The Zululand Energy Terminal (ZET), which is aiming to build South Africa’s first liquefied natural gas (LNG) import terminal at the Port of Richards Bay in KwaZulu-Natal, has signed heads of agreement with an ExxonMobil affiliate – a move that it says signals international market interest in supplying LNG to the country.

It is the second heads of agreement signed by ZET this month, with the first signed on June 5 with Eskom.

Through that initial agreement, the State-owned electricity producer outlined its intention to be a ‘foundation customer’ for the terminal, using the gas in a 3 000 MW gas-to-power (GtP) project it plans to build in Richards Bay in partnership with private investors and at a cost of up to R100-billion.

Speaking at the most recent signing, ZET director Oliver Naidu said the agreement with ExxonMobil South Africa LNG would further strengthen the commercial foundations of the project, earmarked for Berth 207 in the port’s South Dunes precinct and which could cost some R15-billion to build.

ZET is a joint venture between Vopak Terminal Durban and Transnet Pipelines, and was selected in 2024 as the preferred bidder to develop, construct and operate a new LNG terminal at the deepwater port. Vopak Terminal Durban is owned by Royal Vopak, of the Netherlands and the Reatile Group.

The terminal project is currently in the early front-end engineering design (FEED) stage and the next major steps include completing the FEED, securing environmental and regulatory approvals and concluding the commercial agreements needed for making a final investment decision in 2028.

The development, Naidu said, would be phased, with Phase 1 expected to include a floating storage unit of at least 170 000 m³ and an onshore regasification system with indicative capacity of approximately 3-million tonnes per annum, or around 400-million standard cubic feet per day.

“Phase 2 is expected to introduce an onshore LNG tank of approximately 220 000 cubic metres and additional regasification capacity, increasing total capacity to approximately 4.5-million tonnes per annum, or around 600-million standard cubic feet per day.”

ExxonMobil LNG Market Development Inc chairperson Andrew Barry said the agreement reflected the group’s global LNG experience and its commitment to support South Africa’s energy security with reliable supply.

“With LNG markets continuing to expand globally, we see a strong opportunity to help meet growing demand for secure energy and look forward to working with ZET to progress this opportunity,” Barry added.

Naidu said the participation of ExxonMobil reinforced the strategic importance of Richards Bay as an entry point for LNG and was supportive of ZET’s vision of developing the infrastructure needed to unlock a competitive and sustainable gas market.

Besides Eskom’s GtP project, which also still requires environmental authorisation as well as the selection of private partners, the terminal could also potentially play a role in helping to address the “gas cliff” faced by industrial companies later this decade once existing supply from Mozambique’s Pande-Temane fields declines.

“This will serve as a central offtake and distribution node, enabling gas to be supplied to multiple users in the region, including industrial customers and future GtP developments.

“ZET will also connect into the Lilly Pipeline system through a new 24-inch connection, enabling gas imported through Richards Bay to reach broader industrial and energy demand centres,” Naidu said.