By Lwazi Dlamini and Karabo Ngoepe
The adage that “when South Africa sneezes, Eswatini catches a cold” is proving true once again as a looming energy crisis in South Africa threatens to impact Eswatini.
South Africa’s Minister of Electricity, Kgosientsho Ramokgopa, has warned of a potential natural gas shortage—dubbed the “gas cliff”—which could strike within 30 months, endangering up to 5% of the country’s Gross Domestic Product (GDP) and putting hundreds of thousands of jobs at risk.
The Roots of the Gas Cliff
At the heart of this issue lies South Africa’s reliance on gas imports from Mozambique, a nation currently grappling with political turmoil following disputed election results.
Mozambique’s gas fields, operated by Sasol, are set to curtail production by 2027, creating an urgent need for alternative sources.
The gas shortage is particularly alarming for South Africa’s industrial sector, where natural gas fuels critical operations that drive economic growth and employment.
To avert this impending disaster, South Africa is exploring alternative options, including securing liquefied natural gas (LNG) from Qatar, a global leader in LNG exports.
Minister Ramokgopa recently visited Qatar to initiate discussions about a commercial agreement involving Sasol and state utility Eskom.
“We are likely to hit a gas cliff in 30 months,” Ramokgopa said. “Five per cent of the country’s GDP is at risk as a result. We are engaging with gas-intensive users to assure them that we are working on securing supply.”
Eswatini’s Energy Dependence
Eswatini imports 70% of its electricity from South Africa’s Eskom, and its energy future is closely tied to developments across the border. In 2023, Eswatini renewed its electricity import contract with Eskom for another decade.
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While Eswatini Electricity Company (EEC) does not directly import natural gas, any disruption in South Africa’s energy sector could have ripple effects, affecting electricity supply and costs in Eswatini.
EEC Managing Director Ernest Mkhonta assured stakeholders at the EU Green Power Transformation Forum in September that bilateral agreements guarantee Eswatini’s energy supply.
However, the focus now shifts to maintaining affordable electricity, especially for industrial users, amid rising global energy uncertainties.
South Africa’s LNG Strategy
South Africa is racing against time to secure LNG imports. The government has accelerated infrastructure projects to accommodate LNG, with the Transnet National Ports Authority issuing a request for proposals to construct an LNG terminal at the Port of Ngqura in the Eastern Cape.
Additionally, a consortium has been appointed to develop an LNG terminal at Richards Bay on the East Coast, expected to be operational by early 2028.
These initiatives are vital but face tight timelines. Failure to secure sufficient gas supplies could disrupt industries reliant on natural gas, leading to job losses and reduced economic growth.
The crisis also underscores the need for South Africa to balance immediate energy needs with a transition to sustainable sources.
Implications for Eswatini
EEC’s Marketing and Corporate Communications Manager, Khaya Mavuso, clarified that the company imports only electricity from Eskom’s power plants, not natural gas.
However, disruptions in South Africa’s energy sector could indirectly impact Eswatini. For instance, escalating energy costs in South Africa may lead to higher electricity tariffs for Eswatini.
Eswatini’s National Petroleum Company (ENPC), which oversees the country’s fuel supply, is constructing a Strategic Oil Reserve Facility in Phuzumoya.
The project has faced controversy over allegations of corruption and mismanagement, highlighting the complexities of energy security in the region.
ENPC Chief Executive Officer Nhlanhla Dlamini was unavailable for comment.
The Role of LNG in Global Energy
LNG is natural gas cooled to a liquid state, making it easier to store and transport. It is used for power generation, heating, cooking, and manufacturing.
LNG is odourless, colourless, non-toxic, and non-corrosive. When spilt, it evaporates without leaving residue or harming ecosystems.
Globally, LNG demand has fluctuated due to geopolitical and economic factors. The Institute for Energy Economics and Financial Analysis (IEEFA) predicts an oversupply in global LNG markets within the next two years, driven by sluggish demand growth and a surge in export capacity.
Trends in Global LNG Demand
Declining Russian gas supplies to Europe, following Russia’s invasion of Ukraine, caused a temporary spike in European LNG imports in 2022.
However, demand has since retreated due to high prices, energy efficiency measures, and increased use of renewables.
- Japan: Once the world’s largest LNG importer, Japan saw an 8% drop in demand in 2023. The country’s shift toward nuclear and renewable energy could further reduce LNG imports.
- South Korea: Historically a major buyer of U.S. LNG, South Korea’s imports fell nearly 5% in 2023. The nation plans to reduce LNG imports by 20% over the next decade as it expands solar, wind, and nuclear energy.
- Europe: LNG imports in Europe stagnated in 2023 despite reduced reliance on Russian gas. Overall gas consumption in Europe fell by 20% over two years, driven by high prices and climate policies.
Emerging Asian markets face economic, political, and logistical barriers to LNG growth. Countries like Pakistan have reconsidered LNG-fired power plants, focusing instead on alternative energy sources.
The Future of LNG Supply
High LNG prices in recent years spurred a wave of new supply projects. IEEFA estimates that by 2028, global LNG liquefaction capacity could increase by 40%, adding 193 million metric tons annually. However, this surge in capacity may outpace demand, potentially creating a surplus.
Eswatini’s Path Forward
As South Africa grapples with the gas cliff, Eswatini must prepare for potential disruptions in its energy supply.
Diversifying energy sources and investing in renewable energy could help reduce dependency on imported electricity.
Strengthening regional partnerships and accelerating local energy projects will be critical for ensuring long-term energy security.
In the short term, Eswatini’s reliance on Eskom underscores the importance of proactive measures to mitigate risks.
Whether through tariff negotiations or contingency plans, Eswatini must safeguard its energy supply and affordability for its industries and citizens.
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The looming gas cliff in South Africa serves as a stark reminder of the interconnectedness of regional economies.
For Eswatini, the crisis highlights the urgent need to balance reliance on imports with investments in domestic energy solutions.
As global energy dynamics shift, resilience and adaptability will be key to navigating an uncertain future.
Eswatini’s energy stakeholders must work together to address challenges, ensuring that the country remains on a sustainable path while fostering economic growth and stability.
The lessons from South Africa’s predicament should serve as a catalyst for Eswatini to take decisive action toward energy independence and sustainability.
