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Rabat – Shell has entered into a 12-year agreement to provide the country with 0.5 billion cubic meters (bcm) of liquefied natural gas (LNG) annually.
The deal was signed by the National Electricity and Drinking Water Office (ONEE) and Shell and it aims to support Morocco’s energy needs and diversify its energy sources, according to a statement from the Energy Ministry.
While not disclosing financial details, the agreement signifies a long-term commitment between the two parties, the statement explains.
Under the deal, the LNG will be transported from Spanish ports through a gas pipeline that connects Spain and Morocco. The arrangement will continue until Morocco constructs its own LNG terminals, as outlined by the country’s Ministry of Energy.
The supplied LNG will enable ONEE to operate two power stations in northern and eastern Morocco that previously relied on Algerian gas transported through the same pipeline.
Commenting on the news, Leila Benali, Minister of Energy Transition and Sustainable Development, said: “Morocco entered the international LNG market for the first time in 2022, thanks to consistent cooperation and trust with our neighbors.”
Benali added that the medium-term supply contract will increase Morocco’s energy security, “enhance energy affordability and pave the way for a more ambitious decarbonization strategy.”
For his part, Abderrahim El Hafidi, Director General of ONEE, stated: “After completing several LNG purchases on the spot market in 2022, we are delighted today with the execution of this agreement, which is ONEE’s first medium-term LNG purchase contract on the international market.”
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The agreement will enable Morocco to meet part of its needs and guarantee the supply of natural gas to its power stations. “Natural gas is now a major component of our electricity mix because it offers the flexibility needed to offset the massive introduction of renewable energies into our electricity system,” El Hafidi added.
Mehdi Chennoufi, Head of Global Origination, Shell LNG Marketing and Trading, stated: “We are delighted to work with ONEE and supply LNG to the Kingdom of Morocco to help meet the country’s demand for gas. LNG offers a flexible and reliable source of energy and has a crucial role to play in the energy transition.”
In 2021, Algeria unilaterally decided to halt gas flows to Spain via Morocco, prompting Rabat to seek alternative solutions.
The importation of LNG from Spanish terminals was identified as the viable alternative, and the new agreement with Shell will enable Morocco to meet its energy requirements effectively.
ONEE aims to increase the share of gas in Morocco’s electricity mix as part of its efforts to achieve low-carbon goals. Official figures indicate that renewables accounted for 18% of the country’s total electricity production last year, with gas representing only 1.6% and coal accounting for 72%.
By March 2023, however, Morocco had already reached a milestone with renewables constituting 40% of the country’s installed capacity. The country’s ambitious target is to increase this share to 52% by 2030.
