The Zululand Energy Terminal (ZET) has executed a heads of agreement (HoA) with ExxonMobil South Africa LNG, an affiliate of ExxonMobil, to establish South Africa’s first liquefied natural gas (LNG) import terminal.

The agreement aims to facilitate LNG imports through the Port of Richards Bay, indicating sustained overseas interest in supplying LNG to South Africa.

In January 2024, Transnet National Ports Authority selected the consortium of Vopak Terminal Durban and Transnet Pipelines as the preferred bidder for the development and operation of the LNG terminal at the Port of Richards Bay. The project was officially named Zululand Energy Terminal.

The consortium will design, build, finance, run and maintain the LNG terminal in Richards Bay’s South Dunes Precinct for a 25-year term.

Transnet group CEO Michelle Phillips said: “Transnet remains committed to supporting strategic infrastructure that strengthens South Africa’s long-term energy security and industrial competitiveness.

“Through Transnet Pipelines’ partnership in the Zululand Energy Terminal, we continue to support the development of critical LNG import infrastructure at Richards Bay.”

The Zululand Energy Terminal is intended to serve as a gateway for LNG imports and provide storage, regasification and distribution infrastructure. It is set to establish Richards Bay as a main hub for LNG imports into the country.

The planned facility would supply natural gas for both electricity generation and industrial sectors.

By 2030, South Africa may encounter a notable shortfall in gas supply due to decreasing output from Mozambique’s Pande-Temane fields.

This anticipated “gas cliff” could impact electricity generation, industrial operations, jobs and broader economic progress, highlighting the need for alternative gas sources and supporting infrastructure.

After becoming operational, the terminal is intended to enhance the country's energy security, contribute to the growth of its domestic gas market, and enhance industrial development and competitiveness. It will also support a balanced shift in the energy sector alongside renewables.

ExxonMobil LNG Market Development chairman Andrew Barry said: “This agreement reflects ExxonMobil’s global LNG experience and our 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.”