South Africa’s integrated energy and chemical company, Sasol, has signed a Memorandum of Understanding (MoU) with the Central Energy Fund (CEF) to accelerate natural gas developments across the country. The agreement ensures a collaborative approach to driving natural gas project development, exploration and production, with a primary focus on reducing imports and establishing long-term energy security.
Sasol and the CEF will build on existing partnerships as well as their strong business relationship to promote gas-directed investment and development in the country. By working together to develop cost-effective solutions to natural gas monetization and utilization, both Sasol and the CEF are committed to improving the country’s energy supply, establishing a viable natural gas market in South Africa.
“Sasol has had a long-standing relationship with the CEF through our well-established partnership in the Republic of Mozambique Pipeline Company pipeline and looks forward to commencing this next stage of growth in gas together,” stated Priscillah Mabelane, Executive Vice President for energy business, Sasol.
With the country’s energy demand growing at a faster rate than its current supply, and power shortages that continue to impact the growing economy, natural gas has emerged as a significant energy alternative in South Africa. Since the discovery of sizeable natural gas reserves in 2019, South Africa has redirected its attention to developing a robust, natural gas sector, with the signed MoU further enhancing this trend. Development of the country’s high potential offshore deposits in the Brulpadda and Luiperd prospects – estimated at 1 billion barrels of gas condensate each – offer new and valuable opportunities for increasing energy supply and ensuring a sustainable power generation solution for the country’s growing economy.
The MoU is expected to boost natural gas developments across the country, leading to an optimistic natural gas outlook in South Africa. Despite having adequate refining capacity – PetroSA operates a gas-to-liquids refinery in Mossel Bay – South Africa heavily relies on natural gas imports from neighboring countries such as Mozambique. Development of the country’s domestic resources will not enable the creation of a domestic market, but will create new export opportunities for South Africa.
With exploration and production expected to significantly increase in the upcoming years, particularly regarding offshore basins, natural gas is being positioned as the ideal resource to scale up job creation, spur socio-economic growth, and increase foreign direct investment. The Department of Mineral Resources and Energy has placed natural gas a key component in the country’s energy portfolio and is moving to dramatically expand the industry. The signed MoU marks the first of many steps in the country’s journey to become a natural gas competitor.