South Africa is approaching a critical turning point in its gas sector, with the depletion of existing natural gas supplies creating an urgent need for coordinated investment, policy reform and infrastructure development.
Speaking at Enlit Africa, Jaco Human, Executive Officer of the Industrial Gas Users Association of Southern Africa (IGUA-SA), presented South Africa’s newly released National Gas Roadmap, outlining the country’s proposed strategy to secure gas supply while supporting industrial growth, electricity generation and economic development.
Human argued that natural gas should not be viewed solely as a transition fuel for electricity generation. Instead, he described it as a critical energy carrier that supports multiple sectors of the economy through industrial heating, chemical production and power generation.
“Gas energy is actually very little understood in terms of what it can bring from an economic development perspective,” he said. “Gas energy is not just a transition fuel to generate electricity with. It certainly is a primary driver of the primary manufacturing sector in South Africa.”
Human explained that gas-intensive industries contribute around 8% of South Africa’s GDP, generating approximately R700 billion annually while directly supporting around 75,000 jobs.
When indirect economic activity is considered, the sector has an employment multiplier of around six and an economic multiplier of approximately 2.7, underlining its importance to the country’s manufacturing base.
Despite growing demand, South Africa faces an increasingly constrained supply outlook.
The country’s existing natural gas supply from Mozambique’s Pande and Temane fields is expected to decline significantly, with the industry approaching what Human described as a “gas cliff”. At the same time, government policy anticipates substantial growth in gas demand, driven largely by planned gas-to-power developments.
“We are faced with a gas cliff,” Human said. “If certain decisions aren’t made in the next six or nine months, we’re actually going to be in trouble as far as meeting our gas energy demands and also our power demands are concerned.”
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Rather than relying on a single solution, the National Gas Roadmap proposes a diversified supply strategy built around several gas corridors and supply sources.
Human explained that the roadmap considers five regional gas corridors across South Africa, each requiring different infrastructure investments and policy decisions.
The northern corridor, supplied through the existing Rompco pipeline from Mozambique, will require additional gas-to-power capacity to create sufficient demand for future LNG imports through Maputo or Matola.
Richards Bay represents another key entry point for imported liquefied natural gas (LNG), although Human stressed that industrial demand in KwaZulu-Natal alone is insufficient to justify the required infrastructure investment. Gas-to-power projects will therefore play a critical role in creating the demand needed to support LNG terminal development.
Further south, Coega is identified as both an LNG import location and a gas-to-power hub, while offshore gas resources near Mossel Bay present additional opportunities for future supply.
However, Human identified South Africa’s West Coast gas resources as offering the greatest long-term economic opportunity. If successfully developed, these resources could supply domestic markets through new pipeline infrastructure while significantly reducing dependence on imported LNG.
Although LNG imports will be necessary to address the immediate supply gap, Human cautioned against relying on imported gas as South Africa’s long-term solution.
He described LNG as essential because the country has limited time to replace declining pipeline gas supplies. However, he warned that imported LNG carries substantially higher energy costs than domestic gas production.
“We have to be reliant on LNG, unfortunately. It’s expensive… but the reason for that is that we’ve run out of time,” he said.
By contrast, developing domestic and regional gas resources could provide significantly lower-cost energy while strengthening industrial competitiveness.
Human argued that exploiting West Coast gas resources could reduce long-term energy costs while improving the economics of gas-fired electricity generation and industrial energy use.
A recurring theme throughout the presentation was that gas infrastructure cannot be developed through isolated projects.
Human explained that LNG terminals, pipelines, gas-to-power facilities and industrial demand must be developed together if investments are to become commercially viable.
He noted that pipeline investments alone could require around US$6 billion, making coordinated planning essential.
“We have to create a demand stack to which the country can commit,” he said, explaining that infrastructure developers require confidence that sufficient long-term demand exists before committing capital.
Gas-to-power projects were presented as particularly important because they create the anchor demand needed to support LNG terminals and pipeline infrastructure while simultaneously strengthening South Africa’s electricity system.
The presentation also focused extensively on the financing mechanisms required to unlock large-scale gas infrastructure.
Human argued that South Africa currently lacks the fiscal framework needed to support investment in midstream gas infrastructure, despite having well-established financing structures for electricity generation through programmes such as the Independent Power Producer Procurement Programme.
“There is no such fiscal framework for midstream gas infrastructure in South Africa,” he said.
The roadmap proposes several approaches to reducing investment risk, including layered guarantee models, blended finance structures, first-loss facilities, sovereign support mechanisms and multilateral guarantees.
According to Human, the first LNG import terminal alone could require guarantees of approximately $800-900 million, with government participation helping reduce private sector exposure during the early stages of project development.
Alongside financing, Human identified policy coordination as one of the biggest barriers to developing South Africa’s gas economy.
The roadmap calls for a comprehensive national gas policy covering gas extraction, infrastructure development, market coordination and demand planning. It also recommends recognising gas infrastructure as a strategic national priority while strengthening coordination between government departments and the private sector.
Additional recommendations include improving regional integration with neighbouring gas-producing countries, creating stronger legal certainty for investors and establishing more specialised institutional arrangements to resolve energy-related legal disputes more efficiently.
Concluding his presentation, Human argued that South Africa has an opportunity to use gas not only to strengthen energy security but also to drive industrial development.
By combining imported LNG in the short term with the development of domestic and regional gas resources over the longer term, he suggested the country could reduce energy costs while supporting manufacturing, mining, logistics and electricity generation.
“In our analysis, the economic impetus that this gas development can actually bring to South Africa is quite significant,” Human concluded. “Gas energy certainly is a tool for further economic growth. The coordination of that, however, is going to be critical.
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