Infrastructure company DNG Energy has secured an LNG carrier that will serve as the floating storage unit (FSU) for its upcoming bunkering project in Algoa Bay, South Africa.

Sources with knowledge of the project said the vessel is the NYK Line-controlled, 127,705-­cbm LNG Flora (built 1993), in which Mitsui OSK Lines and Japanese utilities ­Osaka Gas and Toho Gas also have stakes.

DNG founder and chief executive Aldworth Mbalati told TradeWinds that his company will charter in the FSU for its upcoming project for a period of at least five years.

Mbalati said DNG is in the process of finalising terms and expects the vessel to arrive in the fourth quarter of 2021.

He said with this schedule and work with local authorities, he is “quite confident” that the project will be operational in the fourth quarter of this year.

DNG looks set to claim South Africa’s first LNG import project. The country has a record of several previous efforts stretching back more than 15 years. But Mbalati said DNG was officially registered as the country’s first importer of LNG on 8 July.

The project was originally planned to launch in mid-2020 but was set back by the global Covid-19 pandemic. However, in the interim, it has extended its supply options, reduced costs and added baseload customers.

DNG plans to deliver LNG cargoes to its FSU. Mbalati said the company has secured supply from a US producer, Nigeria LNG and one of the top three LNG traders amounting to around one million tonnes per annum, which is sufficient for the project’s start-up needs.

Port Elizabeth, South Africa, is located on Algoa Bay. Photo: Socrates2008/Creative Commons

The outfit will use two 10,000-cbm LNG carriers as bunker vessels to shuttle shipments from the FSU either into port so volumes can be transferred into ISO containers for inland delivery or out to vessels for bunkering.

DNG plans to buy these Anthony Veder-managed LNG bunker vessels from GATX Corp. But Mbalati was not yet ready to name the ships.

Mbalati said DNG has four baseload customers involved in mining, pharmaceuticals and industry and transport sectors.

On the marine side, he indicated that DNG would supply a large mover of iron ore — thought to be Vale — and a car carrier operator.

The company has also appointed a broker to market its LNG bunkering volumes and the boss said it is seeing increasing interest in supply.

When Mbalati last spoke to TradeWinds in November 2019, he priced the project at around $300m but said the costs have now reduced to nearer $280m as the company had been able to negotiate better deals on several aspects of the development, including its shipping elements.

Separately, DNG also ordered an LNG barge from Southern African Shipyards. The vessel has been designed to load directly from the FSU and fits in with the company’s plan to supply LNG into Maputo in Mozambique.

But Mbalati said the barge is a “Covid casualty” and it will not now be delivered until next year.