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Rabat – The British energy transition company, Sound Energy, issued today a “notice to proceed” to the Italian contractor, Italfluid Geoenergy S.R.L., for the first phase of the onshore Tendrara gas treatment and liquefaction facility.
Italfluid Geoenergy is set to operate the liquified natural gas (LNG) plant on behalf of the English Sound Energy group and in partnership with Sinmarco, a Moroccan consulting firm. The Italian company secured a $25 million (MAD 226.7 million) investment for the production unit in March 2021.
The deal was signed one year after Sound Energy announced having secured full rights to carry out the Tendrara project following discussions with Morocco’s Ministry of Interior and Forestry Department representatives.
In a press release on Wednesday, Sound Energy reported that its Moroccan subsidiary, Sound Energy Morocco East Limited, has transferred an initial payment of MAD 46 million ($5 million) to Italfluid to advance the development of the LNG plant.
To finance the project, the British company signed a MAD 168 million ($18 million) loan note subscription agreement (LNSA) with Afriquia Gaz S.A on December 29, 2021. The 12 years bonding debt ensures the advancement of the Tendara gas plant.
With the completion of required documents, “the Project Contract is now in full force and effect,” Sound Energy stated.
Graham Lyon, Sound Energy’s Executive Chairman, commented on the occasion expressing his satisfaction with the work’s progress.
Read Also: Sound Energy Secures MAD 167 Million Loan for Tendrara Liquified Natural Gas
“We are delighted to have issued the Notice to Proceed to Italfluid and to have satisfied all conditions to give effectiveness to both the Project Contract and LNSA, which means that following receipt of the Initial Payment by Italfluid, the execution phase of our fully funded Phase 1 micro LNG development of the Tendrara Concession will be underway,” Lyon said.
He said that Sound Energy achieved a “key milestone” with this project, while stressing the need for the British company to continue cooperating with its “strategic partners, Italfluid and Afriquia Gaz, together with [its] joint venture partner, [Morocco’s National Office of Hydrocarbons and Mines] ONHYM.”
Preparing for the second phase of the Tendara plant, Sound Energy signed in November a gas sale and purchase agreement with Morocco’s National Office of Electricity and Drinking Water (ONEE).
As part of the 10 years binding agreement, the British company committed to producing, processing, and delivering gas from Tendrara to the Maghreb-Europe Gas Pipeline (MEG) with respect to the ONEE standards.
Annually, Tendara LGN plant will deliver a contractual volume of up to 350 million cubic meters of natural gas in addition to annual take-or-pay volume of 300 million cubic meters.
Since 1996, MEG has worked to meet European demand for natural gas and diversify the Spanish gas supply. The 400-kilometer high-pressure gas pipeline has annually transported more than 10 billion cubic meters from Hassi R’Mel, Algeria, to Spain and Portugal, passing through Morocco.
Yet the 25-year-old supply contract between the Spanish company Naturgy, the Algerian company Sonatrach, and Morocco’s Metragaz was terminated in October 2021 after Algeria declined to renew the contract amid diplomatic tensions with Morocco.
When the pipeline was fully operational, the Moroccan section of MEG provided annually an average of 30% of natural gas consumed in Spain and generated 17% of Moroccan electricity output, according to the Europe Maghreb Pipeline Limited website.
As a result, the closure of the pipeline led to a 21.2% drop in Spain’s natural gas supply in 2021. To compensate for the loss, Algeria increased its supply of LGN to Spain by 16.4% in the past year.
