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South Africa eyes LPG expansion to ease power shortages

South Africa should significantly grow LPG's share in the energy mix to help alleviate persistent electricity supply shortages, according to a recommendation from the ruling African National Congress (ANC).

In an advisory paper the ANC's economic transformation committee said that LPG and gas should be integrated in new housing developments to enable a shift away from using electricity for heating and cooking. This would lower peak power demand and help towards meeting the government's target of doubling LPG usage to more than 820,000 t/yr within the next five years, it said.

The paper proposes a raft of other measures to boost South Africa's energy security, including further intensifying regional integration efforts with the aim of securing access to gas in neighbouring countries and/or developing new regional generation and transmission infrastructure where needed.

South Africa is already highly dependent on natural gas imports by pipeline from Mozambique, but this will start to taper in 2023 as the Pande and Temane fields deplete. Consequently it has sought to expand collaboration with its neighbour, where Total recently resumed construction on one of the largest LNG projects in the world, which will be fed by offshore fields containing more than 60 trillion ft³ (1.7 trillion m³) of gas resources.

Investments in offshore and onshore oil and gas could make a critical contribution to energy security, the ANC committee said.

"Gas is emerging as a game changer both in terms of its role in the country's energy transition and in terms of the new opportunities it presents," it said.

In early 2019, Total made a gas condensate discovery at the Brulpadda prospect in the Outeniqua Basin's block 11B/12B off the southern coast, indicating potential resources of 1bn bl of oil equivalent (boe). This sparked renewed interest in South Africa's exploration sector, but uncertainty over a long-delayed revision of the legislative framework for petroleum exploration has held back investment.

To aid upstream investments the Petroleum Resources Development Bill should be finalised, including "the related fiscal measures that will ensure shared outcomes between the state and those granted rights," the ANC committee said.

The latest version of the bill envisages the government taking a 20pc carried interest in exploration and production projects through state-owned PetroSA. The next step towards passing the bill is for cabinet to consider the legislation, but the timeline has been delayed by the Covid-19 pandemic.

Upstream, local partnerships should ensure that South African firms develop and own energy technologies, according to the paper. Downstream, the development of new "green industries" and hydrogen technology should be incentivised, it said. The feasibility work for a new refinery complex should also be advanced, the ANC committee said.

South Africa plans to build a 300,000 b/d refinery and associated petrochemical facility at Richards Bay with the backing of a $10bn investment from Saudi Arabia's state-controlled Aramco. State-owned Central Energy Fund (CEF), which is jointly undertaking feasibility studies with Aramco, has said the refinery is unlikely to come online before 2028.

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