Sound Energy Secures $237 Million Financing from Attijariwafa Bank for Morocco Gas Concession

Rabat – British energy firm Sound Energy has received an offer from Morocco’s largest banking group, Attijariwafa Bank, to finance the second phase of its Tendrara production concession project in Morocco.

The offer entails a maximum financing amount of $237 million, subject to certain conditions being met by September 2023, according to Sound Energy’s press release.

The agreement with Attijariwafa Bank stipulates that the bank will arrange a long-term project senior debt facility of up to MAD 2.25 billion ($237 million) with a term not exceeding 12 years.

The loan will be utilized for various purposes, including wells’ design, drilling, construction, and operation, as well as the establishment of a treatment facility and a gas pipeline to transport and sell natural gas produced under the Tendrara Production Concession to Morocco’s National Office of Electricity and Drinking Water (ONEE).

The financing package consists of a 12-year term with a two-year grace period from the first drawdown, along with customary security measures.

However, the loan approval is contingent upon several conditions being fulfilled, such as obtaining approval from Moroccan governmental and ministerial authorities, tax authority clearance for the loan structure, amendment of the gas sales agreement to the lender’s satisfaction, and the conclusion of pipeline interconnection agreements to the lender’s satisfaction.

Graham Lyon, the Executive Chairman of Sound Energy, expressed his satisfaction with the conditioned offer from Attijariwafa Bank, stating that the majority of the conditions were expected and the company had been working towards meeting them for some time.

Lyon emphasized the significance of this financing agreement, as it represents the first of its size for a gas field development in Morocco. He also hinted at future announcements regarding the progress of the project.

“We look forward to working with the Arranger to conclude on what will be the first financing of its size for a gas field development in Morocco, and further announcements will be made, as appropriate, in due course,” Lyon said.

The negotiations for gas drilling financing between Sound Energy and Attijariwafa Bank began in June 2022, and after several extensions, the parties have now finalized the agreement.

Sound Energy is a UK-based company that specializes in the exploration, production, and development of natural gas resources.

Morocco entered into a gas supply agreement with Sound Energy after the Algerian government decided to terminate the Maghreb Europe pipeline that supplied Spain with Algerian gas through Morocco. The move came after Algeria severed diplomatic ties with Morocco in August 2021, citing alleged “hostility” from Rabat.

The deal will see Sound Energy supply the pipeline with gas, ensuring the continuity of energy supply to Spain. Under the revival deal, Sound Energy will supply the pipeline with gas for a period of 10 years.

Sound Energy currently holds a 75% interest in the gas drilling permit, while Morocco’s National Bureau for Hydrocarbons and Minerals (ONHYM) holds the remaining 25% interest.