Sasol (a chemical and energy products company) has confirmed a one-year extension – until June 2027 – on the supply of gas extracted in southern Mozambique to South African industrial clients, who have been warning of a potential slowdown in the supply of that product from next year, the Mining Weekly news portal reported on Tuesday, 20 August .
However, the group listed on the Johannesburg Stock Exchange (JSE) once again reiterated its position that the amount of gas it can supply to industrial clients will decrease as reserves are depleted and can only be replaced by imports of more expensive liquefied natural gas (LNG).
The supply of gas from southern Mozambique to Sasol’s facilities in Sasolburg and Secunda (South Africa) will continue until the mid-2030s, although the group has previously indicated that it was not commercially viable for these to be converted to LNG.
Sasol’s CEO, Simon Baloyi, said in an interview that the extension of supply had been made possible thanks to its recent success in obtaining gas from infill wells, and reported that additional work was underway to potentially extend this supply even further.
Gas volumes in Mozambique increased by 6% to 120.8 billion cubic feet by 30 June this year, largely due to the anticipated flow of gas from the initial facility.
‘The progress of the Production Sharing Agreement (PSA) will allow us to continue supplying natural and methane-rich gas to customers until the end of the 2027 financial year,’ he told shareholders during a results presentation.
The oil company’s executive vice-president for marketing and sales, Christian Herrmann, said there was potential to extend gas supplies until mid-2028, but that no investment decision had been made regarding these extension projects, which carry risks.
The source indicated that a final investment decision could be made during the first half of 2025, but the projects were only designed to ‘bridge’ LNG imports and to provide time and space for the construction of LNG infrastructure, which is expected to take three to four years.
Simon Baloyi told Mining Weekly that Sasol was also in active discussions with its more than 300 industrial clients to sustain the demand needed to build an LNG import terminal in Maputo.
The organisation says that the oil company’s CEO plans to use the existing infrastructure to mix LNG imports with domestic gas to guarantee a consistent supply until the latter is fully depleted.
The transition will have significant price implications for users, with Simon Baloyi estimating the price of LNG to be three to five times higher than the current regulated price of gas in South Africa.
He indicated that Sasol is interested in acting as a market aggregator and expressed optimism that its plans could complement those being put forward by members of the Southern African Industrial Gas Users Association, which has announced plans for a gas aggregator company worth 35.5 billion meticals (10 billion rand) a year.
‘A critical factor in enabling the supply of LNG is to secure confirmation of demand, which will support the development of an LNG terminal and associated infrastructure,’ added Simon Baloyi.
