A task team inclusive of private sector energy players has been set up to strategise over gas supply as well as its availability in efforts to avert the “gas cliff”, which poses a threat of job culling.
This was the assurance that Mineral Resources and Energy Minister Gwede Mantashe made to investors in his keynote address at the 16th edition of Africa Energy Indaba (AEI) on Tuesday. He also used his keynote address to tell business leaders to stop being “cry babies” and assist with inputs to find solutions.
His remarks follow public concern over the looming natural gas cliff.
Sasol, South Africa’s monopoly supplier of large-scale natural gas, decided to suspend the supply of gas to industrial users by June 2026.
“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.
“Having noted this eventuality, we, together with the Department of Trade, Industry, and Competition (Dtic), have established a task team that includes the private sector to develop a joint strategy that will ensure a seamless transition and business continuity, thus ameliorating potential job losses,” said Mantashe.
However, the ministry’s director-general, Jacob Mbele, could not provide the “Cape Times” with further details about the establishment of the task team and exact scope of work. He could only say engagements were ongoing.
Mantashe also gave an update on the Gas Master Plan aimed at boosting electricity generation, saying the Department of Mineral Resources and Energy had also completed all the modelling and drafting work and it was expected to be presented to Cabinet this month.
“To further mitigate the negative impacts of this eventuality, last year we entered into negotiations with the Mozambican government and crafted a memorandum of understanding (MoU).
“Having gone through all the legal processes and (been) certified by the Department of Justice, the MoU is ready to be signed and 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,“ he said. Through the Central Energy Fund (CEF), the DMRE had also signed a gas sales agreement with Empresa Nacional de Hidrocarbonetos with a potential to deliver up to 200 petajoules of natural gas.
To breathe life into this agreement, PetroSA, another subsidiary of the Central Energy Fund, had 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,” Mantashe added.
Energy analyst and University of Johannesburg Department of Physics Professor Hartmut Winkler said while gas was one of the options to consider to grow energy availability, at the same time a task team to explore the future of gas in the country needed to be mindful that this was not as massive an opportunity as was sometimes portrayed.
“Despite extensive searches for oil and gas in and off South Africa’s coast, only relatively limited resources have been found. It takes many years until the gas can be extracted. The gas that is only now beginning to be exploited by Mozambique was first found over 10 years ago.
“I consider the timelines for new gas projects proposed by the Ministry of Mineral Resources and Energy in their latest draft Integrated Resource Plan for Electricity to be completely unrealistic. They are presented there as a solution to the power crisis that will help end load shedding in five years, but I expect that such gas plants would not make a huge impact if they ever see the light of day until about 10 years from now,” said Hartmut.
Cape Times