South Africa Gas Market


The Amersfoort Project is located at the heart of South Africa’s energy, mining and transport infrastructure and close to the major population centres of Johannesburg and Tshwane (Pretoria). Consequently, commercialisation scenarios for Amersfoort gas are varied in both nature and scale. However, a common factor for all scenarios is a growing need for energy in all forms in South Africa and the adjacent developing states of the Southern African Development Community (SADC). It is also important to note the interconnection between the different energy demand sectors due to competition for inputs like coal and gas and regulatory measures that have sought to try and diversify energy demand to overcome increasing shortages in particular sectors like electrical power.


Demands for all forms of energy are growing throughout sub Saharan Africa. The South African parastatal electrical generator and transmission company Eskom has in recent years been finding it increasingly difficult to meet peak demands of the countries that constitute the Southern African Power Pool including South Africa. Eskom not only faces considerable challenges in financing and building new generating and transmission capacity but has also had issues with supply of coal to its power stations. Demand is also growing in the region for petrochemicals, fertilizers and transport fuels. The Amersfoort CBM Project is located close to the majority of South Africa’s power generation infrastructure and the major population and manufacturing centre of Johannesburg. The Majuba Power Station, a 4,110MW coal fired facility is located within sight of the Amersfoort CBM Project. Majuba requires around 50,000 t of coal a day, which has to be transported by truck from various sources in the East Transvaal coal fields.


Gas Markets and Pricing

Sasol which is South Afric’s global petro chemical group sells gas derived from the Mozambique pipeline up to a price benchmark based on the European Benchmark Price (EPB). In 2008/2009 the Sasol price was ZAR63.28/GJ, versus the EPB of ZAR89.12/GJ, at an AUD/ZAR exchange rate of 6.7 the Sasol price equates to AUD$9.04/GJ, which is considerably higher than Australian gas prices over the same period of about A$3.50/GJ under which CBM development has occurred at an impressive rate.

Average production and infrastructure costs for Australian CBM are estimated to be around A$2.70/GJ, statements by Mitchell Drilling Ltd, leaders in SIS (Surface in Seam) drilling claim that their SIS technology can decrease typical Australian costs from A$2 to A$1/GJ.

(1,000 standard cubic feet of gas equates approximately to 1.06GJ)



Potential commercialisation scenarios for Amersfoort include but are not limited to:

  • Gas sales into the existing coal powered generation plants for flame control and ultimately for full co-generation.
  • Gas supply into the existing gas distribution network.
  • Independent Power Production (IPP) either grid coupled or direct to a major customer.
  • Mini LNG interfaced IPP for peak load and distributed demand.
  • CNG production and distribution by road and rail for to manufacturing customers and fleet transport depots.

Badimo and Kinetiko have already commenced discussions with a range potential customers and government agencies charged with infrastructure development and national energy matters.

For further information on the South African energy and power market please refer to KKO research reports