ExxonMobil Signs First LNG Supply Deal for South Africa's Zululand Energy Terminal

ExxonMobil has signed a preliminary agreement to supply liquefied natural gas (LNG) to South Africa’s proposed Zululand Energy Terminal at Richards Bay. The deal adds momentum to the US$1 billion project, which aims to establish the country’s first LNG import terminal and supply fuel to a planned 3,000MW gas-fired power station. Earlier this month, Eskom signed a framework agreement linked to the development as it looks to secure future gas supplies for electricity generation.

Building an Integrated Gas Supply Chain

The Richards Bay project is designed to create an integrated gas supply chain. Under the proposed arrangement, ExxonMobil would supply LNG to the terminal, ZET would receive and regasify the fuel, and Eskom would use the gas to generate electricity at the adjacent power plant.

A consortium comprising Vopak Terminal Durban, a subsidiary of Dutch storage company Vopak, and Transnet Pipelines is developing the terminal. Project sponsors expect to reach a final investment decision later this year, while the first phase is scheduled to begin commercial operations in 2030.

The first phase will include a floating storage vessel capable of holding 170,000 cubic metres of LNG and a regasification facility with a processing capacity of three million tonnes per year. Developers plan to add onshore storage infrastructure during the second phase, increasing total terminal capacity to 4.5 million tonnes annually.

Reducing Reliance on Coal

The development comes as South Africa looks for alternatives to coal and declining gas imports from Mozambique. Coal still accounts for around 80% of the country’s electricity generation, but ageing power stations and growing energy demand are increasing pressure to diversify energy sources and strengthen long-term supply security.

The agreement also supports ExxonMobil’s plans to expand its LNG business globally. The company has identified LNG as a key growth area and aims to increase its worldwide LNG supply capacity to more than 40 million tonnes annually by 2030.

Richards Bay’s Regional Potential

Richards Bay could also become an important LNG gateway for Southern Africa. Industry analysts believe the terminal could eventually supply neighbouring countries including Zimbabwe, Zambia and Botswana through cryogenic trucking networks, creating access to natural gas in markets where pipeline infrastructure remains limited.

The project still faces regulatory, legal and commercial hurdles before construction can begin. However, the latest agreement brings another major energy company into the development and moves the Richards Bay terminal closer to becoming one of Southern Africa’s largest energy infrastructure projects.