60 000 jobs at risk over looming gas cliff

The government’s delayed response in implementing policies to expand the pipeline network for liquefied natural gas (LNG) will result in the loss of more than 60 000 manufacturing jobs when Sasol shuts down access to natural gas in June 2026.

In an interview with the Mail & Guardian, Industrial Gas Users Association of South Africa executive director Jaco Human said the association had engaged with the government to expand its network in anticipation of a gas “day zero” seven years ago, without success.

The association’s members include companies that manufacture glass, steel, ceramics and chemicals as well as those who make food. 

Together, these industries contribute between R300 billion and R500 billion annually to the economy, according to the Trade Industry and Competition department.

Human added there are still no confirmed supply solutions that could come on stream early enough to prevent the halting of gas flow in 2026, raising the prospect of devastating consequences for the economy and jobs. 

“Failure to find a solution will turn off international investors looking to do deals here,” he said.

Human called on the government to secure purchasing agreements with French energy multinational TotalEnergies by August to start receiving gas imports by 2027.

TotalEnergies, together with Southern African energy group Gigajoule Group and Mozambican natural gas distributor Matola Gas Company, have a shovel-ready project through the Beluluane Gas Company’s LNG import terminal project at Matola in Mozambique that the government could approach, he said. 

But, based on current project timelines, it will still be several months before this project can begin supplying gas to South African industrial users. The delay is because natural gas infrastructure cannot be developed and connected to the networks before June 2026, he said.

Human’s concerns come in response to Sasol’s announcement that the gas supply to industrial customers would cease by June 2026. 

Sasol is South Africa’s only supplier of piped gas. 

The decision followed indications of diminishing gas flows from the Pande and Temane fields in Mozambique.

“This is a unique and dangerous situation that is not even comparable to power cuts from Eskom. 

“The reality is that this is a cliff. It is a hard stop, and right now, we do not have the infrastructure for any alternative and no way to reduce our reliance on this single source,” Human added. 

Sasol supplies methane-rich gas produced at its plant in Secunda to KwaZulu-Natal and Mpumalanga via the Lilly and SWM pipelines. The gas supplies many households and factories that rely on it for cooking, lighting, and heating, with the manufacturing sector using gas as the cheapest source of energy. 

There has also been a recent gas find in Amersfoort in Mpumalanga. Australian explorer Kinetiko Energy discovered 3.1 billion cubic feet of maiden gas reserves, which could be as big as 3.0 trillion cubic feet.

At the African Energy Indaba in Cape Town early this month, Mineral Resources and Energy Minister Gwede Mantashe said the country was aware of the impending gas cliff and highlighted numerous potential gas sources as a solution.

These include significant developments in Namibia and Mozambique, as well as the Brulpadda and Luiperd prospects off the Cape coast.

Mantashe said that the country’s gas task team in collaboration with the private sector, which presented its gas masterplan to the cabinet, would ensure a smooth transition, maintaining business continuity and preventing potential job losses. 

During a question-and-answer session in parliament on Wednesday, Mantashe said the cabinet was expected to approve the gas masterplan in the next few weeks.

But Presidential Climate Commission head of mitigation Steve Nicholls said the task team would not be able to meet the timelines. 

“The key variable in developing these local gas resources is going to be whether there is sufficient demand to justify that kind of investment. If we can’t get enough demand to land LNG, I can’t see South Africa generating enough domestic demand to drive investment in that infrastructure,” he said.

Nicholls said the best alternative available to the industry was to push for LNG to be imported but added LNG was not cost-effective and would be unaffordable for the country.

Massive infrastructure development would be necessary to allow South African ports to receive LNG imports and integrate them into the existing pipeline network, he said. 

To ensure timely implementation, and avoid a potential crisis, it is possible to acquire new supply from an LNG import project at the Matola port in Mozambique, but the market must commit to offtake volumes before starting the development of the necessary infrastructure to connect this new supply to the existing infrastructure, Nicholls said.

On Wednesday, the chairperson of Reatile Group, a company with diversified investments in the energy value chain, Simphiwe Mehlomakulu, said it was investing in developing an LNG import terminal in Richards Bay, which Transnet was spearheading. 

He told the M&G that the group was actively engaging Sasol in mitigating the gap between 2026 and the eventual arrival of LNG through the import facility. 

“Some of the imported LNG will be distributed as regasified natural gas through Egoli Gas’s pipeline network, a wholly owned subsidiary of Reatile,” he said.

Mantashe’s department has earmarked natural gas as a vital solution to load-shedding. 

It was included in the Integrated Resource Plan (the energy blueprint) for 2019 and 2023 to be an alternative to intermittent renewable energy. The Integrated Resource Plan maps out how energy technologies will be sourced and used to meet demand.

But without addressing the gas cliff, the Integrated Resource Plan would not be efficient as the country would have a fourth crisis on its hands — load-shedding, a logistics crisis, a water crisis and a gas crisis, Human said.

Human stressed that the industry would  experience an investment hard stop this year, resulting in reduced output from 2026. 

“Consequently, the likelihood of plant and factory closures in KwaZulu-Natal, Mpumalanga and Gauteng looms if the situation persists,” he said.