Transnet Pipelines (TPL), a division of Transnet has issued an expression of interest to repurpose the Lilly gas pipeline from transporting methane rich gas (MRG) to regasified liquefied natural gas (LNG).
“The expression of interest process will help TPL assess market interest and demand, which will inform the pre-feasibility study and future request for proposal (RFP) processes,” it said in a statement yesterday.
TPL, a unit of the state parastal Transnet, said, “With the demand for natural gas expected to rise significantly, Transnet is proactively developing the LNG value chain to safeguard South Africa’s strategic interests. This initiative positions Transnet’s Natural Gas Networks business as a vital contributor to the country’s long-term economic growth and transformation.”
While welcoming the move, the Industrial Gas Users Association said, “The initiative may come too late to save South Africa from a looming gas cliff.”
The Lilly pipeline transports 500 million cubic metres of MRG annually from Secunda via Empangeni to Durban, with key off-take points along the route.
The project entails constructing an intake station near Empangeni to connect with the Zululand Energy Terminal as the source point at the Port of Richards Bay, and splitting the flow at Empangeni to allow bi-directional flow towards Durban and Secunda.
It also includes de-bottlenecking and modelling the pipeline for maximum future capacity to meet market demand and secure commercial agreements.
Jaco Human, CEO of the Industrial Gas Users Association of Southern Africa (IGUA-SA), said yesterday demand for gas in South Africa far outstripped supply at present, and any investment into infrastructure that facilitated access to gas energy was welcomed by the IGUA-SA.
“However, the idea of repurposing the Transnet pipeline is not new, and the Transnet pipelines statement does not specify when such an initiative might become operational. This is pertinent, especially as South African industrial gas users, mostly in KwaZulu-Natal (KZN), Gauteng, and Mpumalanga face uncertain gas supply from 2026, with a complete suspension by 2028.
“Navigating this looming gas cliff requires assuming capacity in the Lilly as it stands today to flow gas to KwaZulu-Natal from LNG infrastructure at Matola via Secunda,” Human said.
The organisation said while it welcomed the development of pipeline infrastructure in KZN, the focus by Transnet should be on how best to urgently secure gas energy for KZN in the face of this gas cliff.
Trade and Investment KwaZulu-Natal acting CEO Sihle Ngcamu said the repurposing of the Lilly pipeline represented a significant enhancement to KZN’s energy infrastructure investment.
“This upgrade is crucial for attracting new investments, as improved energy reliability and availability are vital for industries reliant on consistent energy sources. Enhanced infrastructure is set to make the province a more attractive destination for industrial investments.
“Transitioning to regasified LNG aligns with global sustainability goals by promoting cleaner energy solutions. This positions KZN as a leader in sustainable practices, attracting investors and businesses that prioritise environmental responsibility. The focus on sustainable energy is expected to appeal to environmentally-conscious stakeholders, thereby boosting investment prospects,” Ngcamu said.
Moreover, Transnet’s investment in the energy sector supported economic diversification beyond traditional sectors like agriculture and manufacturing. This diversification enhances the province’s resilience to economic fluctuations, making KZN a more robust and attractive investment destination, he added.
In January this year, the Transnet National Ports Authority appointed the Transnet Pipelines and Vopak Terminals Durban consortium to develop and operate the LNG terminal at the Port of Richards Bay, named the Zululand Energy Terminal. This terminal will be a crucial hub for importing LNG, which will be integrated into the Lilly pipeline network.
BUSINESS REPORT