South Africa

Private sector steps in to save South Africa from gas cliff

Private companies are investing in developing a Liquefied Natural Gas (LNG) import facility in Richards Bay to help manufacturers avoid a ‘gas cliff’ in two years when Sasol stops natural gas production. 

Executive director at the Industrial Gas Users Association of South Africa, Jaco Human, recently said South African manufacturers are facing an existential crisis due to Sasol ending its supply of gas. 

From June 2026, Sasol will stop supplying gas from Mozambique, halting supply to downstream consumers in KwaZulu-Natal, Gauteng and Mpumalanga. 

Human said this is a unique and dangerous situation that is not even comparable to power cuts from Eskom. 

“The reality is that this is a cliff. It is a hard stop, and right now, we do not have the infrastructure for any alternative and no way to reduce our reliance on this single source,” he said. 

“The consequences are real, and it essentially means production stoppages.”

“Sasol will push industry over this gas cliff. Interestingly, we have never seen any solutions coming from Sasol, saying, ‘We can provide you with more gas, and this is how much we have to spend’.”

Sasol has argued that the regulated price of natural gas was insufficient to maintain the pipeline from Mozambique or invest in alternatives.

According to Human, Sasol’s plan to stop production will devastate the economy and could threaten upwards of 60,000 jobs.

The best alternative currently available to the industry is to push for LNG to be imported through South African ports. 

This would require massive infrastructure development to enable South African ports to receive LNG imports and connect them to the current pipeline network. This infrastructure is currently non-existent. 

Reatile Group, a company with diversified investments in the energy value chain, revealed that it is currently investing in developing an LNG import terminal in Richards Bay. 

Through its 30% stake in Vopak, Reatile is part of the consortium that will spearhead the construction and operation of this import facility. 

The LNG will be regasified, and the resulting natural gas will be fed into the existing Transnet pipeline network to manufacturers that currently use gas from Sasol. 

This project is among the largest of its kind in South Africa and represents a crucial step towards a more secure and environmentally responsible energy landscape. 

However, such a project will take a significant period of time to complete, with Human saying it has to break ground by July 2024 for it to be ready to replace the existing supply from Sasol. 

Reatile said it is actively engaging Sasol in mitigating the gap between 2026 and the eventual arrival of LNG through the import facility. 

The engagement will explore possible measures to mitigate a situation of no supply from Sasol or reduced supply. 

These discussions are at an early stage, and no outcome can currently be confirmed.  

Some of the imported LNG will be distributed as regasified natural gas through Egoli Gas’ pipeline network, a wholly-owned subsidiary of Reatile.