CAPE TOWN, June 5 – South African power utility Eskom has signed a long-term liquefied natural gas (LNG) supply agreement with Zululand Energy Terminal, advancing plans for a large-scale gas-fired electricity project.
The agreement will provide Eskom with access to LNG import, storage and regasification infrastructure needed to support its proposed 3,000-megawatt gas-to-power facility.
The project forms part of South Africa’s broader strategy to diversify its energy mix and strengthen electricity supply as the country gradually transitions toward a lower-carbon power system.
Located at the Port of Richards Bay on South Africa’s east coast, the Zululand Energy Terminal is set to become the country’s first LNG import facility.
The terminal is being developed by a consortium comprising Dutch storage and infrastructure company Vopak, South African energy firm Reatile Group and Transnet Pipelines.
The consortium secured the concession to develop and operate the terminal in 2024.
Under the agreement, regasified LNG will serve as the primary fuel source for Eskom’s planned power station throughout its anticipated operational lifespan of approximately 25 years.
The gas-to-power project is viewed as an important component of South Africa’s efforts to improve electricity reliability while reducing dependence on aging coal-fired generation assets.
However, progress on the project has faced delays after a court ruling raised concerns regarding public consultation processes associated with the development.
Despite these challenges, the latest agreement signals continued momentum behind South Africa’s plans to expand its gas infrastructure and increase gas-fired power generation capacity.
The government has identified natural gas as a transitional energy source that can help bridge the gap between traditional fossil fuels and renewable energy technologies.
As part of its long-term energy strategy, South Africa has earmarked approximately 6,000 megawatts of gas-fired generation capacity for development by the end of the decade.
Supporters of the strategy argue that gas can provide reliable baseload and flexible generation capacity needed to complement renewable energy sources such as solar and wind power.
The LNG agreement therefore represents a significant step toward strengthening the infrastructure required to support the country’s evolving energy mix and future electricity needs.
