Rabat – Morocco’s Liquified Natural Gas (LNG) imports have grown at an exponential rate since June 2022, reaching 536 Gigawatt hours (GWh) gas output in January 2023, according to Spanish media.
Morocco switched to LNG imports in 2022 to ensure its energy security, following Algeria’s October 2021 decision to halt gas exports to Europe through the Maghreb–Europe Gas Pipeline that flows through Morocco to Spain.
Algeria’s decision was part of its one-sided hostility toward Morocco and its decision to sever diplomatic ties with the North African kingdom.
In February 2022, Morocco announced venturing into the LNG market despite the higher cost of importing LNG.
Liquified gas comes at a higher price as it requires special infrastructure to compress gas into liquid for easy and cheap cargo transport, and it requires special infrastructure in the receiving country to regasify.
Given that Morocco does not have the necessary infrastructure to regasify LNG, the country struck a deal with Spain to treat the LNG in Spanish facilities and send it back to Morocco through the Maghreb–Europe Gas Pipeline in the reserve direction.
Despite the high cost of importing LNG, Morocco’s Minister has maintained that it is worth the price. Ensuring Morocco’s energy security is “worth the premium,” he said.
With the new flow of gas from Spain, Morocco was able to reopen two of its largest electricity-generating centers in Tahaddart and in Ain Beni Mathar.
While turning to LNG solved Morocco’s energy security issue, the high bill of gas will weigh down on the country’s trade deficit, as gas and electricity are heavily subsidized commodities.
In 2022, Morocco’s gas subsidies reached unprecedented high levels, with the state subsidies fund covering 74% of the original price for a unit of a gas bottle, amounting to MAD 116 ($12.8).
Gas subsidies at the end of 2022 reached a staggering MAD 22 billion ($2.1 billion), up from a projected MAD 9.2 billion ($965.9 million).
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