What is your personal opinion on the possibility of South Africa becoming the LPG Energy Hub of Africa?
I think this is the wrong question, an energy hub implies a number of different forms of energy. While there’s no question that SA has opportunity for much larger amounts of gas (including LPG) than we currently use. I wouldn’t like to see such a narrow focus. We’re trying to develop a gas economy and LPG is just a part of it. We like LPG because it’s at the pointy end of that strategy, it is already in the market, people understand LPG and it’s already used in the hospitality and heating markets. We have variable penetration across the country – there are a number of refineries around the coast and some inland and while the refineries produce LPG, it’s not their primary focus. There tend to be stock ups of LPG at the refineries.
What are some of the challenges that the industry will face in trying to achieve this?
The market challenge is to smooth that supply, so that it leads to demand. By way of example, in the Western Cape where we are, the demand spikes during the winter months. This is when you need LPG in large quantities. There are stock outs where people are scrambling to find LPG and people point fingers at the local refiners. A company called Sunrise Energy has started addressing that by putting import and storage infrastructure into Saldanha bay and that should help some of that issue. There’s also a large plan for LPG storage up in Richards bay which is all the way on the other side of the country and this is around large bulk storage and fairly large scale.
There have been enquiries here from the Competition Commission who has taken the view that the sector needs to be constructing larger storage facilities as while demand is high, local manufacturers can’t produce enough LPG. That’s the basic story line around LPG and it is largely industrial-commercial. The gas economy that we’re trying to develop would be gas that would drive the power system, that would be electricity, as well as gas that’s used in industry but not particularly focused on LPG, instead focused on a total gas economy.
Tell us about SAOGA’s efforts in the LPG sector, what has the organisation been working on recently?
SAOGA is an industry body that represents upstream, midstream, oil and gas and primary focus at the moment is lobbying advocacy around lobbying and policy and that is to support the easier establishment of a commercially viable gas industry. We don’t have any particular projects focused on LPG but we have projects around gas in its broader sense which largely means methane.
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