Sound Energy’s gross revenues for the first year are expected to reach $84 million.
Rabat – The Moroccan National Office of Electricity and Drinking Water (ONEE) signed a memorandum of understanding (MoU) with British oil and gas firm Sound Energy Limited on Tuesday, October 29.
The MoU is related to the sale of natural gas from the Tendrara concession in Eastern Morocco, says a statement from the Ministry of Energy, Mines and Environment.
Sound Energy has a 25-year-exploitation-term in Tendrara, in Morocco’s Figuig Province. The company has been drilling for natural gas since September 6, 2018.
Through the agreement, the two entities discussed the main conditions of Sound Energy’s contract for the sale of natural gas to ONEE for its power plants.
The two parties are still negotiating a detailed gas sales agreement, but Sound Energy has said that there is already a binding agreement in place and that the ongoing talks will incorporate the MOU. Their aim is to reach a final agreement by the end of the year.
“The agreement covers the first 0.5 billion cubic meters (bcm) per annum – approximately 48.4 million cubic feet per day (cf/d) – from Tendrara with payment for any production above this to be part of the final gas sales agreement,” said Sound Energy in a statement.
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Sound will also get a fixed price for a minimum annual volume of 0.3 bcm for each year (approximately 29 million standard cubic feet per day {MMscf/d}).
In the first year, Sound Energy is projecting gross revenues of $84 million with the fixed price element designed to give more certainty when it comes to arranging the funding needed for the hook-up infrastructure.
“Under the MOU the parties have agreed to use their reasonable endeavors to continue negotiations with a view to entering into a binding GSA, incorporating the key terms of the MOU and construed under Moroccan law, prior to the end of the calendar year 2019,” Sound Energy added.
The MOU stipulates a 10-year initial term commencing on the date of signature of GSA, and automatically renewable for further periods of five years thereafter, unless terminated by one of the parties with one year’s notice.
The communiqué noted that ONEE is the reference operator in the field of planning and development of electricity. ONEE aims to diversify the sources of electricity production as part of the national electricity mix, making it possible to increase the integration capacity of renewable energy.
On August 17, 2018, Sound Energy and the Head of Government signed the Tendrara operating concession.
