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Eskom and energy and chemical company, Sasol, have signed a Memorandum of Understanding (MoU) to “collaboratively explore and research potential future liquified natural gas (LNG) requirements”.

This is according to a joint statement released by the two companies, following the signing ceremony of the MoU on Friday.

“The collaboration aims to determine the potential volumes that South Africa requires to establish a viable LNG import market, along with the enabling infrastructure, and will be facilitated by government-to-government relations where necessary. 

“This initiative focuses on using gas for power generation to provide essential base load electricity and position gas as a key enabler of re-industrialisation, while also ensuring continued supply to the market by unlocking global LNG resources. 

“Furthermore, the collaboration will contribute to enhancing South Africa’s energy mix and enable the country’s energy transition and decarbonisation,” the joint statement read.

The MoU is expected to “explore sourcing gas within South Africa, the Southern African Development Community region, and other parts of the African continent, in addition to evaluating long-term LNG contracting”.

“This will support the gas requirements for Eskom’s planned coal power station repowering and conversion to gas in the long term. The parties will also engage other state entities to enable an LNG value chain in South Africa.

“As part of its revised gas strategy, Sasol is working on enabling the future supply of LNG to South Africa by collaborating with companies such as Eskom, existing and future customers, suppliers, and infrastructure developers.

“The research findings from the first phase of the Sasol-Eskom collaboration will guide the necessary role players and investors required to offer the best prospects for South Africa’s energy market, while outlining the challenges associated with the long-term commitments required for LNG imports,” the statement said.

Speaking at the signing ceremony, Minister of Energy and Electricity, Dr Kgosientsho Ramokgopa, explained the importance of the collaboration between two of South Africa’s biggest energy related companies.

“We have made it clear that we are serious about LNG solutions for the country, and that our demand for gas across both industrial and energy frontiers will unlock these solutions.

“This collaboration between our two energy champions – one public, one private – will provide a data-driven and commercially sound basis for gas-fed industrialisation and for us to explore the well-worn path to lower carbon energy that the global north has already taken by scaling gas to power. 

“Gas has emerged as the second-largest contributor to global electricity production, experiencing rapid growth as many countries shift from coal to gas in their energy mix to enable positive implications for climate change, as gas typically emits less CO2 per unit of energy,” Ramokgopa said.

Eskom Group Chief Executive, Dan Marokane, said the two companies can collaborate to work on the transition to lower carbon methods.

“We have a great deal of experience as the two largest users of coal in South Africa and we felt by working together we could accelerate the climate change transition in a responsible way which sets the country up for the best economic, environmental and social outcomes and addresses the imminent gas supply shortfall. 

“Eskom is focused on a balanced and diversified energy mix based on existing coal and nuclear and introducing gas for baseload power, as well as renewables, energy storage systems including batteries and pumped hydro, to achieve overall security of supply and to meet and exceed rapidly expanding energy demand,” Marokane said. – SAnews.gov.za