Energy and chemicals group Sasol has confirmed a year-long extension, to June 2027, in its gas supply from southern Mozambique to South African industrial customers, which have been warning of a potential gas supply cliff as from next year.

However, the JSE-listed group has again reiterated its position that the amount of gas it can feasibly supply to industrial customers will diminish in line with the depletion of reserves and can be replaced only by the importation of more expensive liquefied natural gas (LNG).

Gas supply from southern Mozambique to Sasol’s own facilities in Sasolburg and Secunda will continue until the mid-2030s, however, and the group has indicated previously that it was not commercially viable for these to be converted to LNG.

CEO Simon Baloyi told Engineering News & Mining Weekly in an interview that the extension of the supply “plateau” had been made possible by its recent success in securing gas from infill wells and he reported that additional work was under way to potentially extend the plateau even further.

Gas volumes from Mozambique increased by 6% to 120.8-billion standard cubic feet in the year to June 30, largely as a result of the early flow of gas from the production sharing agreement (PSA) initial gas facility.

“Progress in relation to the PSA will enable us to continue to supply natural gas and methane-rich gas to customers until the end of the 2027 financial year,” Baloyi told shareholders during a results presentation.

Energy and chemicals marketing and sales executive VP Christian Herrmann added that there might be potential to extend supply until mid-2028, but that no investment decision had been made on those extension projects, which carried risks.

Herrmann indicated that a final investment decision could be made during the first half of 2025 but indicated that these projects were designed only to “serve as a bridge” to LNG imports and to provide time and space for the construction of LNG infrastructure, which was likely to take three to four years to build.

Baloyi told Engineering News & Mining Weekly that Sasol was also in active discussions with its 300-plus industrial customers to shore up the demand required for the construction of an LNG import terminal in Maputo.

He envisaged using the existing infrastructure to initially blend the LNG imports with Mozambique gas to ensure consistent supply until the gas from Mozambique had been fully depleted.

The transition would have significant price implications for users, however, with Baloyi estimating that the price of LNG would be three to five times the current regulated gas price in South Africa of between $3/GJ and $3.50/GJ.

He indicated that Sasol was keen to act as a market aggregator and expressed optimism that its plans could complement those being advanced by members of the Industrial Gas Users Association of Southern Africa, which has announced plans for a R10-billion-a-year gas-aggregator company.

“A critical factor for enabling LNG supply is securing confirmed demand, which will support the development of an LNG terminal and its associated infrastructure,” Baloyi said.

He said it was crucial that decisions were made before the end of 2024 to facilitate the construction of the infrastructure required for importing LNG, noting that 175 000 jobs were directly dependent on there being an orderly transition from Mozambican gas to LNG.