By Staff Writer
THE move by Sasol to continue supplying gas beyond its June 2028 deadline and into June 2030 does not avert the “gas cliff”, says Industrial Gas Users Association of Southern Africa (IGUA-SA) executive officer Jaco Human.
Sasol announced in November that it would supply local industry with Methane Rich Gas (MRG) from its Secunda operations to external customers for a limited bridging period from July 2028 to June 2030.
“This initiative forms part of Sasol’s broader strategy to safeguard the gas market and enable a smooth transition to Liquefied Natural Gas (LNG) as a long-term solution,” the company said.
Sasol’s announcement followed growing concerns that if no arrangements were made to secure supply, industries that directly employ 70 000 people and contribute between R300 billion and
R500 billion annually to the economy would be severely affected.
Human welcomed the announcement but said it only gained time for the industry to come up with alternative arrangements, noting that the fundamental issue of security of supply remained unresolved.
He said that, as part of the association’s own efforts to secure supply, some of IGUA-SA’s members had established a gas trading platform company, or aggregator, in November to buy gas.
“This is a company owned by large industrial gas users. It’s an open-access platform for small, medium, and large enterprises to participate in. The purpose is to pool volumes to enable upstream projects for gas supply and infrastructure development,” Human said.
The idea is for the aggregator to use Mozambique as an entry point for the gas.
The problem, he said, is that despite the commitment of large industrial users, industrial demand is too small to underpin the infrastructure investments needed.
The way to bolster demand is to have players in the energy sector, like Eskom, Sasol, and Independent Power Producers (IPPs), sequence their demand to create a “demand stack” large enough to secure infrastructure financing and development.
Human said the overall solution lay with the government, as it needed to provide fiscal guarantees to enable investment in infrastructure. What the government plans to do, however, remains unclear.
“Together with the gas aggregator in place, we believe we can move forward. The problem is, right now, we don’t know where the government stands. That is unclear to us.”
For its part, Sasol said it remained committed to supporting the South African industrial gas market. “The MRG solution provides a critical supply bridge while LNG infrastructure is being developed, and we are engaging customers to ensure alignment on this approach,” said Dumisani Bengu, Senior Vice President: Marketing & Sales Energy at Sasol Gas.
The group pointed out that the successful implementation of the MRG solution was subject to regulatory approval of Sasol Gas’s Maximum Gas Price (MGP) application to the National Energy Regulator of South Africa (NERSA).
The MGP would reflect the cost of acquiring MRG from Sasol South Africa, the producer, and would be determined in accordance with NERSA’s pricing methodology.
Sasol said it had initiated discussions with NERSA to ensure a fair and transparent process that supports economic viability for both the producer and the trader.
Sasol is currently engaging with customers to discuss the proposed MRG solution, assess infrastructure compatibility, and confirm volume requirements. These engagements will inform the final investment decision (FID) for the necessary modifications to enable MRG supply.
Sasol continues to advance its LNG strategy in parallel, with multiple terminal options under consideration to meet long-term gas demand in both inland and coastal regions.
