Avedia Energy: LPG Tanks Arrived at Saldanha Port, South Africa

Western Cape industrial and domestic users of liquefied petroleum gas (LPG) can sigh in relief at the arrival of the tanks intended for the province’s first permanent LPG storage facilities this week, a giant step towards securing a permanent availability of LPG to the region.

Cape Town-based oil and gas company, Avedia Energy, took ownership of the first set of new LPG storage tanks that arrived at the Saldanha port after a six-week journey from the manufacturing plant in China.

With the first phase being 4 000MT, the first of these tanks have already been discharged and are stored at the Port of Saldanha. Once the LPG storage facility is commissioned by December 2013, the product will be distributed to large LPG users and bottling plants throughout the Western Cape and beyond.

Avedia has already secured the annual import of 100 000MT LPG from the Bonny River Terminal in Nigeria, with the first shipment of product programmed to arrive in the first quarter of 2014.

Earlier in March this year Avedia announced its plans to invest heavily in LPG infrastructure in South Africa at an overall investment of R300-million over the next three years. This includes the development of the storage and handling facility at Saldanha Bay and is designed to accept LPG through the port facilities and via road tanker.

This will be the first significant dedicated LPG import facility on a 4300 kilometre shoreline, stretching from Luanda in Angola to Richards Bay on the KwaZulu Natal coast. The envisaged facility will provide an overall storage capacity of 8 000MT in its final phase, which will boost the existing import LPG storage capacity in South Africa by at least 80%. This import facility would be the largest LPG import facility in South Africa.

The Western Cape counts as the second largest consumer of LPG in South Africa. Of the annual 380 000MT LPG consumption in South Africa, some 120 000MT of LPG is being utilised by Western Cape users, with the bulk of industrial LPG users located in a 5km radius of the Saldanha port.

“The current LPG shortfall and erratic production of LPG in South Africa is exacerbated by the country’s handicapped LPG storage and transport infrastructure,” says Atose Aguele, MD of Avedia Energy. “This means that South Africans are simply not able to consider LPG as a reliable and cost-effective energy alternative,” he says.

“The production shortfall in the Western Cape is being supplemented by LPG imports and ship-to-road transport from Richards Bay and Port Elizabeth,” Aguele explains. “Not only does this present an undesirable long-term solution in terms of infrastructure, resource and environmental sustainability, but it also exposes the end-user to massive transport and handling cost,” he says.

Aguele explains, “A roundtrip from the nearest LPG import or handling facility to Cape Town – take Port Elizabeth, for example – is in excess of 1 640km. At an estimate transport cost of R22.31 per km, each LPG road transfer would generate a cost of over R36 588 per trip.

“It is estimated that, on average, a LPG truck departs from Port Elizabeth to the Western Cape every four hours. At R36 588 a trip, the transport cost on the PE/Cape Town route amounts to over a staggering R6 million per month,” he continues.

“With a reliable LPG supply and storage network in the Western Cape, the bulk of these costs can be relayed into savings on the part of the end-user,” Aguele says.

Aguele sees the arrival of the LPG storage tanks as a significant and tangible first step towards Avedia’s commitment to securing a constant supply of LPG to many more South Africans. “It is a small step but it’s a step in the right direction,” he says. “We still have a long way to go – we estimate a required investment of some R5-billion across the entire local LPG infrastructure over the next 10 years in order to support a sustainable LPG industry in South Africa.”

“The South African government has embarked on a drive to promote the use of LPG as a viable energy source among an increasing number of South Africans. Avedia fully supports this drive,” he says.

“However, despite the best intentions by the Department of Energy, and notwithstanding the efforts of individual players in the South African oil and gas industry to drive the use of LPG as a sustainable resource, it is critical that regulators, local players as well as our peers across the Sub-Saharan African region engage in conversation and collaboration to establish viable solutions that would fast-track the import and distribution of LPG to the benefit of the South African economy,” Aguele continues.

“It is going to require a massive collective approach to lift the local LPG industry onto a competitive, sustainable and world-class level.”