Mantashe expected to address ‘gas cliff’ at Energy Indaba

Minister Gwede Mantashe. Picture: Ayanda Ndamane Independent Newspapers

Minister Gwede Mantashe. Picture: Ayanda Ndamane Independent Newspapers

Published Mar 5, 2024


Department of Mineral Resources and Energy (DMRE) Minister Gwede Mantashe is expected to pronounce the government’s stance on the looming “gas cliff” in his keynote address at the Africa Energy Indaba kicking off in Cape Town today.

South Africa faces a shortage of gas from June next year as Sasol has indicated it will no longer supply the domestic market.

This comes as the government has set up a round-table discussion for later on this month for all liquefied petroleum gas (LPG) stakeholders to address the issue.

Industrial Gas Users Association of Southern Africa (IGUA-SA) CEO Jaco Human confirmed yesterday that the Department of Trade Industry and Competition (Dtic) had issued the call for gas stakeholders including the DMRE, Industrial Development Corporation (IDC), Transnet and TotalEnergies, among others.

The round-table discussion comes after the industry last month warned that the unilateral decision to cut off the gas supply posed an existential threat to South Africa’s manufacturing base, in spite of South Africa sitting on significant offshore gas potential.

Sasol, South Africa’s monopoly supplier of large-scale natural gas, announced in August that the supply of gas to industrial users will be suspended by June 2026.

The decision stems from a strategic reduction in methane rich gas (MRG) output to generate internal electricity, acting as a bridge until 2028 when the company foresees running out of sufficient natural gas for its own consumption.

Human said last month the country was going through a gas supply-and-demand deficit as there had been no additional molecule presented into the system from around 2015 or 2016.

Business Leadership South Africa (BLSA) CEO Busi Mavuso said yesterday that as with electricity, there have been warnings for some time that this was coming.

“But through a combination of policy inaction and an inability to commit to the large-scale investment needed to create alternative infrastructure, we now face an almost inevitable supply interruption.

“That puts 70 000 jobs at risk that are employed in businesses that rely on gas as a key input, generating R500bn a year for the economy,” Mavuso said in her weekly newsletter.

She noted that possible alternatives for new gas supplies coming on stream included major developments in Namibia and Mozambique, and the Brulpadda and Luiperd prospects off the Cape Coast, but there was still lack of investment needed in infrastructure for these sources of supply to be able to reach Gauteng and KwaZulu-Natal where most users were.

There were several potential sources, including talks on developing Brulpadda and Luiperd, which had been stuck for some time over whether PetroSA will be an anchor consumer.

“For TotalEnergies to commit to the huge investment needed to bring those resources on stream, 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 noted.

Industry insiders said South Africa's gas imports of about 160 petajoules (PJ) of natural gas from the gas fields in Pande-Temane, Mozambique, with Sasol using 110 PJ, while the remaining 50 PJ is allocated for industrial use.

The imports supports diverse factories across the Gauteng, Mpumalanga and KZN regions where there are a multitude of heavy industries, including aluminium smelters, tiling, mining, brick-making, paper production, steel manufacturing and various other sectors crucial to the economy.