For the industrial gas users of SA to describe the government’s support for a tentative collaboration between Sasol and Eskom to aggregate gas demand as “a significant step forward” only goes to show just how little the industry came to expect from the state during the years when minister Gwede Mantashe ruled over energy.
This is the same minister of energy who showed no sense of urgency in adding new electricity generation capacity in SA even as energy supply constraints unfolded into a full-blown load-shedding crisis.
The Industrial Gas Users Association of Southern Africa (IGUA SA), which represents an industry that directly employs more than 65,000 people, has been warning the government for years of the looming gas supply cliff when monopoly supplier Sasol would no longer be able to supply piped gas from its gas fields in Mozambique. All they got out of Mantashe was a draft gas master plan that proposed no realistic short- and medium-term gas supply solutions to avert the anticipated crisis.
Sasol initially said it would cease to supply natural gas from depleting gas fields in Mozambique in 2026, but it has since been able to move the supply horizon to 2027 and possibly even to mid-2028. However, even under these extended timelines, time is fast running out for gas users to secure an alternative source of supply.
According to IGUA-SA, the most shovel-ready, short-term solution will be to acquire supply from a TotalEnergies-backed project to import liquefied natural gas (LNG) into the Matola port in Mozambique. (There was no mention of this as a possible solution in the gas master plan.)
However, for this project to proceed, the developers need the market to commit to offtake volumes before the development of the infrastructure necessary to link this new supply to existing infrastructure, such as the Rompco pipeline that runs from Mozambique to gas users in Gauteng and Mpumalanga, could start. In response, some of SA’s industrial gas users decided to establish a gas aggregator company, which aims to produce the basis for large-scale gas infrastructure investments.
Last week’s memorandum of understanding (MOU) announcement from Sasol and Eskom have similar aims — to aggregate gas demand, with Eskom as a key off-taker — to enable LNG imports into SA.
Jaco Human, CEO of IGUA-SA and one of the drivers for setting up the private sector-led gas aggregator company, welcomed the announcement by Sasol and Eskom because it “put more options on the table” for gas users. However, IGUA-SA was particularly pleased to see “government commit to something [in the gas supply space] for the first time in a long time”.
At the signing ceremony for the Sasol/Eskom MOU, electricity and energy minister Kgosientsho Ramokgopa pledged his full support, saying the government was “serious about LNG solutions for the country”.
Sasol and Eskom said their collaboration, which aims to determine demand volumes needed to establish a viable LNG import market and enabling infrastructure, would be facilitated by government-to-government relations. Ramokgopa indicated that talks with Qatar about a possible LNG import deal had already been held.
Eskom and Sasol are most likely to initially focus on options for importing LNG via Mozambique using the Rompco pipeline. Their MOU is a tentative and exploratory step, while gas users need certainty and concrete announcements. But the industry is finally getting more from the government than a load of hot air.
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