The IEA, EU, and the UN are Wrong about the Energy Transition: The Case of South Africa

Mozambique’s Matola LNG Import Terminal Back on the Table to Avoid Gas Supply Shortfall in South Africa (with 5 charts)

South African power cuts and load shedding made the international news earlier this year because of the severity of the crisis on one hand and the politics of power generation on the other.  Meanwhile, the heavy dependence on coal for power generation has been an international issue in climate negotiations.  The EU has been trying to reduce South Africa’s dependence on coal in recent years by providing incentives, including donations and grants to switch to renewable energy. 

One thing is clear: The IEA, EU, and the UN are wrong about the energy transition. Existing power shortages and the increasing demand for electricity in South Africa cannot be solved by renewable energy at the expense of coal.  The only way that South Africa can meet future energy demand while reducing its reliance on coal is to use more natural gas.  A side form developing its natural gas resources and importing gas from Mozambique, it needs to import large amount of LNG.  The EU nations that are pressuring South Africa to switch to renewable energy must realize that South Africa needs natural gas as much as they do. 

Geographic location helps South Africa gets all the LNG it needs, especially that most of world LNG tankers carrying US LNG pass around South Africa to deliver their shipments to Asia, while LNG tankers from Qatar travel around the Cape of Good Hope to deliver its shipments to Europe (See Map below). 

On October 15, France’s TotalEnergies decided to revive the 2.5 million tons per annum (mtpa) Mozambique LNG import terminal in order to supply LNG to neighboring South Africa. The project, which is being developed in collaboration with South African gas facilities developer Gigajoule, is expected to reach a final investment decision (FID) in the second quarter of next year. The first shipment of gas from the project is anticipated to commence by the end of 2027. This project is distinct from TotalEnergies' delayed $20 billion Mozambique LNG export project. In this article, we will focus on:

• The significance of Matola LNG import terminal to the region.

• Gas supply in South Africa and why it needs to import LNG via Mozambique.

• The outlook for gas demand in South Africa and potential opportunities.

Matola LNG Import Terminal

The Mozambique’s Matola LNG import terminal is a proposed project located near the capital of Mozambique, Maputo. It is a joint venture between TotalEnergies and Gigajoule aimed at importing LNG into Maputo and transporting it through an existing pipeline that currently carries gas from Sasol operated-fields in Mozambique to neighboring South Africa, as shown in Figure (1).