Gas squeeze looms in South Africa
Govt must intervene
Sikonathi Mantshantsha - South Africa’s industrial users of gas energy have called on the government to intervene urgently to avert a gas shortage when Sasol suspends supplies to industry in two years.
Sasol, which imports liquefied natural gas (LNG) from the Pande and Temane fields in Mozambique, has repeatedly warned that it will stop supplying local companies with gas starting in June 2026. The company needs the gas to decarbonise its own operations, which are among the dirtiest in the world.
The company imports the gas using the ROMPCO pipeline, which runs from northern Mozambique through the east coast of South Africa into Gauteng and Secunda in Mpumalanga and KwaZulu-Natal. The pipeline also branches into Maputo, delivering some of the gas for industrial consumption there.
Sasol expects its own supplies to dwindle while investments in gas infrastructure are under way at Temane.
‘Devastating
consequences’
The Industrial Gas Users Association of Southern Africa (IGUA-SA) says there will be devastating consequences for manufacturers should the gas supply dry up in June 2026. The government needs to intervene to facilitate a gas solution to save the economy as the required infrastructure needs to be put in place.
“There is a significant risk there will be no gas,” said Jaco Human, the chief executive officer of IGUA-SA, on Tuesday.
The organisation represents the largest industrial users of natural gas, including Coca Cola, ArcelorMittal, Rand Refinery, South African Breweries, and South32, among others.
The IGUA-SA members directly employ about 70 000 people and contribute about R300 billion to R500 billion to the economy. “Urgent collaborative government intervention needed,” said Human.
About 400 other small to medium enterprises, hospitals and about 8 000 households also rely on the Sasol supplies into South Africa.
Investment decisions
Investment decisions need to be made within the next four months to avoid a crisis when the supply runs out in two years.
“The solution for us sits around the development of liquified natural gas infrastructure around Maputo,” said Human. That would be the easiest and most “shovel-ready” project to provide gas into the northern parts of South Africa.
IGUA-SA is concerned the required infrastructure and import licences need to be put in place ahead of the Sasol gas drying up.
The recent gas finds by Total Energies off the Eastern Cape coast will also not be ready to plug the gap over the next two years. That is because most of the gas from the Luiperd and Brulpadda gas fields offshore Mossel Bay will be destined for international markets.
The Eastern Cape also currently has no pipelines or any infrastructure to send the gas upcountry.
“We think the government can play a significant role in unlocking the infrastructure risk by providing a quick way to a bankable investment decision by underwriting the investment through sovereign guarantees,” said Human. “The government can play a significant role by unlocking this (investment) quickly.”
Demand
IGUA-SA says more than 100 million gigajoules of gas demand is necessary to make any investments viable. Currently, the local gas industry only represents half that demand.
According to IGUA-SA, the South African government needs to provide the financial guarantees for investment in gas-receiving infrastructure in Matola, outside Maputo, to ensure gas can flow into South Africa’s manufacturing sector.
“Since it is not feasible for industry to singlehandedly invest in and develop national-scale private natural-gas infrastructure, including bulk pipelines, LNG port terminals and regasification terminals, urgent action is required on the part of the South African government to adequately address this crisis,” said Human.
Engagement
He said the industry had tried on numerous occasions to engage the government on this.
According to IGU-SA, two separate applications to import LNG and install the required infrastructure, including pipeline networks since 2010, have failed as they were opposed by Sasol and the National Energy Regulator of South Africa (Nersa). This helped protect Sasol’s entrenched position at the time.
The Department of Mineral Resources and Energy has been approached for comment. – Fin24
Sasol, which imports liquefied natural gas (LNG) from the Pande and Temane fields in Mozambique, has repeatedly warned that it will stop supplying local companies with gas starting in June 2026. The company needs the gas to decarbonise its own operations, which are among the dirtiest in the world.
The company imports the gas using the ROMPCO pipeline, which runs from northern Mozambique through the east coast of South Africa into Gauteng and Secunda in Mpumalanga and KwaZulu-Natal. The pipeline also branches into Maputo, delivering some of the gas for industrial consumption there.
Sasol expects its own supplies to dwindle while investments in gas infrastructure are under way at Temane.
‘Devastating
consequences’
The Industrial Gas Users Association of Southern Africa (IGUA-SA) says there will be devastating consequences for manufacturers should the gas supply dry up in June 2026. The government needs to intervene to facilitate a gas solution to save the economy as the required infrastructure needs to be put in place.
“There is a significant risk there will be no gas,” said Jaco Human, the chief executive officer of IGUA-SA, on Tuesday.
The organisation represents the largest industrial users of natural gas, including Coca Cola, ArcelorMittal, Rand Refinery, South African Breweries, and South32, among others.
The IGUA-SA members directly employ about 70 000 people and contribute about R300 billion to R500 billion to the economy. “Urgent collaborative government intervention needed,” said Human.
About 400 other small to medium enterprises, hospitals and about 8 000 households also rely on the Sasol supplies into South Africa.
Investment decisions
Investment decisions need to be made within the next four months to avoid a crisis when the supply runs out in two years.
“The solution for us sits around the development of liquified natural gas infrastructure around Maputo,” said Human. That would be the easiest and most “shovel-ready” project to provide gas into the northern parts of South Africa.
IGUA-SA is concerned the required infrastructure and import licences need to be put in place ahead of the Sasol gas drying up.
The recent gas finds by Total Energies off the Eastern Cape coast will also not be ready to plug the gap over the next two years. That is because most of the gas from the Luiperd and Brulpadda gas fields offshore Mossel Bay will be destined for international markets.
The Eastern Cape also currently has no pipelines or any infrastructure to send the gas upcountry.
“We think the government can play a significant role in unlocking the infrastructure risk by providing a quick way to a bankable investment decision by underwriting the investment through sovereign guarantees,” said Human. “The government can play a significant role by unlocking this (investment) quickly.”
Demand
IGUA-SA says more than 100 million gigajoules of gas demand is necessary to make any investments viable. Currently, the local gas industry only represents half that demand.
According to IGUA-SA, the South African government needs to provide the financial guarantees for investment in gas-receiving infrastructure in Matola, outside Maputo, to ensure gas can flow into South Africa’s manufacturing sector.
“Since it is not feasible for industry to singlehandedly invest in and develop national-scale private natural-gas infrastructure, including bulk pipelines, LNG port terminals and regasification terminals, urgent action is required on the part of the South African government to adequately address this crisis,” said Human.
Engagement
He said the industry had tried on numerous occasions to engage the government on this.
According to IGU-SA, two separate applications to import LNG and install the required infrastructure, including pipeline networks since 2010, have failed as they were opposed by Sasol and the National Energy Regulator of South Africa (Nersa). This helped protect Sasol’s entrenched position at the time.
The Department of Mineral Resources and Energy has been approached for comment. – Fin24
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