Page 5 - AfrOil Week 28 2022

AfrOil COMMENTARY AfrOil

Domestic sales and exports in the area, which means that from an attrac-
The CEO said that his company would be tiveness perspective, you’ve got the labour force
marketing its LNG to three types of customers there as well, and highly skilled. You’re sitting
within South Africa – buyers seeking to use it as in a position where strategically it makes more
industrial fuel, buyers seeking to use it as gener- sense to set up industrial operations and manu-
ator fuel and buyers seeking to use it as freight facturing operations in the Free State over, say,
transportation fuel. Jo’burg. We really do see this project becoming
For customers in all of these “primary focus” over time a catalyst for the area.”
categories, he explained, LNG can serve as a low- He continued: “So the project itself? Yes, gas
er-carbon source of fuel than existing options. doesn’t employ as many people as mining does.
“There are three primary customer types,” But we believe we will leave a much longer-last-
he told CNBC Africa. “We’ve already signed up ing legacy in the area than the mining houses
with [corporate] customers such as Consol and will.”
Italtile, two blue-chip companies in South Africa Against the
who are weaning themselves off heavier-carbon Could power crisis boost LNG?
fuels as well as using it as a source of energy secu- In the meantime, though, Renergen may also backdrop of a
rity ... [These] are our industrial customers who have a chance to have a significant impact in the power crisis,
are using it for thermal purposes. [Then] there short term.
are other customers who want it as a source Marani did not talk much about what role news of the
of energy to get away from load-shedding, so his company might play in South Africa’s cur-
[they] use it to power [their] generators, and rent energy markets. He did note briefly that Phase 1 launch
it’s about 70% carbon reduction in relation to Renergen expected companies needing fuel
Eskom. So it’s a massive reduction in greenhouse for generators that would allow them to avoid could generate
gas [GHG] relative to Eskom’s power, and it’s load-shedding to be one of its three main groups more interest
significantly cheaper as well. And then the third of LNG buyers. However, he did not address the
pillar is in transport. [For] heavy trucks, it’s sig- possibility that the number of such companies in LNG-fuelled
nificantly cheaper than running your trucks on – and the level of interest in LNG-fuelled gener-
diesel, and it’s the quickest way to get significant ators – is likely to rise in the near term. generators
ESG credits because of the significant reduction South Africa’s energy sector has been in a
in greenhouse gas [GHG] emissions relative to sub-optimal state for more than a decade. Cus- than Renergen
diesel in these trucks.” tomers of Eskom, the national power provider, could ever have
Marani also highlighted Renergen’s plan to have come to expect blackouts and load-shed-
make South Africa a key player in the global ding as a regular feature of service. However, expected
helium market over the long term, saying that conditions have grown even worse over the last
the new plant would be exporting all of its liq- few weeks, with plant breakdowns and strikes
uid helium production. He drew attention to taking some 18,000 MW of generating capacity
the fact that helium shortages had contributed offline. President Cyril Ramaphosa said on July
to supply chain disruptions over the past two 11 that his government would take action to
years, explaining that the gas was used in sem- mitigate the shortages soon, but it remains to be
iconductor and microchip manufacturing, and seen whether conditions actually improve.
also noted that helium was used as a propellant If they do not, Renergen may find that news
in rocket launches. of its Phase 1 launch generates more interest in
LNG and LNG-fuelled generators than it might
Economic potential ever have expected in the short term. In turn, if
He also talked up the potential of the LNG plant interest in LNG remains strong, Renergen may
to fuel job creation and economic growth in Free want to consider ramping up the scale of Phase 2
State. so that it can serve more customers within South
While Renergen will probably not hire more Africa. ™
than 75 people for Phase 1 operations, rising to
150-160 people during Phase 2 operations, he
said, there will be knock-on effects. By making
a relatively low-carbon source of energy availa-
ble to customers in a part of South Africa with
low-priced real estate and good access to key
transportation routes, the project could serve as
a trigger for further growth.
“[It’s] not like a traditional mining company,
where the mining company becomes the bread-
basket for the area and the sole employer. This
is a catalyst,” he explained. “This is a situation
where you have to look at the Free State relative
to the rest of the country. If you think about it,
we’ve got access to the N1, the N3 and the N5
highways, all within almost equal distance. The
ground is flat, there’s a lot of available land, and
it’s relatively well priced … And [with LNG],
you’ve got a source of clean sustainable energy LNG plant construction site, shown in April 2022 (Photo: Twitter/@StefMarani)

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