Sasol’s interim gas strategy offers temporary lifeline amid looming crisis
A newly proposed interim gas strategy by petrochemical giant Sasol could provide temporary relief for South Africa as it faces an imminent natural gas crisis. But according to energy expert Chris Yelland, this stopgap solution will not come without significant costs and challenges.
South Africa’s Looming Gas Cliff
South Africa is on track to hit a “gas cliff” by July 2028, when natural gas supplies from Sasol’s Mozambican fields are expected to run dry. These gas fields currently supply South African industries through a pipeline network, making natural gas a vital part of the national energy chain.
If the supply collapses without a viable alternative in place, the consequences could be severe. The industrial sector—which includes steel, glass, chemicals, and food processing—is heavily dependent on natural gas. The Department of Electricity and Energy previously warned that the looming gas shortage could affect up to 5% of the country’s GDP and put hundreds of thousands of jobs at risk.
A Temporary Fix: Synthetic Methane-Rich Gas
In response to the crisis, Sasol has unveiled a new strategy: redirecting Methane-Rich Gas (MRG), a synthetic gas produced at its Secunda operations, to replace natural gas from mid-2028 through mid-2030.
“This synthetic alternative would fully replace natural gas volumes for contracted external customers over the two-year bridging period, offering South Africa much-needed breathing space to finalize and commission LNG import infrastructure,” said Yelland.
While the plan buys time for the country to establish infrastructure to import liquefied natural gas (LNG)—possibly from Qatar—it is a temporary measure, not a permanent fix.
Regulatory and Pricing Challenges
However, the proposed solution faces key regulatory and financial hurdles. Sasol must first secure approval from the National Energy Regulator of South Africa (Nersa) for a revised maximum gas price that reflects the true production cost of synthetic gas.
“Sasol’s internal models show that MRG has historically been undervalued, with Sasol Gas buying it below cost. This situation must change to make the plan viable,” Yelland explained.
Without approval for price adjustments, Sasol says the plan cannot move forward. Once regulatory backing is secured, the company plans to engage with its industrial customers to negotiate supply volumes and contracts for the two-year bridging period.
Costly Transition for Industries
The switch from natural gas to MRG will not be simple or cheap. On a technical level, industrial customers may need to assess and potentially upgrade their equipment to ensure compatibility with synthetic gas. These adjustments will come with added costs.
Nonetheless, the urgency to act is growing. Yelland highlighted that many industries are already exploring alternative fuels, downsizing operations, or even contemplating relocation due to the uncertainty surrounding post-2028 gas supplies.
Strategic Relief, at a Price
Despite its temporary nature, the assurance of a two-year MRG supply provides a crucial window for industries to prepare for a future without domestic natural gas. It offers a degree of planning certainty, which has been sorely lacking.
“While the relief is short-lived and comes at a premium, it’s critical for protecting jobs, sustaining economic output, and ensuring that South Africa doesn’t fall off the gas cliff entirely,” Yelland concluded.
Sasol’s interim strategy could be the bridge South Africa needs—if it can overcome the regulatory, financial, and technical obstacles in its way.
