Sasol says progress made on methane gas solution will delay looming supply cliff to 2030

South African gas consumers can perhaps breathe easy – at least until June 2030.

Amid mounting concerns about a looming gas cliff in 2028 as Mozambique supplies dry up, petrochemicals giant Sasol said on Thursday that it had made significant progress in a methane-rich gas (MRG) bridging solution at its Secunda operations.

“As natural gas production from Mozambique declines, Sasol has proactively explored alternative solutions to bridge the anticipated supply gap. The company has confirmed the technical feasibility of supplying MRG from its Secunda operations to external customers for a limited bridging period from July 2028 to June 2030,” the company said.

“Sasol is currently engaging with customers to discuss the proposed MRG solution, assess infrastructure compatibility, and confirm volume requirements.”

This is not yet set in stone and is subject to regulatory approval of Sasol Gas’s Maximum Gas Price (MGP) application to the National Energy Regulator of South Africa (Nersa).

“The MGP will reflect the cost of acquiring MRG from Sasol South Africa, the producer, and will be determined in accordance with Nersa’s pricing methodology. Sasol has initiated discussions with Nersa to ensure a fair and transparent process that supports economic viability for both the producer and the trader,” Sasol said.

Pricing will be of more than passing interest to South African users of gas.

Sectors that are heavily reliant on gas include those in the primary manufacturing space, such as steel, gas and ceramics. Households in suburbs of Johannesburg, including Craighall Park, Parktown and Emmarentia, also use piped gas.

What this means
Gas features prominently in South Africa’s energy plans, but there is a massive gap between expected supply and demand. There is a lot of anxiety in key industries about the potential of a “gas cliff”, which, among other matters, is a deterrent to investment and expansion plans. A two-year stopgap solution buys valuable time, but it just does that – it buys some time.

“We are faced with a gas cliff and Sasol’s intervention is critical. It buys us 12 months from today to come up with solutions,” Jaco Human, the executive officer of the Industrial Gas Users Association of Southern Africa, told Daily Maverick.

A longer-term solution is urgently needed, and the clock is ticking