- Eskom and Sasol signed a Memorandum of Understanding to explore South Africa’s future liquefied natural gas (LNG) needs, aiming to provide long-term supply certainty for gas users.
- The collaboration will focus on developing a sustainable LNG import market and enhancing the country’s energy mix to support re-industrialization and the transition to lower-carbon energy solutions.
On Friday, 20th, 2024, Eskom and Sasol signed a groundbreaking Memorandum of Understanding (MoU) to collaborate on research and explore South Africa’s potential liquefied natural gas (LNG) needs. This partnership will significantly reshape the country’s energy landscape by providing gas users with long-term supply certainty beyond the current decade.
Electricity and Energy Minister Kgosientsho Ramokgopa emphasised the government’s commitment to LNG solutions during the signing ceremony. He highlighted the increasing demand for gas in both the industrial and energy sectors, which could pave the way for sustainable energy initiatives. “This collaboration between our two energy champions, one public and one private, will create a data-driven, commercially viable foundation for gas-driven industrialization and help South Africa transition to lower-carbon energy, mirroring advancements made by other countries,” Ramokgopa stated.
Gas has become a significant contributor to global electricity generation, with many nations transitioning from coal to gas, typically emitting less CO2 per unit of energy. The MoU aims to determine the volumes needed for a sustainable LNG import market in South Africa and develop the necessary infrastructure, facilitated by intergovernmental cooperation where needed.
The initiative will primarily focus on utilising gas for power generation to provide essential base load electricity and support the country’s re-industrialization while ensuring consistent market supply through global LNG resources. Additionally, it aligns with South Africa’s Gas Master Plan, exploring local and regional gas sourcing opportunities and evaluating long-term LNG contracts.
Sasol is revising its gas strategy to support LNG supply to South Africa by working with various stakeholders, including Eskom and infrastructure developers. The initial phase of their collaboration will involve intensive research and planning, informing the required roles and investments for the energy market while addressing challenges associated with long-term LNG commitments.
Sasol President and CEO Simon Baloyi expressed enthusiasm about the partnership, stating, “By leveraging our combined expertise, we aim to enhance regional energy security and drive development, unlocking new growth opportunities and fostering a sustainable energy future.”
Eskom Group CEO Dan Marokane added that collaboration would expedite the climate transition responsibly, creating favourable economic, environmental, and social outcomes. “Eskom is focused on a diversified energy mix that includes coal, nuclear, and gas for baseload power, along with renewables and energy storage solutions, to ensure the security of supply and meet the growing energy demand,” Marokane noted.
According to PwC South Africa, the global energy market is undergoing rapid transition and disruption, with decarbonisation reshaping the energy mix. This trend will position gas as the world’s second-most necessary fuel by 2030, overtaking coal. The increase in LNG exports also enhances flexibility in global energy trading, making imports more accessible for a broader range of market participants.