TotalEnergies SE is targeting 2024 to approve the development of a liquefied natural gas (LNG) import terminal in Mozambique, aimed at helping users in neighboring South Africa avert a potential gas supply crisis.
The Matola LNG project, near Mozambique’s capital, Maputo, is expected to supply gas to South Africa by the end of 2027, according to Gigajoule, a partner in the development.
This timeline coincides with the scheduled end of gas supplies from Sasol Ltd.’s fields in Mozambique, which currently serve major South African companies such as Anheuser-Busch InBev and ArcelorMittal. The cessation of these supplies could lead to a feared “gas cliff” in South Africa, the continent’s most industrialized nation.
The Matola project will have the capacity to import 2.5 million tons of LNG annually, TotalEnergies confirmed on Monday.
This project could become the first significant LNG supplier to South Africa and is separate from TotalEnergies’ planned export terminal in Mozambique’s Cabo Delgado province.
Members of the Industrial Gas Users Association of Southern Africa (IGUA) are working to finalize a term sheet by December to secure gas offtake from Matola.
Jaco Human, IGUA’s Executive Officer, emphasized the urgency, stating that delays could have catastrophic consequences for gas supply in South Africa.
South Africa is seeking to diversify its energy sources by moving away from coal and increasing gas usage. However, existing gas consumers cannot afford interruptions.
The final investment decision for the Matola terminal is expected by the second quarter of 2024, according to Gigajoule CEO Jurie Swart.
The facility will connect to the pipeline currently transporting Sasol’s gas from Mozambique to South Africa. While Gigajoule initially estimated the project cost at $3.2 billion, this figure has not been recently updated.
TotalEnergies is actively engaging stakeholders, including Sasol and Eskom Holdings, South Africa’s state-owned power utility.
Sasol is also in discussions with potential LNG suppliers and terminal developers, including TotalEnergies, to secure future gas supplies for South Africa.
On October 4, interested gas buyers held discussions about contract status, pricing, and potential agreements with Sasol and financial institutions.
Although securing commitments at three times the current level would improve efficiencies, time is running out for buyers to avoid gas shortages, according to Human, who stressed that “there’s no other option.”
