South Africa (Commonwealth) _Last week, Eskom and Sasol inked a memorandum of understanding in which the two energy firms committed to working together to investigate the possibility of liquefied natural gas (LNG) supply options in South Africa.
According to Eskom CEO Dan Marokane, this partnership will enable the utility to include gas-to-power generation in its energy mix by positioning Eskom as a major off-taker for imported LNG.
The corporations intend to create enough demand by pooling Eskom’s potential gas demand with that of other industrial gas consumers in order to negotiate favorable gas import supply contracts with major gas exporting nations like Qatar.
The firms indicated during a signing ceremony on Friday that the collaboration’s goal was to ascertain the possible volumes that South Africa would need to develop a sustainable LNG import market, along with the supporting infrastructure. Government-to-government relations would be utilized to facilitate this process as needed.
With the use of global LNG resources, this program aims to ensure a steady supply of electricity to the market by utilizing gas for power generation.
Additionally, the partnership will facilitate SA’s energy transition and decarbonization while also improving the nation’s energy mix.
As previously reported by Business Day, monopoly provider Sasol has stated that it will stop supplying natural gas from Mozambique under its present contract, putting industrial gas users in SA in danger of a gas supply crisis starting in mid-2027.
The CEO of Sasol, Simon Baloyi, stated that the company was aiming to extend supply until 2028 from the Pande and Temane gas resources in Mozambique, which are sent to SA through the Rompco pipeline. It was improbable, though, that the supply could be continued past that point.
After the supply from Pande and Temane ceases, they would first investigate LNG import prospects via Mozambique utilizing the current Rompco pipeline infrastructure, according to Baloyi, in order to guarantee continuous gas supply to industrial users in SA.
Over 65,000 people are directly employed by members of the Industrial Gas Users Association of Southern Africa (IGUA SA), which advocates for industrial gas users like Illovo, Nampak, Mondi, and ArcelorMittal. Members of IGUA SA contribute over R300 billion to the economy annually.
Members of the association have already taken action in response to the impending gas supply cliff by forming a gas aggregator company to pool gas demand and enable safe, long-term infrastructure development and supply into South Africa.
According to Jaco Human, executive director of the association, the industry feels that the most practical answer would be to obtain fresh supplies from a project to import LNG into the Matola port in Mozambique, which may be connected to the Rompco pipeline.
Human said they applauded Sasol and Eskom’s decision to work together to investigate prospects for alternate gas supplies. “Having additional options available for selection will be beneficial,” he stated.
He did, however, issue a warning, saying that any choice regarding a new supply solution would need to be taken within the next nine months in order to give any new project enough time to be developed in order to increase supplies by 2028. This sounds like an MOU for exploration. More specific project announcements are required, he stated.
Human did, however, add that the government’s commitment to assist businesses in resolving issues related to future gas supplies was a major step forward.Kgosientsho Ramokgopa, the minister of energy and electricity, stated during the signing ceremony that the government was committed to locating LNG solutions for the nation.
He stated that SA and Qatar have already held government-to-government discussions over a possible supply agreement.
The public utility that provides energy in South Africa is called Eskom Hld SOC Ltd. Originally known as the Electricity Supply Commission (ESCOM), it was founded in 1923. In the Southern African Power Pool, Eskom is South Africa’s representative. In terms of generation capacity and sales, the utility was among the top utilities in the world and is the biggest producer of energy in Africa. It is the biggest state-owned company in South Africa.
Located in Sandton, South Africa, Sasol Limited is an integrated energy and chemical corporation. The business was established in 1950 in Johannesburg, South Africa, and was based on methods initially created in the early 1900s by German engineers and chemists . Today, Sasol creates various liquid fuels, chemicals, coal tar, energy, and develops and markets technology, notably those related to synthetic fuels.