South Africa’s $1 billion LNG terminal delayed to 2028 after court disrupts plans

For Royal Vopak, a delay to a major South African gas project reflects policy uncertainty and weaker demand signals rather than a shift in strategy. The Dutch tank storage operator has postponed a final investment decision on a proposed liquefied natural gas import terminal, now targeting 2028 after a court ruling disrupted a related project expected to anchor demand.

Vopak delays Richards Bay LNG decision

The ruling centers on plans by Eskom to develop a 3,000-megawatt gas-fired power plant at Richards Bay. That plant was expected to anchor demand for imported LNG. With that clarity now missing, Vopak has chosen to extend its pre-front-end engineering and design study, giving it more time to reassess terms and technical details while waiting for firmer direction.

“We were waiting to see what was happening with Eskom and we just extended our pre-FEED study,” said Oliver Naidu, president of Vopak’s South African business, speaking on the sidelines of an industry event. His comments reflect how closely large energy investments depend on confirmed buyers. The company now expects to be ready for a final investment decision in the first quarter of 2028.

$1 billion South Africa LNG terminal

Estimated at about $1 billion, the terminal is planned in two phases and is expected to play a central role in South Africa’s gas import strategy. In 2024, Vopak was selected with Transnet Pipelines to build and operate the Zululand Energy terminal at Richards Bay under a 25-year agreement, tying the project to long-term infrastructure plans.

Work on commercial agreements is still moving forward. Naidu said the consortium expects to sign preliminary deals in the coming months with Eskom and potentially ExxonMobil for LNG supply and distribution. ExxonMobil, one of the world’s largest LNG suppliers, has identified South Africa as a growth market, though it has not publicly addressed the latest timeline.

Terminal capacity planned to reach 5 million

The terminal is designed to scale over time. Initial imports are projected at about 2 million tons per year, with capacity expected to rise to 5 million tons annually, based on earlier guidance from port authorities. The phased approach reflects both current limits in demand and expectations that gas use will increase over time.

That need is becoming more pressing. South Africa is turning to LNG as local gas supplies decline and pipeline imports from Mozambique begin to ease. At the same time, officials have held talks with suppliers in Qatar and the United States, signaling interest in long-term contracts that could run into several billions of dollars over the next decade.

Demand signals key for LNG investment

Industry estimates support that outlook. Studies by ExxonMobil suggest South Africa may need between 6 and 7 gigawatts of new gas-fired power capacity to support its electricity system. Gas is widely viewed as a practical support for renewables such as solar and wind, helping stabilize supply while reducing reliance on coal and easing persistent power cuts.

For Royal Vopak, the revised timeline reflects a change in timing rather than strategy. The company remains committed to its 25-year operating plan at Port of Richards Bay, but the next step depends on clearer policy signals and confirmed demand. In South Africa’s energy sector, large projects often advance at a pace shaped by regulation and customer commitments.