CAPE TOWN: French energy company TotalEnergies expects to take a final investment decision (FID) on a planned new liquefied natural gas (LNG) import terminal at Mozambique’s Matola port by September next year, a spokesperson said on Wednesday.

The Matola terminal could become South Africa’s first major LNG supplier at a time government wants to significantly expand its domestic gas market but faces a gas supply crunch as onshore gas fields operated in Mozambique by Sasol start running dry within a few years.

TotalEnergies is partnering with South Africa’s privately-held Gigajoule and Mozambican entities to develop the terminal, seen as vital to supply South Africa with gas, at an estimated cost of $550 million.

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The LNG terminal will receive shipments of gas to a permanently moored floating storage and regasification unit in Matola harbour, close to Mozambique’s capital Maputo, although delays in finalizing gas purchase agreements has caused its development to be pushed back.

“Matola LNG aims to provide primarily power to South Africa which faces serious energy issues with recurrent loadsheddings (power cuts) and whose current power generation comes from coal-fired power plants,” a spokesperson for TotalEnergies said in an emailed response to questions. Mozambique supplies the bulk of South Africa’s gas intended for industrial users via the Rompco pipeline.

The Matola LNG terminal forms part of a larger project that links it to a combined-cycle gas power plant with capacity for up to 2,000 megawatts and is seen as a vital enabler to expand power exports within the Southern Africa region.

Matola is separate from Total’s $20 billion LNG development to the north of Mozambique that was disrupted by insurgents linked to Islamic State, although the French oil major wants to restart the project this year.