A Global management consultancy McKinsey & Company has put forward the notion that South Africa should immediately pursue a ‘big gas’ energy option to bridge an electricity supply gap of between 6 GW and 10 GW that could arise by 2025 as older coal-fired power stations are decommissioned.

This was contained in a report titled ‘South Africa’s Big Five: Bold Priorities for Inclusive Growth’ published on September 1 and released as part of McKinsey’s twentieth anniversary in South Africa and the twenty-fifth anniversary of the McKinsey Global Institute.

While releasing the report, coauthor Christine Wu affirmed that with up to 14.4 GW of capacity planned for decommissioning between 2020 and 2030, natural gas could be introduced with a significantly shorter lead time than would be the case for either new coal or nuclear. “Gas could play an important role in South Africa’s energy portfolio, particularly in terms of meeting the country’s base-load energy needs between 2020 and 2030, before more diversified capacity comes into operation,” Wu explained.

She added that the development of a natural gas industry could also boost South Africa’s gross domestic product (GDP) by between R138-billion and R251-billion by 2030 and create up to 328 000 direct and indirect jobs.

However, in order to take advantage of the opportunity, government would have to finalize regulations to stimulate offshore and onshore exploration, as well as facilitating the importation of liquefied natural gas (LNG).

According to Energy Minister Tina Joemat-Pettersson gas was an “immediate focus” for government and indicated that work was under way to finalize the long-awaited Gas Utilization Master Plan, which would offer a road map for South Africa’s development of a gas industry.

“The scale of the opportunity for gas use in South Africa is immense, with demand from the power sector alone possibly reaching one-trillion cubic feet,” the McKinsey report stated.

There were numerous emerging supply options, including shale gas, offshore gas, coalbed methane, LNG imports, and unexploited gas resources in Mozambique. But substantial capital would  be required, with an initial R4.4-billion needed for an LNG terminal at Saldanha Bay and a further R4.1-billion rand in pipelines to connect the terminal to nearby sources of demand. This could be followed up by domestic drilling and development programmes, as well as the addition of new pipeline networks to link areas of demand with both domestic and regional gas sources. Miningweekly reports.