Fund manager the Public Investment Corporation (PIC) has approved a landmark Strategy on Natural Gas, marking a pivotal step towards bolstering South Africa's energy security and accelerating the country’s decarbonisation agenda.

The strategy is engineered to help secure a stable gas supply, directly supporting South Africa’s critical transition towards cleaner energy sources, it says.

Crucially, this initiative aligns with the National Development Plan (NDP), the Draft Gas Masterplan and the Integrated Resource Plan (IRP) 2025, all of which advocate for significant investment in natural gas. 

"The PIC strategy provides for direct and indirect investments into midstream and downstream regional gas projects. Each investment will be rigorously assessed on a project-by-project and risk-adjusted basis, ensuring sustainable financial returns for client investment portfolios," the PIC states.

It points out that the strategy is built on five core components, with the first being investment in gas infrastructure.

"The strategy outlines significant potential investments in gas infrastructure to support South Africa’s transition towards cleaner energy sources. The PIC believes targeted investment in gas will further unlock other opportunities for developing renewable energy.

"Moreover, substantial investments will be crucial for achieving economies of scale in anticipation of the Department of Electricity and Energy’s stated objective to procure gas at a load factor of 50%," it says.

The second core component is the conversion of two of Eskom's open-cycle gas turbine (OCGT) facilities – Ankerlig and Gourikwa – that currently burn diesel to gas and to set up a 3 000 MW gas-to-power plant in Richards Bay.

Reliant on gas, these initiatives will play a crucial role in reducing emissions and stabilising the energy grid. 

Addressing the gas supply cliff is the third component, with the PIC's strategy aimed at addressing the impending gas supply cliff that threatens South Africa’s industrial gas users. Industrial gas users employ over 70 000 employees, directly contribute to 10% of South Africa’s GDP and consume 5 GW to 8 GW of power, the PIC notes.

The last two components are regional cooperation and sectoral impact, with the strategy emphasising cooperation, particularly with Mozambique and Namibia, to develop the natural gas market and drive industrialisation and regional development. 

Further, the fund manager highlights that, beyond energy generation, natural gas will be used as a chemical feedstock for producing ammonia, urea, methanol and diesel, benefiting various sectors such as agriculture, mining and transportation.

"The approval of the PIC Strategy on Natural Gas occurs at a time when the global energy landscape is undergoing a profound transformation driven by climate change, the need for energy security and advancements in technology.

"In recent years, natural gas markets have stabilised following periods of volatility and global energy policies have become increasingly favourable towards natural gas. 

"The PIC Strategy on Natural Gas marks a significant milestone in South Africa's journey towards energy security and sustainability. The PIC remains committed to driving investments that support South Africa’s energy security, its decarbonisation efforts and better regional cooperation," it states.