LNG Hub is poised to become the leading downstream supplier of Liquified Natural Gas (LNG) in Southern Africa by providing reliable energy and services solutions that are financially viable, socially responsible, and environmentally sustainable. MechChem Africa talks to Stephen Rothman, LNG Hub's CEO.
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Stephen Rothman spearheaded the creation of CNG holdings to expand the provision of Compressed Natural Gas (CNG) in Africa. “I am still involved with CNG Holdings and a Director on the board and have joined LNG Hub as CEO to focus on the development of the LNG industry in Southern Africa,” says Rothman.
One of the perceived challenges with LNG supply into South Africa is reliability and cost, but Africa holds 9% of the world’s natural gas reserves. “Having looked at the United States and European markets, we concluded that Africa has rich natural gas resources."
There is already a big move in Nigeria to set up further liquefication facilities to utilise its large gas resources. Other locations in Africa, such as Mozambique are also coming online.
"Financially and developmentally, it makes sense to create an African-based LNG supply chain that is independent of Europe, Asia and the United States,” he continues.
In terms of providing competitive LNG prices compared to those of carbon-based fuels, he says transitioning from carbon-heavy fuels must make financial sense. “We are looking into directly contracting LNG supplies from the source to the customer. That is a strength, because it bypasses reliance on the European TTF price index, which has gone through the roof in recent times due to the war in Ukraine.
"Contracts are directly from the source and link the gas price to the Brent crude oil rates. In this way, any savings on diesel or paraffin will translate directly into natural gas savings,” Rothman explains, adding that this should isolate the local market from exposure to the "crazy” fluctuations seen across Europe.
In expanding the LNG hub customer base, LNG Hub is currently closing contracts up to March 2023 that will start supplying LNG at the start of Quarter 4 of 2024. “We are creating depots in Saldanha Bay, Richards Bay and Durban, along with depots in regions across Gauteng, for the supply of peaking and mid-merit power demands. We intend to set up joint ventures within industries in the private and public sectors to meet needs in the 10 to 350 MW range.
“It is important to note that LNG Hub is not targeting Eskom and or government projects that are looking at supplying 1 000 MW or more, which would require floating storage regasification units (FSRUs),” he points out.
“Our core focus is on the industrial and mining sectors running furnaces and boilers where we can offer LNG as a direct substitute for paraffin and diesel.
“And on the power side, we see LNG as ideal for use in hybrid renewable energy plants. For example, we are looking to work with solar companies which tend to struggle to meet demand before nine in the morning and after four in the afternoon.
“Users typically install diesel generators to meet this demand, but natural gas is far cleaner and much less expensive,” Rothman notes.
Infrastructure requirements
Describing infrastructure requirements that will be developed for smaller customers, he says LNG can be delivered via road tankers for transfer into locally installed tanks, or in ISO containers. LNG is in liquid form (at –
162 °C), so the gas needs to be passed through an ambient vaporising system before use. These can supply natural gas at anything from 1.0 to 10 bar to meet the customer’s needs. In addition, typical storage volumes for industrial customers are below 80 m3, so full environmental impact studies are not required. “We can therefore deploy these solutions rapidly,” Rothman assures.
In terms of onsite storage capacity, one- or two-weeks supply would be needed because LNG cannot be stored indefinitely – the liquid vaporises in the cryogenic tank, resulting in the need for venting to maintain safe pressure limits. “So, we schedule deliveries on a just-in-time routine to supply the customer’s ongoing needs directly from the Distribution Hub,” he says.
SA’s energy transition
Stephen Rothman sees LNG as a vital part of the green energy transition for Southern Africa. “We cannot look at each energy option in isolation, LNG has a vital role to play as a transition fuel towards a zero-carbon economy.
"Every 10 to 200 MW facility we put into South Africa, decentralises the local network and creates opportunity.
In the long-term, green hydrogen will
ultimately become an alternative to
natural gas, and we are already investing in hydrogen to supplement LNG from 2026/2027 onwards. We have created an entity
called H2Hub, and we are busy with a project in Jeffreys Bay with a company called
SSC Group to produce green hydrogen from wind energy,” he tells MechChem Africa.
“We now also have a team of technical people in South Africa – on the installation, quality and SHEQ side – with specialists in handling cryogenic gases. We have also put in place some financing options. A customer has the option to purchase 50% to 100% of the equipment needed onsite, for example, with a five-year payback period during which LNG Hub will service and maintain the facility.
“Once an LNG storage facility has been set up, the client immediately has access to cleaner energy generation, but clients can also run their trucks or a smelter on LNG. LNG use can become a lot more efficient compared to running HFO, diesel or paraffin.
“LNG is very cost-competitive, too. For a mine where we are looking at a 10 to 100 MW facility to replace diesel, we would be able to save our customers a substantial amount of energy per year, equating to an approximate 35% saving on their fuel bill. So, transitioning to using cleaner fuels is not the only advantage of switching to LNG. It can also be a far more financially viable option,” Stephen Rothman concludes.