(Bloomberg) -- TotalEnergies SE aims to next year approve an import terminal for liquefied natural gas in Mozambique that may help users in neighboring South Africa avoid a potential supply crisis.
Gas shipments may flow from the Matola project by the end of 2027, according to Gigajoule, a partner helping develop the facility. That’s the same year that fuel piped from Sasol Ltd.’s fields in Mozambique is scheduled to terminate for companies in South Africa that include units of brewer Anheuser-Busch InBev SA/NV and steelmaker ArcelorMittal, stoking fears of a so-called gas cliff in the continent’s most industrialized nation.
The Matola project next to Mozambique’s capital of Maputo will have the capacity to bring in 2.5 million tons of LNG annually, TotalEnergies said Monday in a response to emailed questions. It may be the first major supplier of the super-chilled fuel to South Africa and is separate from an export plan that the French major has in Mozambique’s northeastern Cabo Delgado province.
Members of the Industrial Gas Users Association of Southern Africa, a lobby group, are poised to sign a term sheet by December for offtake from Matola as part of an effort to realize the project. The group is racing against time that’s needed to build the new infrastructure, IGUA Executive Oficer Jaco Human said.
“The risk of not having gas is catastrophic,” he said.
The search for alternative supplies of gas by IGUA comes as South Africa plans to use more of the fuel and move away from a dependence on coal. While there are government steps toward building such infrastructure, existing customers that use gas won’t be able to afford delays.
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A final investment decision should take place by the second quarter of next year, according to Gigajoule Chief Executive Officer Jurie Swart. The import terminal will connect to an existing pipeline that transports Sasol’s gas from Mozambique to South Africa. Gigajoule in 2019 estimated the project cost at $3.2 billion, including a gas power plant. The companies didn’t provide an update.
TotalEnergies said it’s engaging “all the relevant stakeholders,” including Sasol and South African state-owned power utility Eskom Holdings SOC Ltd.
Sasol is in talks with “several potential LNG suppliers and terminal developers, including TotalEnergies for supply into Matola,” and is having ongoing discussions with customers to confirm supply volumes, a company spokesperson said in an emailed reply to questions.
A spokesperson for Eskom wasn’t able to immediately respond to questions.
Interested gas buyers held discussions on Oct. 4 around contract status and commercial pricing, as well as talks with Sasol and financial institutions, according to Human.
While commitments for about triple of what IGUA has collected would drive better efficiencies, the buyers are running out of time to avoid shortages, he said. “There’s no other option.”
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--With assistance from Jeremy Diamond.
(Updates with Sasol response in ninth paragraph)
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