South Africa’s power utility Eskom has signed a long-term liquefied natural gas (LNG) agreement to support its planned 3,000 megawatt gas-to-power project in Richards Bay, marking a key step in the country’s transition away from coal.
The agreement was concluded with the Zululand Energy Terminal, which will provide LNG import, storage and regasification infrastructure for the project.
The terminal, located at Richards Bay on South Africa’s east coast, is the country’s first LNG import facility and is expected to play a central role in developing a domestic gas-to-power market.
Under the deal, Eskom will gain open access to LNG infrastructure needed to fuel its planned gas-fired power station, which is designed to generate up to 3,000 MW of electricity over an expected 25-year lifespan.
The project is part of South Africa’s broader strategy to diversify its energy mix as it struggles with persistent electricity shortages driven largely by ageing coal-fired power plants and maintenance constraints.
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South Africa has earmarked about 6,000 MW of gas-fired capacity in its long-term energy planning as it seeks to stabilise the grid and reduce reliance on coal while expanding cleaner energy sources.
The Zululand Energy Terminal is a joint venture involving Dutch energy infrastructure group Vopak, South African energy firm Reatile Group, and state-owned logistics operator Transnet.
The LNG supply deal marks an important milestone for the Richards Bay gas project, which has faced delays, including a court ruling that cited concerns over inadequate public consultation.
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Despite regulatory hurdles, the project remains central to Eskom’s long-term generation strategy as it seeks to improve energy security and reduce the frequency of power outages that have affected households and industry in recent years.
Energy analysts say the development reflects a broader shift in South Africa’s power sector, with gas increasingly viewed as a “transition fuel” that can complement renewable energy while providing more reliable baseload capacity than intermittent sources.
If successfully implemented, the Richards Bay gas project could significantly reshape South Africa’s electricity landscape and help ease chronic supply constraints that have weighed on economic growth.
