May 2025

Kinetiko Energy (ASX: KKO) is once again focused on delivering a critical new gas supply to meet South Africa’s urgent energy needs.

Following recent flow challenges encountered during testing at its shallow conventional gas projects in the Mpumalanga province, the company is now confidently moving forward with the ambitious development of South Africa’s largest onshore natural gas resource.

Encouraging initial assessments derived from laboratory analyses suggest that the inhibited gas production observed in the recent wells was attributable to mechanical issues rather than underlying geological constraints.

Citing the need to resolve an “energy problem and an economic problem” rather than just an electricity shortage, Electricity and Energy Minister Dr Kgosientsho Ramokgopa stated that the load factor for South Africa’s proposed gas-to-power (GtP) plants will be increased from 25% to above 50%. Speaking at Eskom’s winter outlook presentation, he indicated that this policy change was a direct response to market feedback on how to encourage gas demand. Ramokgopa’s announcement occurs against the backdrop of concerns about South Africa’s looming ‘gas cliff’ – a sharp decrease in natural gas supply to key industrial regions as Sasol’s Mozambican gas fields approach depletion.

Natural gas is the lifeblood of South Africa’s industrial heartland, powering key sectors like petrochemicals, steel, and food processing and supporting countless jobs. Currently, the nation almost exclusively relies on a single, diminishing source in Mozambique. This precarious situation presents a looming ‘gas cliff’ – a sharp supply drop with severe consequences for energy security and industrial stability, potentially jeopardising over 50,000 livelihoods. Beyond its economic significance, natural gas is also viewed as a critical transition fuel, offering a pathway to lower emissions and helping South Africa meet its ambitious net-zero targets under the Paris Agreement. The urgency to find alternative gas sources is paramount to safeguard both the economy and climate goals.