Eskom and Sasol signed a memorandum of understanding last week, with the two energy companies agreeing to collaborate on exploring the potential for liquefied natural gas (LNG) supply opportunities in SA.
This collaboration will bring Eskom on board as a key off-taker for imported LNG to support the utility’s plans to incorporate gas-to-power generation as part of its energy mix, Eskom CEO Dan Marokane told Business Day.
By working together to aggregate Eskom’s potential gas demand with that of other industrial gas users, the companies also hope to amass sufficient demand to negotiate favourable gas import supply contracts with major gas exporting countries such as Qatar.
At a signing ceremony on Friday, the companies explained the collaboration aimed to determine the potential volumes that SA required to establish a viable LNG import market along with the enabling infrastructure and would be facilitated by government-to-government relations where necessary.
This initiative focuses on using gas for power generation to provide base-load electricity, while also ensuring continued supply to the market by unlocking global LNG resources.
Furthermore, the collaboration will contribute to enhancing SA’s energy mix and enable the country’s energy transition and decarbonisation.
As previously reported by Business Day, industrial gas users in SA face a gas supply crisis from mid-2027 when monopoly supplier Sasol has indicated it will cease supply of natural gas from Mozambique under its current contract.
Sasol CEO Simon Baloyi said Sasol was working on extending supply from Mozambique’s Pande and Temane gas fields, which is transported to SA via the Rompco pipeline, to 2028. However, it was unlikely supply could be extended beyond that date.
To ensure continued gas supply to industrial users in SA once supply from Pande and Temane ends, they would initially look at LNG import opportunities via Mozambique using the existing Rompco pipeline infrastructure, Baloyi said.
Members of the Industrial Gas Users Association of Southern Africa (IGUA SA), which represents industrial gas users such as Illovo, Nampak, Mondi and ArcelorMittal, contribute about R300bn to the economy every year and directly employ more than 65,000 people.
In response to the looming gas supply cliff members of the association have already moved forward with the establishment of a gas aggregator company to consolidate demand for gas and facilitate secure, long-term gas infrastructure development and supply into SA.
The industry believes the most workable solution would be to get new supply from a project to import LNG into the Matola port in Mozambique, which could be linked to the Rompco pipeline, said Jaco Human, executive director of the association .
Human said they welcomed the move by Sasol and Eskom to collaborate on exploring alternative gas supply opportunities.
“It will be good to have more solutions on the table to choose from,” he said.
However, he cautioned, that any decision about a new supply solution would have to be made within the next nine months to allow sufficient time for any new project to be developed in time to augment supply by 2028.
“This sounds like an exploratory MOU. We need more concrete project announcements,” he said.
However, Human added that it was a significant step forward to see the government commit to supporting the industry in finding solutions for future gas supply.
Minister of electricity and energy, Kgosientsho Ramokgopa, who delivered the keynote address at the signing ceremony said government was serious about finding LNG solutions for the country.
SA has already had talks, on a government-to-government basis, with Qatar about a potential supply agreement, he said.
erasmusd@businesslive.co.za
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