Eskom and Sasol have signed a memorandum of understanding to facilitate liquefied natural gas (LNG) imports and thus secure South Africa’s gas supply while diversifying the country’s energy mix. The agreement intends to address the looming depletion of Sasol’s gas fields in Mozambique.

Speaking during the signing ceremony at Megawatt Park in Johannesburg last week, President and Executive Director of Sasol Simon Baloyi said the company successfully extended its gas supply from Mozambique to 2027 with the possibility of pushing this further to 2028. However, he warned, local gas resources are running out. “We are happy that we will have the space and scope for the lead time to import LNG.”

It is crucial to maintain sustainable gas supply to protect 300 000 jobs indirectly created by the gas industry and to ensure gas plays a key role in the energy transition, said Minister of Energy and Electricity Kgosientsho Ramokgopa. “Over the next 10 years, Eskom must decommission coal-fired power stations or repurpose them. Gas is an alternative, less carbon-intensive fuel source.”

He said importing LNG is the only viable short-term solution to the anticipated gas crisis while facilitating the country’s transition to renewable energy.

However, LNG molecules are expensive and South Africa does not have the necessary regasification facilities. Together, Eskom and Sasol will address these challenges by leveraging government-to-government agreements and combining their demand, Ramokgopa pointed out.

Imported LNG will be delivered to Sasol’s regasification facilities in Mozambique and transported to South Africa via the existing Rompco pipeline infrastructure. “This collaboration allows us to make optimal use of infrastructure that would otherwise become obsolete,” said Eskom CEO Dan Marokane.

Discussing potential LNG suppliers, Ramokgopa said: “Currently, Qatar is at the top of the list because of its reserves and it has expressed interest in exploring mutually beneficial opportunities.” Price points have been explored and they are not prohibitive, he added.

During the LNG import contract period (10-15 years), South Africa will explore and bring indigenous gas sources into the market when the country is ready, Baloyi said.