Over the past four years, South Africa has grappled with the fluctuating stages of load shedding, driven by a reduced power supply, failing infrastructure, and, unfortunately, the pervasive shadow of corruption. While the occurrence of load-shedding may appear to be a distant memory, a looming gas crisis in South Africa seems aloof when Energy and Electricity Minister Kgosientsho Ramokgopa, Eskom CEO Dan Marokane, and Sasol CEO Simon Baloyi raised the alarm over the looming “gas cliff” crisis. The unsuspected news, therefore, signals that South Africa's energy crisis is far from over.
Why is there a gas crisis in South Africa?
The "gas cliff" refers to a looming gas shortage in South Africa caused by a sharp decline in Mozambique's gas supply. The web of power players begins at the Pande-Temane gas fields in Mozambique, which are operated by Sasol Petroleum Temane (SPT) and supply natural gas to South Africa via the Rompco pipeline. As a shareholder, Sasol owns 70% of SPT and 40% of Rompco, effectively controlling the gas flow to South Africa. In addition, Sasol also holds a gas trading license from the National Energy Regulator of South Africa (Nersa), giving it a near-monopoly on the supply of natural gas and methane-rich gas, which sells to industrial users in Mpumalanga, Gauteng, and Kwazulu Natal.
In addition to the Rompco pipeline, Sasol utilizes the Lily gas pipeline to transport methane-rich gas which is a by-product of its operations. While Nersa regulates gas processes in South Africa, they include fixed infrastructure costs and variable usage charges. This poorly regulated pricing exacerbates the challenges posed by Sasol's dominance and imminent gas crisis.
However, the declining gas supply from Mozambique's Pande-Temane fields is the true driver of the emerging crisis. Sasol has announced it will stop supplying natural gas and methane-rich gas to industrial users in Mpumalanga, Gauteng, and KZN by June 2026. Thus raising operational concerns about many dependent on its supply.
The "gas cliff" refers to a looming gas shortage in South Africa caused by a sharp decline in Mozambique's gas supply.
What is the pressing impact of the “gas cliff”?
For many, this announcement feeds a host of fears, from the socioeconomic impact to an imminent threat of job loss. Efforts are underway to secure alternative gas sources, including liquefied natural gas (LNG) from proposed terminals in Matola, Mozambique, and Richards Bay, KZN. In addition, many industrial users have proposed that Sasol and the government delay the cutoff date, which has been pushed to June 2027 or potentially June 2028. Thus offering temporary relief and granting additional time to establish LNG infrastructure and mitigate the gas supply crisis.
Is there hope for South Africa?
As the government rushes to patch the immediate threat to its gas supply, Minister of Electricity Kgosientsho Ramokgopa has had bilateral discussions with Qatar, which has allowed an opportunity for a collective brainstorm to minimize the crisis at hand. To this extent, plans are underway for the Transnet National Ports Authority to develop proposals to establish an LNG terminal at the Port of Ngqura in the Eastern Cape.
However, the success of these initiatives will depend on swift implementation, robust policy support, and collaboration across sectors to address the immediate challenges while paving the way for a more secure and diversified energy landscape.