The Department of Mineral Resources and Energy (DMRE) anticipates presenting a Gas Master Plan to Cabinet this month, aiming to tackle the country’s gas supply challenges.
DMRE Minister Gwede Mantashe, speaking at the Africa Energy Indaba in Cape Town, confirmed this initiative.
Recent media coverage has raised concerns about South Africa potentially depleting its natural gas reserves by 2026, a scenario that could profoundly impact employment and manufacturing sectors.
“We have noted concerns regarding the current and future gas supply in the South African market due to commercial disputes between Sasol and its customers. Our understanding is, that this is in relation to the gas flow decline at source. It is a known fact that natural gas, like other natural resources, is a finite resource and, therefore, Sasol reaching a cliff in its gas block in Mozambique is not an anomaly,” said Mantashe.
“Having noted this eventuality, we, together with the Department of Trade, Industry, and Competition (DTIC), have established a task team that includes private sector players to develop a joint strategy that will ensure a seamless transition and business continuity, thus ameliorating potential job losses.”
He added that the DMRE has also completed all the modelling and drafting work for the country’s Gas Master Plan, which we intend to present to Cabinet this month.
To further mitigate the negative impacts of this eventuality, last year South Africa entered into negotiations with the Mozambican Government and crafted a memorandum of understanding (MOU) covering two aspects:
• Partnering and trading on electrons from their Mpandankuwa project, and
• Partnering and trading on gas molecules from their newly discovered gas fields and Matola LNG hub.
Having gone through all the legal processes and certified by the Department of Justice, the MoU is ready to be singed and be put into action.
“We are in engagements with my counterpart in Mozambique to finalise a date for the signing of this MOU within this month,” said Mantashe.
“As part of our interventions, through the CEF, we have signed a gas sales agreement with Empresa Nacional de Hidrocarbonetos (ENH, a central energy fund equivalent entity in Mozambique) with a potential to deliver up to 200 peta joules of natural gas. To breathe life into this agreement, PetroSA, another subsidiary of CEF, has applied for a gas trading licence with the National Energy Regulator of South Africa (NERSA). We are convinced that the granting of this licence will ensure continuous gas supply.”
Notwithstanding these challenges and the persistent threats to the development of the South African Upstream Petroleum Industry by foreign-funded lobby groups, South Africa has made significant new finds of natural gas.
The discovery of gas by TotalEnergies in the Outeniqua Basin, and the discovery of maiden gas reserves by Kinetiko Energy in Amersfoort, Mpumalanga, are strategically placed to strengthen South Africa’s energy security and propel the quest for industrialisation that will bring about growth and development.
“As a matter of fact, gas to power is a critical component of Africa’s energy transition. Given the increase in global LNG demand and supply, it is critical for the Southern African Development Community (SADC) to invest in the development of the upstream petroleum industry and place itself as a key player in the supply of these critical resources.”
In its 72nd edition of the Statistical Review of World Energy, the Energy Institute states that “fossil fuel consumption as a percentage of primary energy remains steady at 82%”, whereas “renewables’ share of primary energy consumption reached 7.5%” in 2022.
In the same year, the European Union taxonomy declared both nuclear and gas as sustainable and part of transitional activities.
“It is, therefore, crucial for African nations to invest in gas infrastructure, including expansion of pipelines,” said Mantashe.
“It is in this context that iGas, a subsidiary of the Central Energy Fund (CEF), acquired an additional 40% ownership of the ROMPCO pipeline, resulting in both South Africa and Mozambique jointly owning 80% of the pipeline.”
