South Africa's Looming Gas Supply Shortage: A Threat to Economic Stability

The looming gas supply shortage in South Africa poses significant risks to the country's economy. As of 2028, Mozambique's Pande and Temane fields, which currently supply around 90% of South Africa's gas, will start to decline in production.

Natural gas is not just another fuel source; it carries strategic weight, with roughly 35-40% used by Sasol's Secunda operations for synthetic fuels and chemical feedstocks. Another 35-40% goes to Sasol's chemicals complex at Sasolburg, where natural gas is used in production processes.

The 'gas cliff' is not just an energy supply issue but also a risk in industrial policy, food security, and manufacturing competitiveness. A reduction in gas supply would require affected firms to redesign production processes, install new storage and handling systems, absorb higher operating costs, and potentially shift to alternatives with higher emissions profiles.

The Industrial Gas Users Association of South Africa estimates that alternatives such as liquid petroleum gas (LPG), diesel, or electricity could cost between double and five times what users currently pay for gas. This would have substantial implications for industry and jobs, with around 70,000-100,000 people directly employed in industries reliant on this gas supply.

The country needs a credible gas plan tied to procurement, infrastructure, and industrial policy. A dual-terminal strategy is recommended, with one LNG terminal in Mozambique to access Rompco and the inland gas market, and another in KwaZulu-Natal to serve LNG-to-power and industrial demand.