Kinetiko Energy, an Australian gas company, has commenced talks with South Africa’s Sasol for a potential gas supply deal, reported Reuters, citing Kinetiko Energy CEO Nick de Blocq.

The development comes after Kinetiko discovered shallow sandstone gas in Mpumalanga province’s Block 272.

Sasol, which is an energy and chemicals company, could benefit from the gas discovery as it is near the Secunda petrochemical complex and Sasol needs to find a new gas source.

Currently, Sasol gets almost all of its gas from the Rompco pipeline, which runs from Mozambique to South Africa. However, the onshore Mozambican gas fields that supply it, Pande and Temane, are anticipated to run out in a few years.

Speaking to the news agency, Kinetiko CEO Nick de Blocq said that the company was in "very early and undetailed discussions" with Sasol.

According to de Blocq, geographically, the South African company was "the natural off-taker for any gas produced in our northern block".

Meanwhile, Sasol CEO Fleetwood Grobler also confirmed the talks, according to a Sasol representative, who said it was "too early to consider details."

Along with Block 272, Kinetiko has discovered sandstone gas in Blocks 270 and 271 to the south.

Last week, Kinetiko, through its subsidiary Afro Energy, signed a non-binding agreement with the Industrial Development Corporation of South Africa (IDC).

Under the agreement, Kinetiko aims to develop an onshore liquefied natural gas project, which it claims will be South Africa’s “largest”.