| Work Detail |
The term gas cliff refers to the anticipated sharp decline in the LNG supply from Mozambique
Transnet Pipelines, a division of Transnet, is to embark on projects to offset the threat of gas shortages in South Africa, otherwise known as the ‘gas cliff’.
The plan involves Transnet repurposing its pipeline infrastructure to transport liquified natural gas (LNG) from the coast to South Africa’s major inland markets.
The term gas cliff refers to Mozambique’s anticipated sharp decline in gas supply to South Africa.
Natural gas is transported to South Africa via an 865km pipeline from Mozambique’s Pande and Temane fields to markets in both countries.
It is operated by the Republic of Mozambique Pipeline Investments Company (Rompco), a joint venture between the governments of South Africa, Mozambique, and Sasol.
The pipeline supplies around 90% of South Africa’s gas demand, mainly for industrial use.
However, the pipeline gas supply from Pande and Temane is expected to decline in the next few years as the fields mature and deplete.
As a result, Sasol is expected to cease supplying industrial gas users in South Africa by the end of June 2026.
The Industrial Gas Users’ Association of Southern Africa (IGUA-SA) warned earlier this year: “The consequences of a sudden supply shortfall are profound, ranging from increased energy costs to potential job losses and economic instability.”
Outlining LNG plan
Sibongiseni Khathi, the Chief Executive of Transnet Pipelines, told the Africa Oil Week (AOW) in Cape Town on Wednesday (9 October) that the entity is looking at new LNG infrastructure being operational by 2027.
“With the prospect of the gas cliff, there is a drive from every corner to try to get new gas supplies online as quickly as possible,” said Khathi. “The schedule is for Phase 1 of the terminal to be completed by Q1 2028, but work is being done to try to bring that forward to early 2027.”
Khathi was referring to the planned Zululand Energy Terminal (ZET) project at the Port of Richards Bay.
“The key objective of the project is to develop, finance, construct, operate and maintain LNG midstream infrastructure to enable the import of LNG,” he said.
Transnet National Ports Authority (TNPA) appointed the Transnet Pipelines and Vopak Terminals Durban consortium on 9 January 2024, to develop and operate the terminal.
Transnet Pipelines is responsible for operating and maintaining South Africa’s 3,800km gas and liquid petroleum pipelines network.
Khathi said they are also preparing to repurpose the Lilly Pipeline “to be able to transmit LNG from Richards Bay to both Secunda and Durban.”
The pipeline currently transports approximately 500 million cubic meters of Methane Rich Gas (MRG) annually from Secunda via Empangeni to Durban, with key offtake points along the route.
The repurposing of the Lilly Pipeline entails:
Constructing an intake station near Empangeni to connect with the Zululand Energy Terminal (ZET) as the source point at the Port of Richards Bay
Splitting the flow at Empangeni to allow bi-directional flow towards Durban and Secunda.
De-bottlenecking and modelling the pipeline for maximum future capacity to meet market demand and secure commercial agreements.
In its South African Energy Trade Report 2023, the Department of Mineral Resources and Energy (DMRE) said that owing to a lack of resources at home, a sizeable amount of natural gas is imported, mostly via pipeline from Mozambique.
“More than 90% of the 2.8 billion kilos of natural gas that South Africa imported in 2022 came from Mozambique compared to nearly three billion kilograms of natural gas that was imported in 2023,” said the DMRE.
Gas cliff threat to jobs
IGUA-SA Chairman Thomas Shaw, in the organisation’s 2024 annual report, said several key manufacturers, supporting tens of thousands of jobs, are “deeply reliant” on gas energy for their continued operations.
“These industries span multiple economic sectors, including chemicals, steel, glass, food and beverages, in Gauteng, Free State, KwaZulu-Natal, and Mpumalanga,” said Shaw.
The IGUA-SA report highlights the fact that South African industrial gas users directly employ around 70,000 people and contribute between R300 billion and R500 billion annually to the South African economy.
“A cessation in the gas supply will result in multiple plant closures and a significant reduction in manufacturing output across KwaZulu-Natal, Gauteng, and Mpumalanga.
“Gas-energy security is crucial for South African economic development.
“The unilateral decision by Sasol in August 2023 to cut off gas supply from June 2026 poses an existential risk to large industrial gas users and is likely to lead to the deindustrialisation of the South African economy.
“Many industries have already been forced to halt investment and growth plans due to the risk of a gas-energy shortage,” said Shaw.
Call for more infrastructure funding
The IGUA-SA 2024 annual report said the impending depletion of gas fields in Mozambique “highlights our vulnerability due to over-reliance on a single source.”
“To mitigate the risk associated with the gas cliff, we are exploring alternative sources of natural gas.
“This includes fast-tracking the development of domestic gas reserves and seeking new import agreements with international suppliers.”
The report said that projects such as the Liquefied Natural Gas (LNG) import terminals are pivotal to diversifying South Africa’s supply base and enhancing energy security.
IGUA-SA had also advocated for increased investment in pipeline networks, storage facilities, and processing plants.
Exploring South Africa’s LNG potential
In September, Eskom and Sasol signed an MoU to “collaboratively explore and research potential future liquified natural gas (LNG) requirements.”
According to Sasol, the collaboration will also enable the country to find a solution for gas users who require longer-term certainty of supply beyond this decade.
Sasol said the collaboration aims to determine the potential volumes that South Africa requires to establish a viable LNG import market along with the enabling infrastructure. Where necessary, government-to-government relations will facilitate the collaboration.
“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.”
The MoU is aligned to the country’s Gas Masterplan. It 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 re-powering 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,” said Sasol.
Mozambique eyes new LNG terminal
Meanwhile, Rompco said in August that to address the declining gas reserves at Pande and Temane, it is exploring the possibility of connecting LNG from Mozambique’s Matola terminal.
This facility is being developed by Beluluane Gas Company (BGC), a joint venture between Gigajoule, a South African energy company, and TotalEnergies.
“The Matola terminal will have a floating storage and re-gasification unit that can receive LNG shipments from various sources and deliver re-gasified gas to a gas-to-power plant to be built at the Beluluane Industrial Complex and, in addition, supply gas to the South African market via the Rompco pipeline.” |
