National oil company (NOC) PetroSA has decided not to establish its proposed floating liquefied natural gas (LNG) import terminal in the Southern Cape region.

The NOC announced on Tuesday that this followed extensive research into the feasibility of establishing the terminal near Mossel Bay.

“A study undertaken by international professional services firm WorleyParsons, of Mossel Bay’s suitability for an LNG terminal has determined that the location is technically and commercially challenging,” it stated.

The study had found that meteorological and oceanographic conditions in Mossel Bay were severe and would increase the logistical and overall gas supply costs of the project.

PetroSA had previously indicated that it would make an investment decision on the $375-million to $510-million facility, which had been expected to be established at either Voorbaai or Vleesbaai, near Mossel Bay, in the fourth quarter of this year.

The project was aimed at improving gas supply security for the NOC’s Mossel Bay gas-to-liquids (GTL) refinery.

The proposed floating LNG facility was to comprise a breakwater and berth structure, allowing a permanently moored floating, storage and regasification unit to discharge vaporised LNG into a subsea and overland pipeline leading to the refinery. 

PetroSA CEO Nosizwe Nokwe-Macamo stated that the NOC would persist with efforts to find sustainable feedstock solutions for the GTL refinery.

“We are committed to Mossel Bay and the Southern Cape for the long-haul. Our focus is to now go back to the drawing board and evaluate other long-term feedstock options,” she said.

Given the outcome of the study, PetroSA also withdrew its application for environmental approval for the proposed terminal.

The Rescue Vleesbaai Action Group, which had been opposed to the establishment of the floating LNG terminal in the Vleesbaai area, welcomed the announcement.

Nokwe-Macamo, meanwhile, commented that the feasibility studies had been very useful, as the company was now better acquainted with the oceanic conditions prevalent around the Mossel Bay area.

“The results from this [study] are telling us it is not technically feasible to locate the LNG facility in the area. The good thing about this exercise is that the results of these feasibility studies will be put to good use in other projects in the medium to long term,” she commented.    

PetroSA had closely studied 13 other operational floating LNG terminals around the world in countries like Argentina, Brazil and the United Kingdom, besides others.

“The main distinguishing factor between these floating LNG terminals and the one that was proposed for Mossel Bay is the fact that all of them are located either in very well protected ports, very near the shore or are located on very calm rivers,” she pointed out.