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Contract negotiations for Secunda sustainable aviation fuel project may be concluded by mid-2024

A Rolls-Royce SAF test flight

A Rolls-Royce SAF test flight

11th April 2024

By: Terence Creamer

Creamer Media Editor

     

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Contractual negotiations are under way between the developers of the HySHiFT sustainable aviation fuel (SAF) project, in Mpumalanga, and the intermediary company set up under Germany’s H2Global scheme, known as Hintco, which enters into long-term purchase contracts for clean hydrogen and derivatives such as ammonia, methanol and SAF.

Speaking at Resources for Africa’s 2024 Hydrogen Discussion in Johannesburg ENERTRAG business case development manager Jonathan Metcalfe reported that the project, which was being developed by Sasol, Linde, ENERTRAG and Hydregen, had been selected as a preferred bidder and that the negotiations for a ten-year offtake deal could be concluded by mid-2024.

“We are currently in contractual negotiations with Hintco … and we are ready to commence detailed engineering [having already] completed the front-end engineering design on the project.”

Through H2Global, long-term purchase agreements are extended to projects producing green-hydrogen-based products outside of Germany, which are then sold under short-term contracts to European consumers, with public funding used to compensate for any difference in pricing.

Through HySHiFT, the plan is to used renewable electricity from wind and solar resources in an electrolyser to split water into hydrogen, which will be used to displace a portion of the coal-based hydrogen that Sasol uses in its Fischer-Tropsch reactors to produce carbon-neutral kerosene.

The target is to produce 50 000 t/d of such kerosene, which could fuel two daily flights between Germany and South Africa.

The offtake agreement with Hintco could play a significant role in ensuring the project’s bankability, but Metcalfe indicated that the ten-year contract was not sufficiently long to ensure prices that were low enough for a binding offtake agreement. Discussions were, thus, ongoing with the European Union and Germany about a longer-term floor price.

Improving demand-side conditions for green hydrogen projects was also highlighted as a priority by International Energy Agency energy technology analyst for hydrogen and alternative fuels José Miguel Bermúdez Menéndez, who cautioned that initiatives to stimulate demand for green and low-emission hydrogen were lagging production ambitions.

He said the number and size of announced projects was growing rapidly, which could result in production of 35-million tons by 2030, against potential demand from a combination of policy initiatives, aggregation and private offtake currently estimated at between 10- and 19-million tons for 2030.

“Without robust demand, low-emission hydrogen producers will not be able to secure offtakers that are needed to underpin the large investments that are required, which jeopardises the viability of the entire global low-emission hydrogen industry,”  Menéndez warned.

He called for bolder actions to stimulate demand, particularly for existing hydrogen uses.

Edited by Creamer Media Reporter

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