After 2023 gas supplies are expected to start dropping by 15% a year. Picture: REUTERS/HEINZ-PETER BADER
After 2023 gas supplies are expected to start dropping by 15% a year. Picture: REUTERS/HEINZ-PETER BADER

Industrial users of gas such as Mondi, Nampak and Illovo, expect a supply crunch to set in as early as 2023.

According to Jaco Human, CEO of the Industrial Gas Users Association, who spoke at a seminar hosted by Nedbank and EE Publishers on Wednesday, the coming gas shortage poses a significant threat to businesses which are dependent on it for their industrial processes. The industrial gas users generate a collective R150bn in revenue a year and employ more than 46,000 people.  

The companies use gas for direct heating and are supplied through the Sasol pipeline, which imports gas from the Pande and Temane fields in Mozambique. The resource has been in short supply more than once,  but after 2023 its supply is expected to start dropping by 15% a year, Human said.

Sasol, which will also suffer the effects of a supply crunch, is implementing mitigating programmes that may buy a bit more time. It is also on the hunt for new gas and last year received two new licences for gas exploration in Mozambique.

At this rate, it is unlikely that new sources can be developed before the supply crunch sets in. Even a recent discovery by Total off the coast of Mossel Bay, if developed, would take 10 years to come into production, said Human.

A significant gas resource find in the Rovuma basin off the northern coast of Mozambique is important for SA in the longer term, but will require 1,700kms of pipeline to connect with the existing gas infrastructure which feeds SA. Such a project would require significantly higher gas demand from SA and, even then, would take a decade to complete.

Human said SA’s industrial gas users have very few options. Regulation does not allow them to generate their own electricity at the scale they require and they cannot turn to Eskom, which is already struggling to meet demand.   

“Some of our users are starting to consider coal to gas, but that is unimaginable. It used to be done in the past at industrial scale, but with the advent of clean gas energy it made sense to use gas. So you are almost going back in time — notwithstanding the environmental implications of that,” said Human. The only other lever they can pull is to downscale, he said.

steynl@businesslive.co.za