ExxonMobil has thrown its weight behind South Africa's halting shift away from coal, signing a preliminary deal to supply liquefied natural gas to what would become the country's first dedicated LNG import terminal.
The American oil major announced on 17 June that it had signed heads of agreement to feed the proposed Zululand Energy Terminal at Richards Bay, the industrial port on the KwaZulu-Natal coast. The deal is an early-stage commitment rather than a binding supply contract, but it is a notable vote of confidence in a project that has been talked about for years and rarely advanced.
Why Richards Bay matters
South Africa generates the overwhelming majority of its electricity from ageing coal-fired stations, and the hunt for a cleaner, more flexible fuel has grown urgent as Eskom's fleet creaks. Imported gas is widely seen as a bridge: cleaner than coal, quicker to switch on than nuclear, and able to firm up a grid that leans ever more heavily on wind and solar.
Phase one of the Zululand terminal is expected to feature a floating storage unit holding 170,000 cubic metres of LNG, paired with an onshore regasification system able to process roughly 400 million cubic feet a day, or about three million tonnes a year. Earlier this month state utility Eskom signed a long-term LNG agreement with the terminal's developers to underpin a planned 3,000 megawatt gas-to-power project.
A bigger African play
For ExxonMobil, the agreement slots into a continental strategy. The company has flagged South Africa as a priority market and wants to lift its global LNG supply to more than 40 million tonnes a year by 2030. Securing offtake at a brand-new terminal hands it an anchor position in a region where gas demand is tipped to climb.
Plenty could still go wrong. The terminal must reach a final investment decision, lock in financing and clear regulatory hurdles before a single cargo arrives, and South Africa's record on delivering large energy infrastructure is patchy. But for a country desperate to keep the lights on, the prospect of gas flowing through Richards Bay is a welcome signal.
