Busisiwe Mavuso, CEO of BLSA, points to a new obstacle arising in energy availability in South Africa, with a cliff in natural gas supply just over two years away. Many industries, from glass making to beverages, rely on gas as an energy source, she notes, and the current main source of supply, two gas fields in Mozambique operated by Sasol, will not supply South African clients from mid-2026 when Sasol itself will use the remaining gas.
Development of new gas supply sources will need huge investment in infrastructure.
In her weekly newsletter of 4 March 2024, Mavuso writes: “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 – for people employed in businesses that rely on gas as a key input, generating R500 billion a year for the economy.”
There are possible solutions, but they will require swift action from government and business working in partnership. Mavuso makes the point that it takes massive investment to develop new sources of gas and the infrastructure to get it to where it is needed, and as things stand, the best options still envisage a 12- to 18-month gap between the end of Sasol’s supply and any new supply coming on stream. She notes several potential sources, including major developments in Namibia and Mozambique, and the Brulpadda and Luiperd prospects off the Cape coast, but the investment needed in infrastructure for supply from these sources to be able to reach Gauteng and KwaZulu-Natal, where most users are, has not yet begun. “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 on stream, it needs to secure agreements with large-scale buyers.” And, Mavuso adds, “Even if it does, it will take until 2030 for the projects to start supplying gas.”
She advocates a significant coordinated effort through which potential users of gas, in the public and private sectors, from industry to electricity production, need to form agreements with potential suppliers and logistics providers to allow the investment to happen. “Most important though, is the role of government in creating an enabling environment for the necessary licensing, particularly in the Petroleum Agency of South Africa and the Department of Mineral Resources and Energy.” Mavuso acknowledges that it will not be easy. “There are complex technical considerations regarding the sources of gas that are most feasible to tap as well as the ways in which it can be transported. But by coordinating the right expertise, political will and focusing on solutions, we can make progress.”
She urges action now. “Business, including potential suppliers and consumers of gas, is ready and willing to partner with government to work on solutions. Long-term secure supply is years away and we will need interim measures to fill the gap when the existing supply runs out. We need to act now.”
For more information visit: www.blsa.org.za