South Africa Targets Ending Loadshedding for Good Using Gas

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Two sizeable discoveries in 2019 and 2020, respectively, as well as new exploration campaigns have demonstrated the true potential of South Africa’s gas sector, and as such, the country has placed the resource as a central tool for alleviating energy poverty.

While regional neighbors including Mozambique and Namibia having initiated large-scale gas developments in pursuit of energy security across southern Africa, South Africa continues to make significant progress towards becoming a gas economy in its own right. Since 2019, exploration campaigns undertaken by both regional and international energy companies have revealed two sizeable gas discoveries while further upstream initiatives in 2022 are targeting even more finds. As such, the Ministry of Mineral Resources and Energy of South Africa led by Gwede Mantashe has prioritized gas within the country’s development agenda, recognizing the role the resource will play in ending loadshedding for good.

Relaying on coal for 80% of its power generation needs, South Africa’s prioritization of gas is rooted in the need to transition to cleaner as well as widely available sources of fuel – such as gas. Following two sizeable discoveries in 2019 and 2020, namely the Brulpadda and Luiperd discoveries off the coast of South Africa, the country leapt into action, establishing the Integrated Resource Plan (IRP) to ensure universal and reliable access to electricity for years to come. Specifically, the IRP comprises a ten-year national electricity plan constituting nine policy decision that serve as a blueprint for meeting power demand, a blueprint in which gas plays a central role.

For South Africa, unlocking the true potential of the country’s gas sector could not come at a better time. Currently, the country is struggling with loadshedding due to inadequate generation capacity owing largely to maintenance at power plants, the slow penetration of renewables and global geopolitical tensions. While renewables will play a key role in bringing new capacity online, natural gas represents the only resource with the potential to power large-scale industries while at the same time significantly improving power generation. As such, the country’s proven and estimated gas reserves urgently need to be tapped, while new supplies are brought in from regional markets such as Mozambique.

Progress has been made, however. In September 2022, helium and natural gas producer, Renergen, announced the commencement of operations at its Virginia Gas Project in South Africa’s Free State Province. The project, representing the first commercial liquefied natural gas project to come online in South Africa to date, will see, in its first phase, the production of 2,700 gigajoules per day (GJ/d) of LNG and 350kg per day (kg/d) of helium, while the second phase will involve an additional investment of $900 million for the production of 5,000 kg/d of helium, 24,000 GJ/d of LNG, as well as the development of a 60 MW gas-to-power plant.

However, despite the potential gas has and continues to play in meeting domestic as well as regional power demand, ongoing attempt by environmental organizations threaten the country’s gas future. Currently, energy major Shell is looking at drilling in the Orange Basin offshore South Africa, hoping to mirror exploratory success seen in neighboring Namibia. However, environmentalists have, time and time again, blocked this campaign. Unless Shell can drill and the potential discovery realized, South Africa will not be able to benefit from its significant gas resources.

With the continent’s biggest energy event, African Energy Week (AEW) – taking place from October 18-21 this year – hosted in Cape Town, South Africa’s gas play will be featured and explored, with dedicated panel discussions, investor summits and country-specific forums making a strong case for gas-directed investment in South Africa in 2022 and beyond. As such, current and future projects underway in the country as well as policy reforms implemented to fast-track exploration and production will be further unpacked, with discussions led by both public and private sector investors.

AEW 2022 is the AEC’s annual conference, exhibition and networking event. AEW 2022 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments. Key organizations such as the African Petroleum Producers Organization, as well as African heavyweights including Equatorial Guinea and Nigeria, have partnered with AEW, strengthening the role the event will play in Africa’s energy future.

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