Sasol unveils interim plan to ensure SA industry doesn't run out of gas in next few years

Energy analyst Chris Yelland warns the plan will come at a cost - Stephen Grootes interviews him on The Money Show.

There have been repeated warnings about a looming gas shortage that will have dire consequences for South Africa's industrial users.

Sasol, our monopoly supplier of natural gas, sources its LNG from the Pande and Temane fields in southern Mozambique, which are drying up.

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Now the energy and chemical company has unveiled a potential interim gas strategy, that 'could buy SA an additional 24 months' to stave off this 'gas cliff', writes Chris Yelland in a piece for Daily Maverick.

However, the cost will be high, he warns.

Sasol is working on a plan to redirect methane-rich gas (MRG) as a stopgap measure to maintain gas supplies from mid-2028 through to mid-2030, he explains on The Money Show.

MRG is a synthetic gas already produced at Sasol's Secunda plant and piped to industry in KwaZulu-Natal.

While some technicalities would need to be addressed if industries elsewhere had to switch from one gas to another, in principle Yelland doesn't foresee problems that are insurmountable.

However, it appears this switch would mean displacing some other products that Sasol produces, which would entail a significant price hike, he says.

"It's replacing other opportunities, so it's like an opportunity cost - lost revenue on one product would have to be recovered from this product."

Chris Yelland, MD - EE Business Intelligence

Sasol would have to get this approved by the National Energy Regulator of South Africa (Nersa), which regulates all piped gas.

Yelland explains the regulatory hurdles and the market implications if the plan IS approved - take a listen in the interview audio at the top of the article