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Industry lifeline — Sasol unveils bridging plan to avert South Africa’s looming gas cliff

Industry lifeline — Sasol unveils bridging plan to avert South Africa’s looming gas cliff
Chris Yelland
By Chris Yelland
15 Apr 2025
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Sasol has unveiled a potential interim gas strategy that could buy South Africa an additional 24 months to stave off the well-flagged ‘gas cliff’ threatening the country’s industrial users, as depleting gas reserves from Mozambique edge closer to exhaustion.

With the supply of natural gas from Sasol’s Mozambican fields projected to end by July 2028, and liquefied natural gas (LNG) import projects still in early development stages, the country’s industrial gas users have been facing the risk of a sudden halt in supply – jeopardising jobs, manufacturing, processing and other heavy industries reliant on gas for power and heat.

Now, in a critical development, Sasol has confirmed that it is working on a plan to redirect methane-rich gas (MRG) – a synthetic gas produced at its Secunda operations – as a stopgap measure to maintain gas supplies from mid-2028 through to mid-2030. It would fully replace natural gas volumes for contracted external customers over the two-year bridging period, offering South Africa much-needed breathing space to finalise and commission LNG import infrastructure.

MRG as a strategic bridge


The proposed MRG solution, while promising, does not come without trade-offs. Redirecting synthetic gas for external supply will require significant internal process adjustments at Sasol’s Secunda facility and would result in a reduction in output of chemicals and liquid fuels. However, the company sees the move as essential to uphold security of energy supply and retain industrial continuity.

Crucially, the viability of this stopgap hinges on regulatory and technical feasibility. Sasol has begun formal engagements with the National Energy Regulator of South Africa (Nersa) to obtain approval for a new maximum gas price (MGP) that would reflect the true cost of producing MRG – a cost notably higher than current natural gas prices regulated by Nersa. 

Internally, Sasol’s own pricing models show that the synthetic gas has historically been undervalued, with Sasol Gas purchasing it below cost – a situation the company says must change to ensure the bridging plan is economically sustainable.

Regulatory hurdles


Sasol is urging Nersa to recognise the urgency and exceptional nature of this interim measure, since the production and supply of MRG is not a permanent solution but rather a limited-term emergency intervention to mitigate the gas shortfall. Should the MGP process move forward successfully, Sasol plans to open discussions with customers to secure volume commitments and contractual terms tailored to the 2028-2030 window.

“Pricing approval is absolutely fundamental,” a company source close to the matter said. “Without economic sustainability on both the production and trading sides of the business, the MRG plan simply cannot be implemented.”

Furthermore, Sasol cautioned that technical readiness is another critical factor. Any shift from natural to synthetic gas would necessitate detailed assessments and potential upgrades to customer transmission, distribution and usage infrastructure to ensure compatibility with MRG’s different specifications. The company has committed to supporting customer readiness and plans to initiate bilateral engagements once regulatory and commercial approvals are secured.

LNG import delays raise stakes


The urgency around this bridging solution is compounded by delays in the roll-out of South Africa’s long-term LNG import plans. Despite support from customers and government alike, progress on LNG infrastructure has lagged behind original timelines – partly due to insufficient demand aggregation and the slow development of gas-to-power projects, which are essential to underpin the economies of scale required to make LNG importation viable.

Without a committed anchor demand base and supporting infrastructure in place, there is growing concern that LNG will not be operational by the mid-2028 deadline – hence the rising importance of MRG as a stopgap.

Energy sector insiders have long warned of the “cliff edge” scenario, whereby gas-dependent industries are left stranded as pipeline gas dries up and LNG remains unavailable. The two-year MRG window now offers a critical contingency to avoid such a worst-case outcome.

Market implications and industrial impact


For South African industry, the news could not come at a more pivotal time. Companies in sectors such as steel, glass, chemicals and food processing are heavily reliant on natural gas as a feedstock or energy source. Many have been scrambling for alternative fuels, contemplating relocations or scaling down operations due to the uncertainty around post-2028 gas availability.

The assurance of a 24-month MRG bridge provides critical clarity and will allow industries to adjust and align their strategies with the evolving LNG roll-out.

However, this interim relief is likely to come at a premium. With MRG production being more expensive and subject to regulatory approval of new pricing structures, customers may face significant gas price increases from 2028 – posing affordability challenges in an already constrained economic environment.

A vital, if costly, reprieve


Sasol’s MRG plan offers South Africa a vital window of opportunity to transition towards a new gas era without catastrophic disruption. While the solution is technically feasible and a regulatory pathway is being pursued, the success of the plan will hinge on swift and pragmatic regulatory decisions, customer buy-in and infrastructure readiness.

With fewer than three years to go before pipeline gas from Mozambique runs dry, the clock is ticking. The proposed MRG bridge is not a silver bullet, but it may be the only viable path to ensure continuity of supply – and by extension, industrial survival – until LNG finally comes online.

As the country navigates its gas transition, industry stakeholders, regulators and energy planners now face a crucial test of coordination and urgency. The next six months will be decisive. DM

Chris Yelland is managing director of EE Business Intelligence.

© Copyright 2025 – EE Business Intelligence (Pty) Ltd. All rights reserved. This article may not be published without the prior written permission of EE Business Intelligence.

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