South Africa's gas sector strategy remains unclear as gas cliff looms
Minister for Petroleum and Natural Resources Gwede Mantashe.
Image: Itumeleng English/Independent Newspapers
South Africa has just nine months to address critical infrastructure, policy, and pricing developments to avert a looming gas cliff, according to discussions between government energy departments, intensive industrial users, and Parliament's Portfolio Committee on Electricity and Energy.
Industry stakeholders said the country must finalise a fiscal framework, develop a gas-aggregation platform, and conclude transactions to facilitate investment decisions for LNG importation infrastructure by 2030.
Minister of Petroleum and Natural Resources Gwede Mantashe noted that the debate surrounding the gas cliff remains fragmented and lacks a cohesive strategy. He pointed to ongoing impediments to the gas sector's development, which have led to a reliance on imported gas rather than utilising South Africa's own resources.
'The court has directed the Central Energy Fund (CEF) to issue regulations to lift the moratorium on shale gas exploration in the Karoo, but progress has been slow. We have not succeeded in balancing economics and ecology, which is why we depend on imported gas instead of our own,' Mantashe said.
He expressed frustration that discussions on gas supply are dominated by liquefied natural gas (LNG) and reiterated the need to develop South Africa's domestic resources. 'I believe our economic growth trajectory depends on oil and gas exploitation and use. I still want researchers and analysts to prove me wrong on that,' he added.
Craig Morkel, the chairperson of the South African Oil and Gas Alliance, said South Africa has significant domestic production potential but faces serious constraints in realising it. He pointed to progress in neighboring Namibia, where discoveries of 9 billion barrels of oil equivalent have been made in the Orange Basin, which extends across the border. Production in the region is projected to reach 778 000 barrels per day by 2035.
'We are in a transition period, and gas-to-power will play a prominent role in the future energy mix, but we are not well-equipped to capitalise on our potential. We have the resources and know the demand, but we are failing to connect the two,' Morkel said. He noted that the only tangible development in local capacity is the Virginia gas fields, which, while promising, are niche and not designed to supply the entire country. 'We need much better coordination. We have nine months to get this right, based on what we aim to achieve by 2028,' he added.
Jacob Human, the CEO of Industrial Gas Users South Africa (IGUA-SA), called for the urgent finalisation of a fiscal guarantees framework to enable the industry to move to a transactional level and make the necessary infrastructure investments to mitigate the gas cliff.
While recent government shifts toward recognising gas-to-power (GtP) projects to anchor LNG importation demand are promising, Human argued that the strategy remains insufficiently pragmatic to support immediate investment. 'Industrial users need a clear roadmap with defined actions, timelines, and policy commitments - not further rounds of consultation or vision statements,' Human said.
Morkel added that there is no clear strategy on the country's supply side, with concerning projections of gas imports rising significantly by 2033.
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