Western Cape's LPG Shortages Met by $130 Million Open Access Terminal

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Sunrise Energy (Cape Town) has begun construction on an open-access liquefied petroleum gas (LPG) import and storage terminal in Saldanha Bay, on the South Atlantic coast in South Africa's Western Cape province.

The $130 million project will allow infrastructure to be acquired by qualifying wholesale distributors, importers, traders or industrial LPG users, freeing up the market and solving the severe LPG shortages in the Western Cape.

Barthlo Harmse, the managing director of Sunrise Energy, said that as a result of a shortfall in LPG production capacity in the province, gas had to be transported by road from the Sasol (NYSE:SSL) (Johannesburg) plant at Secunda and from Richards Bay on the Indian Ocean coast. This is becoming uneconomical, unsafe and unsustainable.

"The terminal will, thus, provide strategic buffer storage in the Western Cape, increasing the current storage capacity from three to 14 days," Harmse said.

Harmse went on to explain that the required capital spend on LPG infrastructure is far less than that on a coal-fired power station, so much so that 1.5 million tons of the gas can replace the equivalent 2,500 megawatts (MW) of electricity.

Sunrise Energy will build and operate the open-access LPG terminal for 30 years, according to an agreement awarded by The Transnet National Ports Authority (TNPA).

A 5,500-ton storage capacity will be built in the $70 million initial phase of the project, and commissioning is scheduled for the second half of 2015. Incremental capacity expansions of 5,500 tons each will follow, with a total available capacity on completion of 52,000 tons.

The storage bullets are the largest vessels of their kind to be manufactured in the southern hemisphere and are being fabricated locally by Elgin Engineering (Durban, South Africa), Harmse said.

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