ExxonMobil LNG Deal Strengthens South Africa’s Richards Bay Gas Hub

ExxonMobil’s move into liquefied natural gas supply for South Africa’s Richards Bay hub positions the company as a central pillar in the country’s shift from coal to gas-fired power. The preliminary agreement to supply the planned Zululand Energy Terminal gives investors a clearer anchor for South Africa’s first LNG import infrastructure and its emerging gas-to-power market.

LNG deal anchors Richards Bay as a strategic entry point

ExxonMobil has signed a preliminary agreement to supply LNG to the planned Zululand Energy Terminal (ZET) at Richards Bay on South Africa’s east coast. The terminal is set to become the country’s first LNG import facility once built, giving South Africa a dedicated entry point for seaborne gas.

ZET Director Oliver Naidu said ExxonMobil’s participation “helps reinforce the importance of Richards Bay port, where ZET is being built on South Africa’s east coast, as an entry point for LNG and supports plans to unlock a ‘competitive and sustainable gas market’.” The project is designed to establish a domestic LNG market and support South Africa’s long-term energy security strategy, as policymakers seek to diversify away from coal-fired generation.

South Africa still relies heavily on coal for electricity generation, and grid instability has increased the pressure for new flexible capacity. Gas-fired power offers quicker ramp-up than coal and can complement variable renewables, which are expected to grow under the country’s long-term energy plan. The Richards Bay hub could therefore become a key link between global LNG supply and regional power and industrial demand across Southern Africa.

ExxonMobil has identified South Africa as a priority growth market within its global LNG strategy. The company aims to expand its global LNG supply portfolio to more than 40 million metric tonnes per year by 2030, as demand for cleaner-burning fuels rises. For investors, that alignment between a global LNG major and a new import market reduces project-onboarding risk and strengthens the credibility of the Zululand scheme.

Gas-to-power project underpins demand visibility

The ExxonMobil supply agreement is intended to enable South Africa’s state utility Eskom to import gas at the proposed Zululand LNG terminal at Richards Bay, but details of any separate long-term LNG sales agreement between Eskom and Zululand Energy Terminal have not been publicly disclosed. According to reports, the LNG supplied under the preliminary agreement is intended for use at a planned 3,000‑megawatt power facility located near the Zululand site, which is expected to be fueled by regasified LNG from the terminal.

South Africa’s current Integrated Resource Plan (IRP 2019) allocates about 3,000 megawatts of new gas-to-power capacity by 2030, underscoring the growing role of natural gas in the future electricity mix. The Zululand‑linked 3,000‑megawatt project would therefore represent a large share of South Africa’s currently planned gas‑to‑power capacity under the IRP 2019, giving the LNG terminal a substantial anchor customer from the outset.

This demand visibility is critical for LNG infrastructure bankability. Long-term offtake from Eskom can support financing for the terminal, pipeline connections and associated power assets, while offering international LNG suppliers a clearer route to market. Moreover, the clustering of LNG import, regasification and power generation at Richards Bay creates scope for future expansion into industrial gas use and possible regional exports.

Industry observers view the ExxonMobil agreement as a major milestone in South Africa’s efforts to build LNG infrastructure, attract private investment and strengthen energy security while shifting gradually away from coal dependence. As a result, the ExxonMobil LNG South Africa story now sits at the intersection of energy transition, power reliability and cross-border gas trade potential.

For investors, the next phase will hinge on final investment decisions for the Zululand Energy Terminal, the timing of Eskom’s 3,000-megawatt plant, and how quickly South Africa translates its gas-to-power capacity allocations under the IRP 2019 into concrete projects that can scale the ExxonMobil LNG South Africa opportunity across the wider Southern African market.

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