South Africa is on the brink of a major energy crisis, with Electricity Minister Kgosientsho Ramokgopa warning that the country could face a significant natural gas shortage within the next 30 months.
This so-called “gas cliff” threatens to undermine up to 5% of the nation’s GDP, putting hundreds of thousands of jobs at risk.
The core of the problem lies in dwindling gas supplies from neighbouring Mozambique.
Currently, Sasol operates gas fields in Mozambique and supplies natural gas to South African industries via pipeline.
However, production from these fields is expected to decline sharply by 2027, leaving a critical gap in the nation’s energy supply chain.
This is particularly alarming for South Africa’s industrial sector, where natural gas is essential for operations that contribute substantially to economic output and employment.
To address this looming crisis, South Africa is scrambling to secure alternative sources of natural gas.
One of the most promising solutions is importing liquefied natural gas (LNG) from Qatar, one of the world’s leading LNG exporters.
Minister Ramokgopa, who recently visited Qatar for bilateral discussions, revealed that negotiations are underway to establish a commercial agreement involving fuel producer Sasol and state utility Eskom.
“We are engaging with gas-intensive users to assure them we are working on the supply,” he told lawmakers in Cape Town.
“We are likely to hit a gas cliff in 30 months, and 5% of the country’s gross domestic product is at great risk as a result,” said Ramokgopa.
South Africa is also ramping up infrastructure development to facilitate LNG imports.
The Transnet National Ports Authority has issued a request for proposals to construct an LNG terminal at the Port of Ngqura in the Eastern Cape.
Additionally, earlier this year, a consortium was appointed to develop and operate an LNG terminal at Richards Bay on the East Coast, which is slated to become operational by early 2028.
Despite these efforts, the timeline is tight, and the stakes are high.
If South Africa cannot secure sufficient gas supplies in time, industries dependent on natural gas could face severe disruptions, leading to job losses and reduced economic growth.
The crisis also underscores the need for long-term energy planning as the country grapples with balancing its industrial demands with a transition to more sustainable energy sources.
As the deadline looms, the government’s ability to navigate these challenges will be critical to safeguarding the economy and ensuring energy security.
Bloomberg
