South Africa’s government believes gas can play an important role in the country’s energy future, with plans in hand to create a liquefied natural gas terminal in Coega, near Port Elizabeth.

Minister of Energy & Mineral Resources Gwede Mantashe said at the Africa Oil Week conference in Cape Town that Coega will be the initial home for the LNG import terminal but added that “we think we may need more than one terminal".

While the minister did not identify where other terminals could be located, Richards Bay and Saldanha have previously been mentioned as possibilities.

A terminal at Coega will help boost the financial fortunes of state-owned utility Eskom as well as PetroSA.

“We think the availability of gas can help alleviate that cost to Eskom of using diesel in peak times of energy demand,” said Mantashe.

“This is what is driving us to look into these LNG complexes.”

He added that Eskom may also be able to convert coal-fired power plants to run on gas.

The minister stressed a Coega import facility could “change the fortunes” of PetroSA’s Mossel Bay gas-to-liquids facility, which is only pumping at one-third of its capacity due to gas feedstock shortages.

“We need an LNG terminal urgently and we have to talk to various investors to get commitment to that terminal because it must not depend on the state.”

This move to improve the profile of gas in South Africa’s economy is underpinned by the government’s recently unveiled Integrated Resource Policy (IRP).

The IRP is designed to offer potential investors a framework around which the government aims to achieve security of supply and access to clean and affordable energy to all South Africans by 2030.

Mantashe said: “We are giving space in the IRP to develop oil and gas. The (Bulpradda) discovery by Total (indicates) that we may be sitting on a bright future for gas and oil. Exploration will determine that.”

He said: “ We want petroleum to grow to become a massive sector of the economy,” while at the same time pointing out that gas “is not an enemy to renewables but is complementary to it.”

Mantashe believes firmly that any gas developed in South Africa must be prioritised for domestic consumption, with key users being the mining and manufacturing sectors.

He said that the government’s desire is to reduce the price of electricity to industrial users, which would make them more competitive.

As well as the IRP, all eyes of industry are on the Petroleum Resources Development Bill, which will provide the underpinning legislation for the upstream sector.

Mantashe told media at Africa Oil Week that the government could unveil a draft of the new upstream petroleum act this month.

“We have a draft bill that is in cabinet and I imagine that it will be released for comment in the next two weeks," he said.