South Africans are becoming accustomed to the term 'gas shortage' amid increased pressure to take measures ahead of the expected gas deficit. A significant portion of the gas consumed is imported from southern Mozambique, coming from the Pande-Temane fields via the pipeline operated by Republic of Mozambique Pipeline Investments Company (Rompco) into the Mpumalanga province of South Africa.
Gas holds strategic importance as it is not merely another fuel in the energy balance. Although natural gas accounts for only about 2.5% of South Africa's total energy supply, its role is critical. Approximately 35–40% of the gas from Pande-Temane is used at Sasol facilities in Secunda, where the South African chemical and energy company converts coal and natural gas into synthetic fuel and chemical raw materials.
Another 35–40% is directed to the Sasolburg chemical complex, where natural gas is used in production processes for chemicals such as wax, methanol, and ammonia. The remainder is distributed among industrial and commercial consumers. Furthermore, Sasol annually sells about 20–23 petajoules of methane gas to clients in South Africa, including steel, sugar, paper, and motor manufacturers.
Thus, the 'gas shortage' should be viewed not only as an energy supply problem but also as a risk to industrial policy, food security, and production competitiveness. Globally, natural gas provides about 70% of ammonia production and 55–65% of methanol production; ammonia is essential for fertilizers, and fertilizers are necessary for food production. Methanol serves as a basis for the chemical industry. In the context of South Africa, gas also supports the operation of furnaces, kilns, boilers, and technological plants in sectors such as metallurgy, glassmaking, ceramics, brewing, and synthetic fuel production.
A reduction in gas supplies will require more than just a change of fuel. Affected companies may have to redesign production processes, install new storage and processing systems, accept higher operating costs, and, in some cases, switch to alternatives with higher emission levels.
According to estimates by the South African Industrial Gas Users Association, alternatives such as liquefied petroleum gas (LPG), diesel, or electricity could cost two to five times more than the current price of gas, excluding capital expenditure for retrofitting. The consequences for industry and employment are considerable: industries dependent on this gas supply directly provide jobs for approximately 70,000–100,000 people. Sasol's broader contribution to the South African economy is even greater: in 2021, its contribution was estimated at about 5% of GDP, supporting around 500,000 direct and indirect jobs.
The country may require 300–400 petajoules of gas per year, equivalent to 6–8 million tonnes of liquefied natural gas (LNG), to meet industrial heating and power generation needs. Consequently, current supplies are insufficient. In this situation, procrastination is not a passive stance, as it increases the risk of price hikes, industrial weakening, and heightened energy insecurity.
A policy framework and infrastructure are being developed for gas imports. The publication of the draft Gas Management Plan points to Richards Bay in South Africa as a key LNG import location, while Matola in Mozambique is considered a regional supply source. Projects for terminals in both locations have passed the permitting stage, and procurement negotiations are underway. However, each of these initiatives requires several years of work, while the gap between the country's current state and the required level is constantly narrowing. The 'gas shortage' is only a few years away, leaving little time for further delays.
The primary and most urgent option is LNG import. A study conducted by the independent non-profit economic research institute Trade and Industry Policy Strategies (TIPS) in March 2026 clearly shows that South Africa must secure LNG imports in the short and medium term. While domestic resources may help later, they are incapable of closing the short-term gap.
The LNG strategy must be practical, not symbolic. The ports of Durban and Richards Bay, two major commercial ports in South Africa (in KwaZulu-Natal), can serve as LNG import terminals, but the existing pipeline infrastructure is insufficient to meet domestic demand. Therefore, South Africa needs a second import route through Mozambique, via the ports of Matola or Inhasso, to connect to the existing infrastructure serving the eastern interior of the country. Matola is at a more advanced stage, having received permits and environmental approvals.
The report's priority is a two-terminal strategy: one LNG terminal in Mozambique for access to Rompco and the domestic gas market, and a second in KwaZulu-Natal to serve the electricity and industrial demand in KwaZulu-Natal. Both must be secured and commissioned by mid-2030. Regional and domestic gas sources remain important but are not an immediate salvation. Timelines, costs, distance to infrastructure, and regulatory delays mean that current domestic resources cannot save South Africa before the crisis hits.
Demand-side measures are also important. Some users may switch to LPG, diesel, electricity, transported LNG, or compressed natural gas (CNG). Biomethane, green hydrogen, and electrification can help over time. However, the report is realistic: many alternatives are expensive, technically immature, logistically complex, or have higher emissions. South Africa's effective carbon tax, which rises from R35/tonne ($2 USD) in 2024 to R115/tonne ($7 USD) in 2030, alone will not force mass substitution.
South Africa needs a credible gas plan linked to procurement, infrastructure, and industrial policy. The draft Gas Management Plan for South Africa has already outlined the scale of potential future demand: about 400 petajoules per year inland by 2050 and another 350 PJ per year in coastal areas. Now, this planning must move into execution.
The Department of Mineral Resources and Energy, regulators, state-owned companies, and private investors must develop a clear LNG-to-power strategy. It must define how much gas the country will need, who will buy it, how it will be priced and stored, and how supplies can be regulated based on changing demand.
The regulatory system also needs reform. The TIPS report calls for clearer rules regarding what assessments companies must conduct before obtaining environmental approval for offshore oil and gas projects. It also proposes creating a specialized tribunal to resolve disputes over these permits. Broader environmental assessments can help identify suitable areas for development. Maritime spatial planning is also required to manage the competing use of South Africa's ocean space.
These points are not bureaucratic footnotes; they determine whether investment comes before or after the crisis. First and foremost, South Africa needs coordination. The report calls for the creation of a dedicated delivery structure. This could be a new workflow similar to Operation Vulindlela—a government initiative aimed at modernizing the country's electricity, water, transport, and digital communication networks. Or it could be a Rompco-style mechanism, uniting the state and private sector under the coordination of a single gas aggregator.
A critical analysis of the required policy, regulation, procurement, infrastructure, and resource development shows that decisions must be made in the next few years to avoid a gas supply deficit after 2030. Many of these actions have long development and construction timelines and are highly interdependent. Delays in permitting, approval processes, LNG procurement, terminal development, or domestic gas projects can significantly affect South Africa's ability to secure alternative gas supplies before existing reserves decline. Therefore, early action is necessary to ensure that import infrastructure and production capacity are ready in time to support future gas demand and maintain energy security after 2030. The call to action is simple: decide now, procure now, permit now, build now. The crisis will not wait for the next plan.
According to a trade conditions survey conducted by the South African Chamber of Commerce and Industry (SACCI) for June 2026, trade conditions continued to be under pressure. The survey, published on Tuesday, showed that trade conditions stood at 36 points with seasonal adjustment.
Experts believe that the situation may improve later this year. SACCI noted that the war in the Middle East negatively affected trade conditions because it impacted fuel supplies and led to a rapid rise in crude oil prices.
Crude oil prices peaked at around $119 (R1,960) at the end of April 2026. This had a noticeable impact not only on retail fuel prices but also triggered a rise throughout the supply chain, which significantly affected the inflation rate.
SACCI added that this development directly influenced household consumer habits and business operating costs. As a result, 75% of respondents in the April 2026 survey recorded an increase in raw material costs. However, when the price of crude oil dropped to approximately $72 (R1,187) by the end of June 2026, this brought positive effects for businesses and, specifically, for overall trade conditions in June, improving traders' expectations.
In June, inventories, work-in-progress orders, and raw material costs became more favorable. All other components of trade slightly decreased from May and stabilized in June. SACCI also reported that, besides the decrease in raw material costs, retail prices remained virtually unchanged in June, although the overall price level (inflation) began to partially reflect the full impact of fuel prices back in May.
Low sales volumes and new orders in May and June indicate the real impact of rising fuel prices and their consequences for consumer spending in the economy. According to the June 2026 survey, expected trade conditions confidently returned to a positive phase for the next six months. Although the gap between current and expected trade conditions remains significant, significantly lower crude oil and fuel prices stimulated positive expectations after a serious decline in the Trade Expectations Index in April.
Latest data shows that consumer inflation rose to 4.5% in May 2026, while producer inflation was 4.3%.
SACCI concluded that the current weakened trade conditions prompted respondents to reduce staff, although 31% were still hiring in June. Given the expected improvement in trade conditions over the next six months, respondents intend to increase employment, and the expected index will rise to 57 in June compared to 40 in April (peak high crude oil prices).
Professor Raymond Parsons, an economist at the University of the North West School of Business, noted that the latest SACCI data confirms other high-frequency data regarding the negative impact of the global energy crisis on business activity in the second quarter. He suggested that with the appearance of macroeconomic indicators, GDP growth in the second quarter likely suffered significantly, and both growth and employment felt negatively in recent months, but this economic pain may be temporary.
Parsons also emphasized that the good news is that survey respondents expect business conditions to improve later in the year, thanks to the internal resilience of the South African economy. He added that the strength of the expected business recovery will depend on factors such as the degree of further escalation of the conflict in the Middle East and the economy's reaction to the expected interest rate hike by the South African Reserve Bank on Thursday.
Professor Simphiwe Madikizela, an economist at the University of South Africa (Unisa), believes that this is a very serious problem for trade conditions, which will remain negative as long as this war continues. Madikizela stated that the consequences of the Middle East war will be observed for many years after its end, as destroyed infrastructure will require costly reconstruction, and lost lives cannot be recovered.
Dr. Elifas Ndu, an Unisa economist, noted that recent events in the Middle East have increased uncertainty in oil prices. Ndu stated that the recent instability driving up oil prices is bad news for consumers and companies, as households and firms are revising their inflation expectations upwards. These revisions affect investment planning, hindering budget allocation for planned investments and creating greater uncertainty regarding the repo rate trajectory.
Supply chains in South Africa are facing significant disruptions caused by geopolitical tensions and growing cyber threats. As costs rise and operational difficulties increase, businesses are forced to adapt strategically to secure their future.
Amid uncertainty, South African companies are grappling with a changing supply chain management landscape. According to the latest CIPS Pulse Survey for Q2 2026, while concerns about supply chain disruptions have slightly eased from record highs, risks associated with geopolitical instability remain substantial. Vigilance is crucial for organizations across South Africa.
The CIPS survey results indicate that procurement and supply chain professionals are experiencing an unprecedented level of anxiety. Despite a slight decrease in short-term disruption fears, long-term issues remain alarmingly high. This suggests that businesses are adapting to a 'new normal' characterized by constant global unpredictability, rather than a stable return to previous conditions.
South Africa's strong reliance on international supply chains creates a unique set of challenges. The region's heavy dependence on imported fuel, industrial equipment, chemicals, pharmaceuticals, and various manufacturing components underscores the critical need for uninterrupted logistical operations. Key sectors such as mining, agriculture, automotive, and retail rely on these global networks to maintain competitiveness.
The CIPS survey highlighted the conflict in the Middle East as the primary source of supply chain concern, confirmed by 75% of surveyed procurement specialists. Broader geopolitical tensions (67%) and the ongoing war in Ukraine (33%) exacerbate the situation. Despite geographical distance, these conflicts significantly impact South Africa by affecting freight routes, delivery costs, energy markets, and overall supplier availability.
Another emerging issue is the escalation of cyber risks. The survey showed that cyberattacks have surpassed logistics disruptions as one of the most pressing threats for procurement professionals. There is a growing realization that incidents affecting suppliers or critical infrastructure can quickly lead to operational failures, production stoppages, and delays in vital supplies.
For South African enterprises, the consequences are serious. The survey forecasts rising costs in several critical sectors, including shipping and logistics, oil and gas, mining, chemicals and pharmaceuticals, food and beverages, and sheet metal products. These increases could lead to higher transportation expenses, increased prices for imported goods, and higher food costs, potentially putting pressure on local economies.
To cope with these numerous challenges, companies are prioritizing resilience over mere cost-cutting. Key strategies for ensuring supply continuity include diversifying suppliers, extending supplier contracts, and maintaining buffer stocks. Paul Vos, Regional Managing Director of CIPS Southern Africa, warns that although some inflationary pressures have begun to ease, the operating environment for businesses remains unpredictable. He notes: 'Organizations can no longer assume that global supply chains will return to pre-crisis norms.'
Vos emphasizes the strategic advantage that resilience can offer businesses, asserting that it is vital to develop broader supplier networks and strengthen regional sources. Furthermore, improving supply chain transparency and enhancing the importance of procurement functions within organizations can lead to more robust operational structures.
Ben Farrell MBE, Global CEO of CIPS, comments that global trade is undergoing a fundamental transformation amid these challenges. He stated: 'The tectonic plates of world trade are shifting.' As regionalization gains momentum and globalization evolves, businesses that cultivate resilient regional partnerships will be best positioned to thrive.
Moreover, the survey indicates that one-third of organizations are already feeling the impact of recent changes in US tariff policy, and another 37% are closely monitoring developments, further demonstrating how uncertainty in trade policy complicates procurement strategies alongside geopolitical turmoil.
In light of these findings, Dr. John Glenn, Chief Economist at CIPS, cautions that despite a slight easing of sentiment, concerns regarding geopolitical shocks, cyber risks, and general uncertainty remain alarmingly high, exposing economies to potential operational disruptions.
