Exxon Mobil to supply LNG to South Africa as it cuts coal reliance

Exxon Mobil Corp. has struck a preliminary deal to supply liquefied natural gas (LNG) to South Africa, helping the country diversify its heavily coal-dependent power grid, according to Bloomberg.

The agreement will allow state utility Eskom Holdings SOC Ltd. to import LNG at the proposed Zululand LNG terminal in Richards Bay on South Africa’s east coast. 

The deal is still in early stages and has not been officially announced.

Strategic shift for South Africa

South Africa relies on coal for around 80% of its electricity generation, making it one of the most coal-intensive economies in the world. Chronic power shortages, frequent blackouts, and international pressure to reduce emissions have pushed the government to explore cleaner alternatives.

LNG is seen as a practical transitional fuel that can provide reliable baseload power more quickly than renewable projects while emitting significantly less carbon than coal. 

The Zululand terminal project is a key part of South Africa’s efforts to build gas infrastructure and modernise its aging energy system.

Boost for Exxon’s LNG ambitions

The deal aligns with Exxon’s strategy to expand its global LNG footprint. The company aims to more than double its LNG supply capacity to over 40 million tons per year by 2030, according to the Bloomberg report. 

Supplying South Africa would mark an important entry into the African market and diversify its customer base beyond traditional Asian and European buyers.

Exxon has been actively developing LNG projects worldwide, including in the United States, Mozambique, and Papua New Guinea, as demand for cleaner-burning fossil fuels grows during the energy transition.

Challenges and context

South Africa’s energy crisis has been severe for years, with Eskom struggling with aging coal plants, maintenance backlogs, and corruption issues. 

The introduction of LNG is expected to improve power availability and support economic growth, which has been hampered by unreliable electricity.

However, the project still faces hurdles, including regulatory approvals, infrastructure development, and securing long-term financing. 

Environmental groups have raised concerns about building new fossil fuel infrastructure, even as a transitional solution.

The timing of the deal also reflects shifting global energy dynamics. While many countries push for rapid decarbonisation, developing nations like South Africa argue they need affordable, reliable energy sources to support industrial growth and alleviate poverty.

Broader implications

If finalised, the Exxon-Eskom agreement could pave the way for more LNG imports and accelerate South Africa’s gas-to-power programme, the report noted. 

It may also encourage other international energy companies to explore opportunities in the country.

For Exxon, the move strengthens its position in emerging markets and supports its goal of becoming a larger player in the global LNG trade. The preliminary nature of the deal means details on volumes, pricing, and timelines are still to be confirmed.

This development highlights the growing role of natural gas as a bridge fuel in countries heavily dependent on coal, even as the world grapples with the dual challenges of energy security and climate goals.