Minister in the Presidency for Electricity and Energy, Kgosientsho Ramokgopa, speaking at the signing of the MoU aimed at determining the potential volumes that South Africa requires to establish a viable LNG import market. Picture: Siyabulela Duda GCIS
Eskom and Sasol on Friday signed a Memorandum of Understanding (MoU) to collaboratively explore and research potential future liquefied natural gas (LNG) requirements.
This landmark move was set to reshape South Africa’s energy landscape with the collaboration enabling the country to find a solution for gas users who require longer-term certainty of supply beyond this decade.
Delivering the keynote address at the signing ceremony, Electricity and Energy Minister Kgosientsho Ramokgopa said they had made it clear that they were serious about LNG solutions for the country, that its demand for gas across both industrial and energy frontiers would unlock these solutions.
“This collaboration between our two energy champions – one public, one private – will provide a data-driven and commercially sound basis for gas-fed industrialisation and for us to explore the well-worn path to lower carbon energy that the global north has already taken by scaling gas to power,” Ramokgopa said.
“Gas has emerged as the second-largest contributor to global electricity production, experiencing rapid growth as many countries shift from coal to gas in their energy mix to enable positive implications for climate change, as gas typically emits less CO2 per unit of energy.”
The collaboration aimed to determine the potential volumes that South Africa requires to establish a viable LNG import market along with the enabling infrastructure, and would be facilitated by government-to-government relations where necessary.
This initiative focused on using gas for power generation to provide essential base load electricity and position gas as a key enabler of re-industrialisation, while also ensuring continued supply to the market by unlocking global LNG resources.
Furthermore, the collaboration would contribute to enhancing South Africa’s energy mix and enable the country’s energy transition and decarbonisation.
Under the MoU, Sasol and Eskom would collaborate to drive an intensive initial phase of research and planning.
Aligned to the Gas Master Plan, the MoU would explore sourcing gas within South Africa, the Southern African Development Community (SADC) region, and other parts of the African continent, in addition to evaluating long-term LNG contracting.
This would support the gas requirements for Eskom’s planned coal power station repowering and conversion to gas in the long term. The parties would also engage other state entities to enable an LNG value chain in South Africa.
As part of its revised gas strategy, Sasol was working on enabling the future supply of LNG to South Africa by collaborating with companies such as Eskom, existing and future customers, suppliers, and infrastructure developers.
The research findings from the first phase of the Sasol-Eskom collaboration would guide the necessary role-players and investors required to offer the best prospects for South Africa’s energy market, while outlining the challenges associated with the long-term commitments required for LNG imports.
Simon Baloyi, president and CEO at Sasol, said as a leading energy player in South Africa, they were excited to collaborate with Eskom to transform the regional energy landscape.
“By leveraging our combined technical, operational and project execution expertise, we are committed to enhancing regional energy security and driving development. In doing so, we will unlock new growth opportunities and help drive the transition to a more sustainable energy future for our country,” Baloyi said.
There was clear alignment between Sasol and Eskom in exploring LNG supply as an enabler of this vision.
Dan Marokane, Eskom Group CEO, said they had a great deal of experience as the two largest users of coal in South Africa.
“And we felt by working together we could accelerate the climate change transition in a responsible way which sets the country up for the best economic, environmental and social outcomes and addresses the imminent gas supply shortfall,” Marokane said.
“Eskom is focused on a balanced and diversified energy mix based on existing coal and nuclear and introducing gas for base load power, as well as renewables, energy storage systems including batteries and pumped hydro, to achieve overall security of supply and to meet and exceed rapidly expanding energy demand.”
According to PwC South Africa, the global energy market was in an exciting phase of transition and disruption. The firm said in its industry analysis, decarbonisation, driven by the environmental sustainability agenda, was shifting the energy mix at an accelerating pace. This seemed likely to position gas ahead of coal by 2030 to become the world’s number-two fuel.
LNG exports were introducing increased flexibility into global energy marketing and trading. The number and type of market participants had increased dramatically as lower prices made imports more affordable.
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