Eskom and Sasol have signed a Memorandum of Understanding to facilitate the importation of Liquid Natural Gas (LNG), aiming to secure South Africa’s gas supply and diversify the country’s energy mix. The agreement comes as South Africa faces the looming depletion of Sasol’s gas fields in Mozambique, heightening the need for alternative solutions.

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

It is crucial to maintain a sustainable gas supply to protect the 300 000 jobs indirectly created by the gas industry and to ensure that 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 presents an opportunity as an alternative, less carbon-intensive fuel source for these power stations,” he said.

In the short term, importing LNG is the only viable solution to solving the impending gas crisis and aiding the country’s transition to renewable energy, Ramokgopa said.

The cost of LNG molecules, however, is expensive and South Africa does not have the regasification facilities to import the gas. Together, the two large entities will leverage government-to-government agreements to reduce imported LNG costs. The MoU will aggregate the demand for LNG from Eskom and Sasol, which will reduce the cost per molecule, Ramokgopa said.

The 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 soon become obsolete,” said Eskom CEO Dan Marokane.

Discussing potential LNG suppliers, Ramokgopa pointed to Qatar as a leading contender. “We have friends across the globe. Currently, Qatar is at the top of the list because of the reserves it has. Qatar has expressed its interest in exploring mutually beneficial opportunities.” He added that price points have been explored and they are “not prohibitive”.

The contract for importing LNG would be for a period of 10 to 15 years, allowing South Africa to explore indigenous gas sources and bring this into the market, Baloyi said. However, South Africa was not ready to do so yet, he admitted.