PetroSA, the state-owned oil and gas company of South Africa, has finalized an agreement with Mozambique's ENH for an initial annual supply of 2 petajoules of gas, with the potential to eventually increase to 200 petajoules.

PetroSA, South Africa's state-owned oil and gas company, anticipates receiving the first gas shipments from Mozambique's ENH later this year, as efforts intensify to secure energy supplies amid looming shortages.

Following the issuance of a gas trading license in March, PetroSA swiftly finalized a deal for an initial annual supply of 2 petajoules, with the potential to increase to 200 petajoules over time. This supply will cater to various industrial users, including ArcelorMittal, currently dependent on approximately 190 petajoules annually, primarily sourced from Sasol.

With Sasol's Mozambican gas fields depleting, customers have been cautioned about impending supply constraints in the next few years.

PetroSA is pursuing a joint venture (JV) with ENH to attract potential gas clients in energy-strapped South Africa. They plan to replicate this JV model in Mossel Bay to trade gas from offshore fields discovered by TotalEnergies to the Cape market.

"At Mossel Bay, we will be looking at potentially two different JVs, one with Total for Brulpadda (field), and then another JV for the Block 9 development, but the main entity that will trade gas for the group is PetroSA Gas Trading," said Sesakho Magadla, chief operating officer at PetroSA, to Reuters.

The ENH gas sales agreement involves importing gas via the 869 km ROMPCO pipeline, linking Pande and Temane fields to South Africa, and then supplying users via Sasol's pipeline network in the north of the country. ENH did not respond to requests for comment.

PetroSA is currently in negotiations for two gas transportation agreements with Sasol and ROMPCO, the pipeline company it operates, as shown in a presentation to lawmakers last month.

The ROMPCO pipeline runs from Mozambique to Sasol's petrochemical complex at Secunda, where it operates the world's largest coal-to-liquids plant.

"Negotiations are currently ongoing relating to a gas transportation agreement to provide PetroSA ... access to uncommitted capacity within the pipeline network," said Alex Anderson, Sasol spokesperson.

Technical studies are also underway to determine the feasibility of transporting PetroSA's gas to different locations near the current pipeline network, he added.