Join on WhatsApp
Join on Telegram
Rabat – British company Sound Energy announced today that it has “entered into a binding gas sales and purchase” agreement with Morocco’s Electricity and Water Office (ONEE) to revive the Maghreb Europe Gas Pipeline.
Under the agreement, the company will supply the pipeline with gas for a period of ten years.
Sound Energy owns the Tendrara gas concession in eastern Morocco.
The company’s deal with ONEE comes just weeks after Algeria’s decision to terminate the contract of the Maghreb Europe Gas Pipeline, citing “hostile acts” from Morocco.
The regional gas pipeline had been supplying Spain with gas from Algeria through Morocco since 1996, but Algeria ended its contract amid tensions with Morocco and reports of considerable drops in its gas production capacities.
“Sound Energy, the Moroccan focused upstream gas company, is delighted to announce that it has entered into a binding gas sale and purchase agreement (the ‘GSA’) in respect of the Phase 2 development of the Tendrara Production Concession with Morocco’s state-owned power Company ONEE (Office National de l’Electricite et de l’Eau potable) for the sale of natural gas from the Tendrara Concession in Eastern Morocco over a 10 year period,” Sound Energy said in a statement today.
The company and its partners emphasized commitment to the processing and delivery of gas to the Maghreb Europe Gas Pipeline from the Tendrara production concession, in accordance with the specifications required by ONEE.
According to Sound Energy, the gas pipeline includes a fixed unitary price for the annual volume of “0.3 bcm per annum (approximately 29.0 MMscf/d or a minimum amount of energy of approximatively 10.5 million MMbtu per annum to be delivered at the point of sale).”
The numbers will result in annual gross revenues attributable to the Tendrara concession (100%), it said. These estimations meet the forecasts in the original binding memorandum of understanding between ONEE and Sound Energy, which the company announced on October 30, 2019.
Sound Energy said it has put in place all conditions to meet the requirements of the project.
It expressed satisfaction with securing the deal with ONEE, describing it as important.
Graham Lyon, Sound Energy’s Executive Chairman, said the agreement is a “long-awaited step” that will allow his company to further its development in Morocco.
“It also underpins the ongoing discussions with potential and identified funding partners,” he added. “These potential partners have expressed strong interest in participation in the proposed regional infrastructure and asset development via vendor financing, equity participation and alternate lending solutions, in order to build the long-term domestic infrastructure and gas supply in and for Morocco.”
While it is challenging to meet the conditions of the deal in a tight 90-day timetable, “all parties have expressed support to conclude with financiers,” Lyon said.
He also emphasized importance of cooperation between Morocco, saying the company is delighted that their partnership is working well.
“Such a business partnership can enhance, with the strong support of our shareholders and our local partners, the expected 5.7% economic growth of the Kingdom of Morocco despite the COVID-19 pandemic,” Lyon added.
