KEY POINTS
- South Africa’s energy body warns against linking LNG deals with long-term national gas strategy.
- Eskom and Sasol’s LNG negotiations are essential but not a substitute for a broader energy plan.
- A national gas strategy is urgently needed to avoid a looming gas shortage.
South Africa is currently in the middle of key energy talks with the focus shifting to deals on Liquefied Natural Gas between Eskom and Sasol. Nevertheless, specialists are warning that whilst these bilateral discussions are required, they will not suffice to address the growing requirement for an effective national gas plan.
Without such a plan, the country has a risk of a so-called ‘gas cliff’ – a dramatic reduction of gas which can destabilize the energy sector.
This emerging crisis has however not gone unnoticed and the Industrial Gas Users Association of Southern Africa (IGUA-SA) has sounded the alarm. Given that South Africa is struggling to source its gas needs, mainly because of ageing pipelines and excessive dependence on imports, the country’s energy security is still a concern.
Eskom and Sasol’s LNG talks
South Africa’s power utility Eskom and chemicals and energy producer Sasol have also been in discussions to source LNG supplies. These negotiations are to diversify the energy sources needed and reducing the impact of South Africa’s overwhelming dependence on coal. LNG is also considered more environmentally friendly and it could provide a bridge to the low-carbon economy.
However, as reported by Engineering News, such deals are large but not long-lasting in outlook as pointed out below. The country’s energy sector needs more than quick solutions if the country is to respond adequately to future energy demand.
IGUA-SA has continued to warn the nation that acquiring LNG alone will help to avert the looming crisis if it will not be done under a strategic national plan.
The increasing need for a national gas plan
The body also cautions that while the LNG talks with Eskom and Sasol are important, they should not be the only focus of the country. This would entail the modernization of infrastructure, the development of a range of energy supplies and the acquisition of long-term gas supplies. Without this, South Africa may soon find itself in a very serious deficit of gas.
Hearings for a national gas strategy are not unfamiliar but the time-line is fast running out. It is still possible to knock on the door of a “gas cliff”, as reserves are gradually used up, and the infrastructure is in decline.
The idea is that with concerted effort, South Africa can create a robust gas strategy that will meet the present requirements while setting the country on the path to sustainable energy. Especially in a country where energy shortages have become a major setback to economic development, avoiding this potential gas crisis is important.
The good news is that something is being done and stakeholders throughout the industry understand that a holistic approach is required. However, it is not yet too late for South Africa to act and prevent the energy crisis and start establishing a more efficient energy system in the future years.
