South Africa's Gas Bill Risks Discouraging Investment in LNG Infrastructure

South Africa's proposed Gas Bill has raised concerns among industry participants that it may discourage investment in liquefied natural gas (LNG) infrastructure. The bill aims to update the regulatory framework for gas transmission, storage, distribution, liquefaction, regasification, and trading, but some argue that its provisions need further refinement.

Sasol Senior Manager Jak Koseff told Parliament's Portfolio Committee on Electricity and Energy that if concerns are not addressed, the risk could be reduced investment in LNG and gas infrastructure. Sasol plans to provide methane-rich gas from 2028 to 2030 as a bridge to imported LNG, but LNG supply after 2030 will require new import and regasification capacity.

Industry participants also raised concerns about price regulation, with some arguing that the framework should recognize the costs and risks of developing new LNG supply infrastructure. Vilgro Energy's John Sichinga called for 'light-handed' regulation, saying that a static domestic cap may not accommodate LNG prices affected by crude oil-linked contracts, global spot market indices, weather events, shipping costs, and geopolitics.

Others suggested that the bill should include guiding principles recognizing the cost of capital and allowing a reasonable return on investment. They also called for third-party access to pipelines, storage, and regasification facilities to be defined in the Act rather than left to ministerial determination.