Renergen plans LNG filling points across the country

Helium and domestic gas producer Renergen plans to establish multiple liquefied natural gas (LNG) filling stations to service “selected customers” across South Africa within the next three years, when Phase 2 of the Virginia Gas Project comes online.

The JSE-listed company gave investors a preview of its plans when it announced a partnership with Cape Town-based transport and logistics company Timelink on Wednesday.

The deal Renergen has struck through its subsidiary Tetra4 will see Timelink supplied with LNG to be used in its line-haul fleet, helping the transport company begin its move away from more expensive diesel.

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Renergen’s Virginia Gas Project, which is being rolled out in two phases – with phase one already operational – will support these ambitions once it has been completed.

“Renergen’s Virginia Phase 1 liquefaction plant will produce around 50 tons of LNG daily, while Virginia Phase 2 will see this increase to about 680 tons, or 940 000 diesel litre equivalent a day. Virginia Phase 2 is planned to be operational in 2026,” Renergen said.

LNG fuelling points

Speaking during an SAfm Market Update with Moneyweb interview on Wednesday, Renergen CEO Stefano Marani told Jimmy Moyaha that no major challenges are expected in the process of establishing LNG fuelling points around major highways in the country.

Renergen’s LNG fuel stops could possibly be found near the N1, N5, N3, N4, N11 and further strategic points along the N2.

“That will essentially service our customer base to be able to move goods from city to city … you want to use LNG if you are moving goods from Cape Town to Joburg, that’s when your cost savings is remarkably significant on running LNG as opposed to diesel,” he added.

Viable diesel alternative

Independent analyst at Small Talk Daily Research Anthony Clark told Moneyweb that Renergen’s plans are perfectly timed to relieve an economy under duress and in need of a viable, cost saving renewable energy alternative to diesel. He said the company won’t even need a dozen stations to provide the relief.

“For a trucking company that has varying locations around the country, you don’t need to have LNG filling stations at every fuel stop, you need them at strategic locations across the country,” Clark said.

“A truck on average on a tank full of diesel or similarly LNG is probably going to get in about 800km before they need to refuel.”

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Timelink CEO Kamal Mitoo acknowledges the sustainability benefits of reducing diesel use in its fleets, saying in a statement: “As fleet operators, we are always looking to reduce our carbon footprint, enhance fuel efficiency and reduce costs. Introducing LNG to displace diesel in our fleet just makes sense.”

Clark added: “This clear need from business for an affordable alternative, along with the ESG [environmental, social and governance] benefits and Renergen’s access to great LNG capacity in the Free State via the Virginia Gas Project puts the company in a sweet spot to rake in huge profits in the future.

“It shows you that in the alternative energy market, people are looking for an outlet to lower their costs given the soaring price of diesel, the weak rand, volatile oil price and the fact that Eskom is so unreliable.

“Renergen in many aspects is currently in the sweet spot regarding energy and helium, not just nationally but globally.”

Listen to Jimmy Moyaha’s interview with Renergen CEO Stefano Marani expanding on the next steps in the process of establishing LNG filling stations across South Africa:

You can also listen to this podcast on iono.fm here.