South Africa’s Impending Natural Gas Crisis Threatens Jobs

  • Impending Natural Gas Shortage: South Africa faces an imminent crisis due to the dwindling natural gas reserves, particularly from Sasol's production limitations in Mozambique, risking the loss of hundreds of thousands of jobs in industries reliant on gas.
  • Challenges in Energy Transition: The country confronts challenges in addressing the impending gas supply gap, lacking clear policy frameworks and strategic direction. Urgent execution and infrastructure development are crucial to prevent an economic crisis.
  • Overall Industry Impact: South Africa's industrial landscape already contends with existing deficiencies in infrastructure and power supply. The impending natural gas shortage compounds these issues, necessitating swift action to avoid further economic setbacks and job losses.
Threatens Jobs

South Africa’s economic landscape faces an impending crisis, with its natural gas reserves anticipated to deplete within the next three to four years, according to an industry expert. The looming shortage poses a significant risk to the country’s industrial sectors, potentially jeopardizing hundreds of thousands of jobs, cautioned James Mackay, CEO of the Energy Council of South Africa.

The anticipated reduction in natural gas supply stems from Sasol’s decision to limit production from its Mozambique fields between 2026 and 2027. As reserves dwindle, Sasol intends to allocate more output for its internal operations, potentially endangering approximately 300,000 to 400,000 jobs reliant on gas for industrial purposes across various firms.

In an exclusive interview, Mackay emphasized the imminent “supply cliff” confronting South Africa’s industrial landscape. “There isn’t currently a supply alternative that will readily be available in the time frames needed,” he warned, highlighting the urgency of addressing this impending crisis.

This potential gas supply crunch compounds the existing challenges hampering the growth of Africa’s most industrialized economy. South Africa grapples with frequent power outages due to insufficient generation capacity, while its vital infrastructure, including ports and freight rail networks, deteriorates from inadequate investment and maintenance.

Mackay stressed the necessity for a national strategic focus to identify alternative gas supply sources. He proposed potential solutions such as importing gas through Mozambique’s ports or expediting the establishment of facilities at South African harbors like Richards Bay or Coega. Additionally, he highlighted the prospect of leveraging the gas field discovered off the west coast by TotalEnergies, potentially operational by 2030.

Addressing the urgency of the situation, Mackay underscored the need for swift execution of policies, expediting implementation processes, and establishing clear regulatory environments to attract necessary investments. He emphasized that the absence of a coherent policy framework for energy transition and supply exacerbates the looming crisis.

Highlighting the detrimental impact of South Africa’s diminishing state capacity, a recent report by Harvard University researchers indicated a 40% loss in the country’s growth over the past 15 years due to inefficiencies in sectors like electricity provision and port management.

“We need absolute clarity and swift action to avert a natural gas supply crisis,” Mackay emphasized. He stressed that while there is still time to address the issue, decisive and rapid measures are imperative to prevent a potential catastrophe.

Furthermore, South Africa faces challenges in its refining capacity for gasoline and diesel, with closure of processing plants contributing to a decline in domestic production. However, Mackay asserted that import alternatives could meet the nation’s requirements in this aspect.

The urgency to address these impending crises, ranging from natural gas shortages to declining refining capabilities, requires immediate and cohesive action from governmental bodies, industry stakeholders, and policymakers. The formulation of a comprehensive strategy, coupled with swift execution and investment in infrastructure, remains critical to safeguarding South Africa’s industries and employment prospects.

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