2 years to South Africa’s next energy crisis – Eskom and Sasol team up

Power utility Eskom and petrochemical group Sasol have signed a memorandum of understanding (MoU) to collaborate on exploring and researching potential future liquified natural gas (LNG) requirements in South Africa.

The move is an effort to find a solution for gas users who require longer-term certainty of supply beyond the current decade.

Reports from earlier this year suggested that South Africa may run out of natural gas supply in 2026, which could have devastating consequences for jobs and manufacturing, risking an economic crisis.

Sasol is set to curb production of the fuel from its fields in Mozambique between 2026 and 2027 as reserves dwindle and retain more output for its own operations.

Starting June 2026, Sasol will stop supplying gas from Mozambique, halting supply to downstream consumers in KwaZulu-Natal, Gauteng and Mpumalanga. This will lead to a ‘day zero’ for gas users.

Industry experts pointed out that between 300,000 and 400,000 jobs at firms that use gas for industrial purposes are in danger.

While the former Department of Mineral Resources and Energy responded to the looming crisis with a ‘Gas Masterplan‘ for the sector, many stakeholders found the government’s plans vague and wanting.

South Africa’s industrial gas users, meanwhile, have laid out their own plans to try to avert disaster, aiming to form a company that will ensure supply.

Eskom has now joined the fray, agreeing to work with Sasol to determine the potential volumes that South Africa requires to establish a viable LNG import market along with the enabling infrastructure.

The collaboration will be facilitated by government-to-government relations where necessary, Eskom said.

“This initiative focuses on using gas for power generation to provide essential base load electricity and position gas as a key enabler of re-industrialisation, while also ensuring continued supply to the market by unlocking global LNG resources,” it said.

“Furthermore, the collaboration will contribute to enhancing South Africa’s energy mix and enable the country’s energy transition and decarbonisation.”

The MoU will see Sasol and Eskom drive an “intensive initial phase of research and planning”, and was signed with the full support of the Minister of Electricity and Energy, Kgosientsho Ramokgopa.

Aligned with the government’s Gas Master plan, the MoU will explore sourcing gas within South Africa, the Southern African Development Community (SADC) region, and other parts of the African continent and evaluate long-term LNG contracting.

This will support the gas requirements for Eskom’s planned coal power station repowering and conversion to gas in the long term. The parties will also engage other state entities to enable an LNG value chain in South Africa.

As part of its revised gas strategy, Sasol is working on enabling the future supply of LNG to South Africa by collaborating with companies such as Eskom, existing and future customers, suppliers, and infrastructure developers.

The research findings from the first phase of the Sasol-Eskom collaboration will guide the necessary role players and investors required to offer the best prospects for South Africa’s energy market while outlining the challenges associated with the long-term commitments required for LNG imports.

“This collaboration between our two energy champions – one public, one private – will provide a data-driven and commercially sound basis for gas-fed industrialisation and for us to explore the well-worn path to lower carbon energy that the global north has already taken by scaling gas to power,” Ramokgopa said.

“Gas has emerged as the second-largest contributor to global electricity production, experiencing rapid growth as many countries shift from coal to gas in their energy mix to enable positive implications for climate change, as gas typically emits less CO2 per unit of energy.”

Read: Businesses rush to save South Africa – 2 years away from its next crisis