dutch Shell are among more than 100 bidders for the gas projects, which South Africa hopes will add more than 3,000 megawatts (MW) to its current power production capacity of 42,000 MW.

A separate 600 MW gas-fired power plant is also being developed in parallel by the department of energy’s independent power producers unit.

South Africa already imports gas from neighbouring Mozambique and could buy LNG from major African producers such as Nigeria and Angola, analysts said.

A drop in global energy prices has encouraged South Africa to push ahead with gas-to-power projects as it looks to quickly increase electricity supply capacity following nationwide outages last year.

“The current global gas and LNG market conditions are expected to represent an opportunity for South Africa to achieve an economically beneficial pricing arrangement in the oil and gas cycle,” the document said.

The department of energy has a preference for floating regasification and storage facilities due to the speed with which they can be built.

The most likely location for new gas-fired power plants are at Richards Bay and Coega, the document said.

South Africa has separate plans for huge nuclear power expansion which could cost up to 1 trillion rand ($73 billion).

$1 = 13.62 rand Editing by Joe Brock and Mark Potter

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