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Will Morocco Join the Gas Exporting Countries’ Club?

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Rabat – Morocco will soon launch an international call for tender for the construction of a gigantic industrial complex processing natural gas for a budget of USD 4.6 billion, reported Bloomberg quoting the Minister of Energy, Mines, Water and Sustainable Development, Aziz Rebbah.

“This is a project to build an integrated plant to process gas,” Rebbah told Bloomberg, adding that the offer would concern the construction of an industrial unit while the selection of financial and technical consultants was already made.

Morocco, which imports 97 percent of its energy needs, is trying to diversify its energy mix mainly dependent on oil and coal. In this sense, Rebbah recalled that Morocco’s goal is to cover 42 percent of its energy needs from renewable sources by 2020. “We might surpass that target because there are massive investments now,” he said.

READ ALSO: Who Owns Morocco’s Oil and Gas Industry?

But can Morocco’s gas industry, one that is mainly financed by foreign investment, sustain such project?

In 2016, over MAD 1.2 billion was spent on Moroccan oil and gas exploration. However, the sector is mainly monopolized by the country’s international E&P partners, who invested ten times more in the industry compared to Morocco’s National Hydrocarbons Office (ONHYM).

In terms of investments, 2016 has certainly not been a conducive year. In its 2016 annual report, the ONHYM revealed that Morocco hardly allocated a MAD 117 million budget to the sector, while its foreign partners invested ten times more, with a MAD 1.117 billion budget.

The ONHYM’s strategic approach is simple  and to the point. Instead of funding the sector itself, the office “continues to redouble its efforts to attract other partners and to ensure regular monitoring of its partners as part of the implementation of their commitments,” explained the office in its 2016 annual report.

To date, Morocco counts more than twenty E&P companies which explore the country’s soil in partnership with the ONHYM. Among these international firms are British giants SDX Energy and Sound Energy in the gas exploration sector.

READ ALSO: Morocco to Join Gas Producers Club by 2019

These two firms alone are practically monopolizing the gas sector in Morocco. And it’s not only the distribution of interest in exploration permits allocated to these international firms, which allows them 75 percent of the gas wells revenues, that is attracting them to the kingdom.

According to Sound Energy, the formations that make Algeria rich in gas reserves, could soon benefit Morocco. In its Tendrara permit, east of Morocco close to the Algerian borders, the firm explains that its exploration wells could dig up the first gas production of Morocco, which would allow it to become a gas exporting country.

Following completion of a basin study, preliminary estimates from Sound Energy indicate a range of volumes across the entire Tendrara and Meridja permit areas, with a 9 Trillion Cubic Feet low case for gross gas in place and, if all the key elements of the petroleum system’s model are present, an upside case of 31 Trillion Cubic Feet of gross gas in place .

These trillion cubic feet of gas discovered by Sound Energy can cover Morocco’s energy needs, estimated at 5 billion cubic meters per year according to the National Plan for Development, for the next 90 years.

At this stage, Sound Energy is beginning to talk about marketing aspects, and pipeline construction plans for this purpose, which will join the Maghreb Europe Pipeline (GME).

But while the releases of Sound Energy are quite abundant, they come with the radio silence of the ONHYM and local authorities on the subject.

Several questions remain unanswered: What is the actual level of Morocco’s gas reserves, proven at this stage? How will the marketing be done through the GME? What are the necessary authorizations to transit through this one?

Upon contacting Sound Energy’s public relations, their answer is that Sound Energy can not communicate anymore on the subject, inviting Morocco World News to check their press releases.

Sound Energy may have communication restrictions as the firm is listed on the London Stock Exchange. A fact that sustain the possibility that Sound Energy may only be looking for announcing effects through its releases, to boost its stock market.

After James Parsons, CEO of Sound Energy announced that his company “could be sitting on a supergiant gas field in Morocco,” the price of Sound Energy shares soared instantly.

A source at ONHYM, speaking on condition of anonymity, told Morocco World News that the assessment of 9 trillion cubic feet is already a certainty.

However, “this assessment means the volume of gas at the indicated location. This does not necessarily mean reserves that can be extracted,” adds the source.

Currently, the study run by RPS Energy COnsultants Ltd confirms the findings of Sound Energy on the TE-5, TE-6 and TE-7 wells. MWN’s source explains that these first estimations are sufficient to support the Tahadart and Bni Mathar electric power units, which run on gas, and require one billion of cubic meter of gas per year.

“Sound Energy is currently carrying out the necessary evaluation tests to establish the economic feasibility of the production of the discovered reserves,” said the source.

Morocco World News also tried to reach Aziz Rebah, Minister of Energy to confirm whether these discoveries could sustain the construction of a USD 4.6 billion gas production unit, but to no avail.

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