South Africa faces a new energy crisis

Business Leadership South Africa (BLSA) CEO Busi Mavuso warns that the country faces a new blow to energy availability with an end in natural gas supply just over two years away.

The current main source of supply, two gas fields in Mozambique operated by Sasol, will not supply South African clients from mid-2026 since Sasol will use the remaining gas itself.

As with electricity, there have been numerous warnings that this was coming. However, policy inaction and a lack of guaranteed investment have stifled progress to mitigate the problem.

Mavuso said a lack of alternative infrastructure means South Africa faces an almost inevitable supply interruption.

Many households rely on gas for cooking, lighting, and heating. In the manufacturing sector, gas is the cheapest source of energy.

There is currently no alternative to gas for most manufacturing industries that use it, especially given the unstable electricity supply.

Other energy sources, such as diesel, fuel, and oil, are prohibitively expensive. This means many large-scale manufacturers depend on gas.

Should the gas supply be interrupted, it will put 70,000 jobs at risk for those employed in businesses that rely on gas as a key input.

Last year, the government promised a major gas plan, laying out the next steps for a transition, to be released by the end of 2023. No such plan has yet been finalised.

Industrial Gas Users Association of South Africa executive officer Jaco Human said South Africa is unlikely to find new domestic sources of natural gas within ten years.

In all likelihood, the country will rely on imported gas from mid-2026. The high cost of importing gas will squeeze manufacturing firms in the coming years if the government fails to intervene.

BLSA CEO Busi Mavuso

Mavuso said there are possible solutions, but they will require swift action from the government and businesses working in partnership.

“It takes massive investment to develop new sources of gas and infrastructure to get it to where it is needed,” she said.

“The best options still envisage a twelve to eighteen-month gap between the end of Sasol’s supply and any new supply coming on stream.”

Several potential sources exist, including major developments in Namibia and Mozambique and the Brulpadda and Luiperd prospects off the Cape Coast.

However, there is no progress on the investment needed in infrastructure for these sources of supply to be able to reach Gauteng and KwaZulu-Natal, where most users are.

Talks on developing Brulpadda and Luiperd have been stuck for some time over whether Petro SA will be an anchor consumer.

PetroSA’s Mossgas refinery has been sitting idle for four years since its last gas supply source was exhausted.

For TotalEnergies to commit to the huge investment needed to bring those resources onstream, it needs to secure agreements with large-scale buyers.

“Even if it does, it will take until 2030 for the project to start supplying gas,” Mavuso said.

The BLSA CEO said a massive coordination effort is needed to resolve South Africa’s looming gas crisis.

“Gas users need to form agreements with potential suppliers and logistics providers to allow the investment to happen,” she said.

The government must create an enabling environment for licensing, particularly the Petroleum Agency of South Africa and the Department of Mineral Resources and Energy.

“It will not be easy – there are complex technical considerations regarding the sources of gas that are most feasible to tap and the ways it can be transported,” she said.

“However, by coordinating the right expertise, political will and focus on solutions, we can make progress.”

SOURCE:South Africa faces a new energy crisis – Daily Investor