South Africa is facing a looming "gas cliff" as Sasol prepares to reduce its gas supply from 2028, a move that could have far-reaching consequences for households, businesses and the country's economy.
The warning comes from Davies Tsikayi, a lecturer at the Wits Business School African Energy Leadership Centre and Associate Partner at Africa International Advisors, who says the country is running out of time to secure alternative gas supplies.
Speaking to 702 Drive, Tsikayi explained that the term "gas cliff" refers to a sudden interruption in supply rather than a gradual decline.
"What Sasol did was announce to the market that come 2028, they will need to cut supply to the market," he said.
"What that means is that industries and residential areas that rely on this gas supply from Sasol will no longer be receiving it. That's got huge implications for South Africa."
According to Tsikayi, unless alternative sources are secured before then, many industries and households that depend on natural gas will be left without a reliable supply.
The industrial sector is expected to be among the hardest hit, with gas playing a critical role in manufacturing processes, heating and industrial burners.
Tsikayi estimates that between 70,000 and 100,000 jobs depend directly on the country's gas supply, while a further 500,000 direct and indirect jobs are linked to industries that rely on natural gas.
"They're using gas for industrial burners and for heating requirements, for different processes that require heat as a source of energy. As a result, you can see there are massive implications for the economy," he said.
He warned that as much as five percent of South Africa's gross domestic product (GDP) could be affected if replacement supplies are not secured before Sasol scales back its deliveries.
Efforts are underway to diversify the country's gas supply, with one of the key projects centred on the proposed liquefied natural gas (LNG) import terminal at Richards Bay. Tsikayi noted that ExxonMobil and Eskom have already signed a heads of agreement with the terminal operators, but significant infrastructure challenges remain.
He said transporting imported LNG from Richards Bay to major industrial hubs in Gauteng and Mpumalanga will require substantial investment in pipeline infrastructure.
Another option under consideration is increasing gas imports from Matola in Mozambique and transporting them to Gauteng through the ROMPCO pipeline.
Despite ongoing volatility in global gas markets driven by geopolitical conflicts, Tsikayi believes South Africa still has a window of opportunity to secure alternative supplies if decisive action is taken.
"The market currently is quite volatile because of the wars that we're seeing, but hopefully by 2028, when South Africa needs to get this done, we can have a solution in place," he said.
He added that international energy companies, including ExxonMobil and TotalEnergies, could play a key role in guaranteeing LNG cargoes for South Africa if import infrastructure projects move ahead.
Tsikayi stressed that urgent action is needed to avoid the economic impact of the anticipated supply shortfall.
"What this calls for is urgency to address this gas cliff because it is something that is coming, and we're two years away from it," he said.
However, he cautioned that even if replacement supplies are secured, consumers and businesses should expect higher gas prices.
"LNG will come at a higher cost compared to the supply that we're currently having right now," he said.
He added that Sasol is exploring a temporary bridging solution using methane-rich gas, but warned that this option would also be more expensive.
"Whatever options are available to the industrial market, there's going to be a financial hit that they will potentially face, and that will be passed down to consumers. Overall, that will lead to a higher cost of living," Tsikayi said.