SOCAR participating in tender for LNG purchase in South Africa

Amid a war in Ukraine and soaring gas prices, South Africa wants to urgently secure access to vast amounts of natural gas.

The Central Energy Fund (CEF) released a tender last month, looking for a gas aggregator to help secure liquified natural gas (LNG) for various gas-to-power projects planned for the Coega special economic zone in the Eastern Cape, Report informs referring to foreign media.

A gas aggregator is a wholesaler that imports LNG in bulk and sells it to smaller customers.

SOCAR, the state-owned oil company of Azerbaijan, and Gazprombank, which is owned by Russia’s state-owned natural gas supplier Gazprom, are contemplating bids. Shell, which was expected to be a front-runner for the gas aggregator tender, has confirmed that it will not bid.

“[T]he average Gas Demand could be more than [200 million cubic feet per day]. Such volumes can be managed through multibillion-rand contracts per annum. It would be recommendable to consider aggregating supply ... so as to maximize the benefits of economies of scale,” the tender documents explain.

This translates to over 75-million MMBtu per year, the common unit of measure for natural gas when it is sold on the global market.

Before the Russian invasion of Ukraine, 1MMBtu was priced at roughly $26. At the beginning of March, 1MMBtu hit a record-high of $52. Even at pre-Ukraine prices, that would put the size of the potential contract at $2-billion (R29-billion) a year.