The push to resolve South Africa’s gas supply crisis

South Africa is on the brink of a gas crisis, with a significant shortage expected by June 2026. The decline in gas supply crisis from Mozambique’s Pande-Temane fields operated by Sasol Petroleum Temane (SPT) has raised concerns.

Moreover, Sasol’s near-monopoly supply to industrial users could see temporary relief due to the pushback of natural gas and methane-rich gas termination to June 2028. The solution relies on the construction of liquified natural gas (LNG) terminals in the province of Cabo Delgado, in northern Mozambique.

How has gas exploitation compared prior to the crisis?

Over the past 20 years, Sasol exported 2.695 billion gigajoules of the 3.47 billion gigajoules produced in Mozambique. Back in 2022, South African energy company Gigajoule Group planned to achieve financial closure for the construction of the $550 million Matola LNG import terminal.

TotalEnergies, its joint development partner aimed to receive its first shipments by mid-2025. The success of this initiative would have enabled a stable gas supply in South Africa.  

At its peak, the successful exploitation of gas in Mozambique’s Pande and Temane fields boosted the country’s economy and energy sector. This brought about the development of massive reserves in the Rovuma Basin.

With new developments for the establishment of the LNG terminal on backlog, Mozambique approved three major LNG projects to exploit these reserves. Two of these aim to channel seabed gas to onshore facilities where it is cooled to export by sea in a liquid state.

One of the largest Rovuma Basin projects is led by French energy giant TotalEnergies. Moreover, development stalled in April 2021 when Islamist militants attacked Palma, leading to a force majeure declaration. The security challenges delayed progress on the LNG terminal.

Is there hope for recovery of the supply of gas for South Africa?

Presently, it’s reported that TotalEnergies’ LNG project will not resume until May or June 2025. The delay comes with a clause for financial guarantees from the US Exim Bank. Consequently, this guarantee hinges on the appointment of a new Exim Band board following the inauguration of President-elect Donald Trump in January 2025. US firms involved in constructing the LNG facility require this financial assurance for work to proceed.

How does diversification mitigate the crisis?

South Africa’s reliance on LNG from Mozambique highlights the urgency of diversifying gas sources. Successful completion of these projects will stabilize the supply in South Africa and support the industrial and energy sectors.