The Industrial Gas Users Association of Southern Africa (IGUA-SA) has acknowledged the steps taken by South Africa’s Electricity and Energy Minister Kgosientsho Ramokgopa to avert the impending “gas cliff” in South Africa, Engineering News reported on September 25.

However, the organisation cautioned that the recent agreement between state-owned power utility Eskom and integrated chemicals and energy company Sasol to explore LNG importation should not be perceived as a “national strategy.”

According to IGUA-SA, neither Eskom nor Sasol can adequately represent the industrial consumption sector which plays a critical role in meeting South Africa’s LNG demand. Furthermore, the collaboration can not provide an inclusive solution reflecting the broader interests of all stakeholders.

In a joint statement on September 20, Eskom and Sasol said they would be researching potential demand, including gas-to-power (GtP) projects linked to the Rompco pipeline from Mozambique to South Africa.

Jaco Human, IGUA-SA’s executive officer, expressed his approval that the government finally recognised the urgency in dealing with the looming gas shortage in the country, after many years of industry warnings. Sasol has extended its gas-supply plateau from Mozambique to mid-2027, with hopes for further extension to mid-2028, providing time to develop the necessary contracts and infrastructure for LNG imports.

However, Human pointed out that IGUA-SA preferred a multilateral approach to gas aggregation, aiming at consolidating the fragmented market and providing a comprehensive and long-term solution to secure gas infrastructure and supply for future LNG users.

The annual industrial demand for gas in South Africa, which is around 60 petajoules (PJ), serves as the primary foundation for calculating future imports of LNG. According to Human, Sasol’s own future demand would be limited to around 30 PJ for electricity generation. This decision is based on Sasol’s assessment that using LNG for fuel and chemical production at its Sasolburg and Secunda plants is not economically viable.

Additional demand will likely come from the government’s independent power producer GtP programmes and Eskom’s 3-GW GtP plant planned for construction in Richards Bay.

Human acknowledged that Sasol could still develop a valuable offering for gas consumers in the future. However, he emphasised that this would differ from the aggregation model industrial users envisioned, which would focus on cost-pass-through basis rather than profit.

In the absence of other market options, IGUA-SA was moving forward with the creation of GasCo, an inclusive platform that brings together government, international oil companies, gas suppliers, transporters, financial institutions, and Sasol to collaborate on gas supply and infrastructure development.

“We look forward to Sasol making its offer to gas consumers,” Human noted, indicating that to date no LNG offer had been made. He also stressed that the industry would not support any future gas market structure that aimed to maintain the dominance of a single company.

“It is precisely such a structure that has led us to the current crisis and we will, thus, not support any move aimed at perpetuating Sasol’s market dominance at the expense of the development of a competitive gas market in South Africa,” Human told Engineering News.

However, he expressed optimism about continuing discussions with Ramokgopa and other key players, including Eskom and Sasol, to find a long-term solution to the impending gas shortage.