SA is expected to dangle deeper gas ties before US President Donald Trump in next week’s crucial meeting with President Cyril Ramaphosa, a gambit that could simultaneously bolster energy security and forge an important economic link.
High-level meetings behind closed doors between government officials and experts in the gas industry on Wednesday have revealed a keen interest in leveraging SA’s growing gas dependence for political capital.
Electricity minister Kgosientsho Ramokgopa’s office, in a rare disclosure, confirmed to Business Day that increased gas co-operation with the US was a key component of the offer being formulated for Trump. The US, it appears, is looking at a dual play: more access to SA’s gas exploration and gas infrastructure development, with a push for Pretoria to source more gas in the short term from US companies.
“The department is exploring all possible options to secure a continuous supply of natural gas beyond 2030, when Sasol gas is expected to decline to near-zero levels,” said Tsakane Khambane, Ramokgopa’s spokesperson.
“The department is investigating all countries that export natural gas and are active in the global gas market, including the US,” Khambane said.
The potential for an energy partnership with the US also slots into the SA policy narrative for gas to play a role in the SA energy mix but, crucially, it could also offer a strategic bridge to potential diplomatic fissures.
“SA is becoming a gas-dependent economy, and that holds political capital. We have leverage there,” said Jaco Human, CEO of the Industrial Gas Users Association of SA, who was part of closed-door meetings with the trade, industry & competition department. “Potential partners include the US, Mozambique, Namibia (through piped gas) and Qatar on gas, and we need businesses from those countries to invest in infrastructure to bring gas here. It is important that SA seeks opportunities with the US,” he said.
Mitigate risks
Craig Morkel, head of the gas economy leadership team for the SA Oil and Gas Alliance, envisioned a scenario in which US companies bear the cost of delivering gas to energy generation projects through SA’s ports.
“They would identify and mitigate risks to make them bankable projects. The US has a surplus of gas, it could liquefy gas either from the US or Southern Africa, bring that gas here on ships and all that would be required is a floating jetty on the water to store the liquefied gas and then it could be transported to SA’s gas power stations in containers,” Morkel said.
This is a live opportunity for US and other companies to compete in the SA market for gas supply and gas to power
— Craig Morkel, head of gas economy leadership team
Earlier this year, SA took steps towards its gas ambitions, signing a deal to develop the country’s first liquefied natural gas import terminal. The project, under which Transnet teamed up with private outfit Zululand Energy Terminals, is expected to unlock 6,000MW of gas-to-power projects.
“This is a live opportunity for US and other companies to compete in the SA market for gas supply and gas to power in particular. The other long-term option would be a regasification unit at SA’s ports. That would be more medium to long term and more expensive, but allows for quicker gas to energy supply,” Morkel said.
Business Day reported on Tuesday that the Ramaphosa-Trump meeting was expected to set the stage for a series of bilateral trade agreements in various sectors, including agriculture, energy and transport.
A three-member ministerial team comprising trade, industry & competition minister Parks Tau, international relations & co-operation minister Ronald Lamola and agriculture minister John Steenhuisen, has been tasked with crafting a trade package deal aimed at repairing relations, said three officials familiar with preparations for the face-to-face meeting in Washington.
Though it remains unclear whether formal trade agreements will emerge from the talks, diplomatic sources suggest the groundwork is being laid for either a bilateral trade and investment framework or a “mini-deal” focused on priority sectors.
The Trump administration has thus far taken a hardline stance on SA, halting all aid, including health and climate funding, citing SA’s land expropriation policies.
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