South Africa : Sasol to ditch South African pipeline project
- 14 April 2022 / News / 59 / Fares RAHAHLIA
Sasol will no longer consider gas supply from a planned pipeline stretching from fields in northern Mozambique to its South African operations because it doesn’t want to get stuck with the infrastructure as the world shifts away from fossil fuels, chief executive officer Fleetwood Grobler said.
The company, South Africa’s biggest fuel producer, in 2020 said it would potentially buy a small stake in the proposed 2,600-kilometer (1,616-mile) African Renaissance Pipeline – valued at $6 billion in 2016 – connecting to discoveries made by TotalEnergies SE and Eni SpA. TotalEnergies last year suspended the development of its find due to an Islamist insurgency.
That type of infrastructure will mean that the company will be “tied to that for 30 or 40 years because that’s the nature of the investment,” Grobler said in an interview at Sasol’s headquarters in Johannesburg. “Gas in the long term is also a fossil fuel and we said we want to get to net-zero.”
The nation’s second-biggest emitter of greenhouse gases has now targeted a 30% reduction in emissions by 2030, largely through replacing a portion of the coal it uses to make synthetic fuel and chemicals, with natural gas.
The company’s focus on options that involve less investment reflects a rapidly changing energy landscape that ultimately will see gas demand follow an exit from coal. Sasol is considering liquefied natural gas imports from the Matola terminal planned by TotalEnergies and Gigajoule Group in Mozambique, along with further development of its own fields in the country.
“It’s a no-regret move because you know that will deplete and then when you don’t need the gas, you don’t develop more gas,” Grobler said. “You need to bridge 10 or 15 years and then you need to go out.”
Sasol already transports gas to South Africa from Mozambique on the 865-kilometer Rompco pipeline. The fuel is used for all of its Sasolburg operations and for 8% of its Secunda operations — with 40 million tons of coal — which it plans to cut by a quarter — accounting for the remainder.
Sasol cut its stake in the Rompco pipeline last year.
A decline in production from Sasol’s Mozambique gas fields can be supplemented by the LNG from Matola that would be converted back to gas and fed into the main line through a connecting pipe by 2026. The company plans to sign a term sheet for supply by the end of the year after assessing the potential effects of demand for the fuel from buyers including state-owned utility Eskom Holdings SOC Ltd., which plans to replace some of its coal-fired power generation with gas.
The changes will switch Sasol’s position from a seller to a buyer of natural gas, which could expose it to price swings recently exacerbated by Russia’s invasion of Ukraine. “Hopefully we’re beyond that volatility by ‘26,” Grobler said
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