South Africa faces a stark reality: failure to take urgent action to address the impending ‘gas cliff’ will result in economic regression, Electricity and Energy Minister Dr Kgosientsho Ramokgopa has warned.

“The gas cliff is not a distant event. It is imminent. But it is not inevitable. We have the analytical tools, institutional memory and public-private platforms to act. What we now require is resolve, coordination and energy,” he told key industry stakeholders at the Natural Gas Symposium, in Johannesburg, on May 7.

The symposium was hosted by Wits Business School, in partnership with the Industrial Gas Users Association of Southern Africa and Mail & Guardian.

Ramokgopa advocated for gas to be placed at the forefront of industrial revitalisation and energy resilience, and to advance a model of gas development that was sovereign, inclusive and environmentally responsible.

“South Africa stands at a pivotal crossroads. We are emerging from a decade in which energy insecurity constrained economic performance and undermined public confidence. Yet, we are now entering a new phase, one that requires a profound recalibration of our energy system, institutions and investment architecture.”

“The gas economy, still in its formative stages, holds promise, but also presents constraints and demands urgent decisions. Natural gas is often described as a transition fuel.

“But for us, it is not merely a bridge. It is a pillar in a diversified and pragmatic approach to energy planning, particularly in the context of industrialisation, job creation and spatial economic transformation,” Ramokgopa said.

He pointed out how the geopolitics of natural gas had shifted in the past two years.

Following the start of the Russia-Ukraine conflict, global gas markets experienced a highly volatile and uncertain period, as European countries scrambled to reconfigure supply chains, moving away from Russian pipeline gas towards global liquefied natural gas (LNG) markets.

This caused price spikes, shifts in supply routes and new diplomatic alignments.

“This episode laid bare a fundamental lesson: energy security is national security. No country can afford to leave the reliability, affordability and resilience of its energy systems solely to market forces or external suppliers.

“The weaponisation of gas through price manipulation, supply disruptions and political leverage is not a theoretical risk. It is a lived reality in today’s multipolar world,” Ramakgopa said.

He said this was especially relevant for developing economies such as South Africa, where dependence on a narrow supplier base could render entire industries vulnerable.

Ramakgopa pointed out that South Africa imported about 160 PJ/y of natural gas from Mozambique, representing more than 85% of the country’s total consumption. Sasol, the largest domestic user, consumes about 125 PJ/y, creating more than 30 000 direct jobs and contributing about 5% to GDP.

However, the Pande and Temane gasfields are projected to decline between 2026 and 2028. Ramakgopa said this anticipated gas cliff was a significant threat to the economy that demanded a coordinated and forward-looking response.

“Gas is not simply a commodity. It is a vector of industrial capability, spatial integration and economic power. Around the world, countries are reconfiguring their gas strategies, not just around cost and supply, but around sovereignty, localisation and geopolitical influence.

“For South Africa, this presents both risk and opportunity. On the one hand, we are currently exposed, dependent on a single supplier, with limited infrastructure and a small domestic market. On the other, we are strategically located, relatively stable and endowed with underexplored petroleum potential.

“Our political economy must respond by crafting a developmental gas strategy – one that integrates domestic production, regional diplomacy, infrastructure, finance, and market design. It must be grounded in public value, not just private returns,” Ramokgopa said.

He pointed out that, historically, South Africa's gas sector was shaped by vertically integrated operations, notably Sasol, which had played a dominant role upstream, midstream and downstream.

“This legacy is being reconfigured,” Ramakgopa assured, pointing to recent developments such as the National Energy Regulator of South Africa’s rules for third-party access, aimed at opening pipeline infrastructure to independent gas traders and facilitating a more competitive wholesale market.

Transnet Pipelines, the custodian of key gas transport infrastructure, is being repositioned to support this open-access environment.

“There is also potential to establish a national gas aggregator or trading platform that can contract long-term supply and make volumes available to smaller parties, ensuring greater liquidity and lowering entry barriers,” Ramokgopa said.

He noted that South Africa’s most immediate lever was gas-to-power – not just for its ability to provide dispatchable electricity, but because it would enable the kind of long-term, firm demand needed to unlock capital for LNG infrastructure.

“A minimum of 175 PJ/y to 200 PJ/y of gas is required to make an LNG import terminal viable. However, current non-Sasol demand stands at just 60 PJ/y - a volume insufficient to underpin a bankable investment case.”

“The role of government, therefore, is to aggregate demand, facilitate offtake certainty, and ensure regulatory alignment,” Ramokgopa said.

He pointed out that strategic nodes such as Richards Bay, Coega and the Vaal Triangle were natural candidates for gas-to-power infrastructure, given their proximity to industrial activity, ports and existing grid capacity.

“Gas is not only about molecules – it is about enabling productive capacity. In the Just Energy Transition framework, Mpumalanga can shift from coal dependence to a diversified industrial base supported by gas. Fertiliser production, ceramics, aluminium smelting and food processing are all sectors where gas offers cleaner and more competitive energy,” Ramokgopa said.

However, he noted that a coherent industrial policy needed to be linked to a major gas infrastructure rollout. This would include specially targeting new gas markets where they could support special economic zones, agro-industrial nodes and mineral beneficiation clusters.

He added that South Africa also needed to strengthen regional energy integration.

“The Southern African Development Community holds significant potential for shared gas infrastructure. Discussions are under way around pipeline extensions from Mozambique, integration with Namibia’s gas finds and exploring regional LNG storage hubs,” Ramokgopa said.

He noted that South Africa’s 2025 chairmanship of the G20 provided a global platform to advocate for energy diplomacy frameworks that benefited Africa, including more equitable access to transitional fuels and infrastructure finance.

“Gas infrastructure is capital-intensive, often with long payback periods and high counterparty risk. That is why the public sector has a vital role in derisking private investment. Blended finance mechanisms, such as those supported by the Development Bank of Southern Africa, the African Development Bank and multilateral climate finance, will be essential,” he said.

Ramokgopa added that government was also exploring models such as take-or-pay contracts, volume guarantees and strategic reserves to underpin market confidence.

“We must build on the successes of the Renewable Energy Independent Power Producer Programme to design a Gas Independent Power Producer Procurement Programme with clear rules, environmental compliance, and community benefit obligations,” he said.

Ramokgopa noted that while LNG was a short- to medium-term solution, government’s long-term ambition was to unlock South Africa's indigenous gas resources.

He stated that onshore prospects in the Free State and Mpumalanga, as well as offshore finds such as Brulpadda and Luiperd – located in Block 11B/12B of South Africa’s Outeniqua Basin – held immense potential. It had been estimated that the Brulpadda field contained about 1.3-trillion cubic feet of natural gas, while the Luiperd field was estimated at about 1.2-trillion cubic feet.

“But we must not ignore exploration timelines. Environmental approvals and production ramp-up periods are long. The time between discovery and first gas can easily exceed eight to ten years,” he pointed out.

Further, he noted that a clear upstream fiscal regime, streamlined licensing and predictable royalty structures were essential.

Ramokgopa also suggested that South Africa position itself as a consumer and a technology participant, investing in research and development, skills development and deep academic collaboration.

“Looking ahead, gas will evolve. Emerging technologies, such as blue hydrogen, synthetic methane, and carbon capture and storage, will shape the future value chain,” he said.