South Africa’s pending crisis – Mantashe responds with a plan

 ·6 Mar 2024

The Department of Mineral Resources and Energy (DMRE) is expected to present a Gas Master Plan to Cabinet this month to address gas supply in the country.

This is according to DMRE Minister Gwede Mantashe, who delivered the opening address at the Africa Energy Indaba held in Cape Town.

Recent media reports have suggested that South Africa may run out of natural gas supply in 2026, which could have devastating consequences for jobs and manufacturing.

In his written speech, the Minister said the government has “noted concerns regarding the current and future gas supply in the South African market due to commercial disputes between Sasol and its customers”.

“Our understanding is that this is in relation to the gas flow decline at source. It is a known fact that natural gas, like other natural resources, is a finite resource and therefore, Sasol reaching a cliff in its gas block in Mozambique is not an anomaly.

“Having noted this eventuality, we, together with the Department of Trade, Industry and Competition (DTIC), have established a task team that includes private sector players to develop a joint strategy that will ensure a seamless transition and business continuity, thus ameliorating potential job losses.

The DMRE has also completed all the modelling and drafting work for the country’s Gas Master Plan, which we intend to present to Cabinet this month,” the Minister said.

Mantashe emphasised the importance for African countries to invest in gas infrastructure also as a means of transitioning from high carbon-emitting energy sources.

“In its 72nd edition of the Statistical Review of World Energy, the Energy Institute states that fossil fuel consumption as a percentage of primary energy remains steady at 82%, whereas renewables’ share of primary energy consumption reached 7.5% in 2022.

“In the same year, the European Union taxonomy declared both nuclear and gas as sustainable and part of transitional activities.

“It is, therefore, crucial for African nations to invest in gas infrastructure, including expansion of pipelines.”

“It is in this context that iGas, a subsidiary of the Central Energy Fund (CEF), acquired an additional 40% ownership of the Republic of Mozambique Pipeline Investments Company (ROMPCO) pipeline, resulting in both South Africa and Mozambique jointly owning 80% of the pipeline,” he said.

To solidify the gas supply further,  Mantashe added that South Africa has entered into a gas sales agreement with the Mozambican State-owned hydrocarbon company, which has the potential to “deliver up to 200 petajoules of natural gas”.

“To breathe life into this agreement, PetroSA, another subsidiary of Central Energy Fund (CEF), has applied for a gas trading licence with the National Energy Regulator of South Africa (NERSA).

“We are convinced that the granting of this licence will ensure continuous gas supply,” the Minister said.

According to the Minister, South Africa has also made “significant new finds of natural gas.

“The discovery of gas by TotalEnergies in the Outeniqua Basin and the discovery of maiden gas reserves by Kinetiko Energy in Amersfoort, Mpumalanga, are strategically placed on strengthening South Africa’s energy security and propelling the quest for industrialisation that will bring about growth and development,”  he said.

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