Successfully establishing a natural gas economy in South Africa, which has significant gas resources, requires addressing the associated challenges and implementing policies that promote investment in the sector, says the firm’s senior partner of research and strategy Birguid. Patience Panashe.
Panashe describes the Gas Master Plan, published in 2021 by the Department of Mineral Resources and Energy, as an important step towards developing South Africa’s natural gas industry that could help the country diversify its energy mix while reducing its dependence on coal and other fossil fuels.
He says the plan provides a clear framework for the development of a gas value chain, which includes the exploration, production, transmission and distribution of natural gas, and will help create a stable investment environment and ensure compliance with environmental and safety regulations.
In addition, the strategic roadmap to coordinate investment and implement gas-related projects will ensure that South Africa maximizes the benefits of its natural gas resources. The collective participation of the public and private sectors could also boost investment in technologies and knowledge needed for the development of a local gas economy.
“Viability depends on the availability of liquefied natural gas and the infrastructure to distribute and store it. South Africa has significant natural gas reserves, mainly located onshore along its southern coast. The country, however, will need extensive infrastructure to support the development of a natural gas industry.”
Panashe highlights concerns about how the infrastructure needed to transport and store the gas will be financed. He points out that the lack of investment in gas infrastructure negatively affects the transport, distribution and storage of gas between suppliers and end users.
Therefore, the local gas sector will affect South Africa’s budget, due to the introduction of new infrastructure.
Also, while gas projects may benefit South Africa’s economy to some extent, he says most lower-income citizens are unlikely to benefit. This means that regulatory and policy challenges must be addressed to ensure that a stable and predictable regulatory framework is established for the natural gas industry.
This framework would include regulations related to the exploration, production, transportation and distribution of gas, while ensuring that the frameworks are reliable and conducive to investment.
In addition, Panashe highlights concerns related to the investment and development of a gas economy that contradict South Africa’s climate change bill and undermine the urgency of a just energy transition and the adopted global methane commitment at the 2021 United Nations Conference of the Parties on Climate Change, or COP26.
He therefore says that the distribution of economic benefits and environmental considerations must be considered before establishing a gas economy.
“Gas development in South Africa will perpetuate our dependence on fossil fuels and slow down a just energy transition; the Gas Master Plan does not refer to the National Environmental Management Act (Nema) with regard to certain important provisions.
“It is important that the Gas Master Plan talks to Nema, because of the impact of gas and gas pipelines on the environment. Gas development is not compatible with a fair, just, equitable and decarbonised energy future in South Africa where people can contribute to and benefit from the means of energy production and distribution,” warns Panashe.
It also warns of the need to address how communities will be compensated when land has to be expropriated to build pipelines.
“The Gas Master Plan does not talk about how families and communities will be compensated in cases of land acquisition for pipeline expansion, especially when families may be vulnerable.
“The local community, therefore, must be consulted and involved in the planning and development of a local gas economy. It is important to address any concerns or issues raised by the community to ensure that the project is socially acceptable and sustainable in the long term,” concludes Panashe.
