Gas: The potential of British juniors in Morocco highlighted by the Wall Street Journal

SDX Energy facilities in the Gharb. DAVID RODRIGUES / THE DESK

The financial news bible highlights the growing interest of British juniors currently with plans to develop Morocco’s gas wealth: London-listed companies SDX Energy, Sound Energy, Chariot Ltd and Predator Oil & Gas Holdings

As its domestic demand for gas increases, Morocco aims to increase its production while reducing its dependence on coal-fired electricity, offering tax breaks to exploration companies, recalls the Wall Street Journal.

The financial news bible highlights the growing interest of British juniors who currently have plans to develop Morocco’s gas wealth

Potentially, part of this production could supply the Old Continent via the Gazoduc Maghreb-Europe (GME) gas pipeline, which crosses Morocco and the Mediterranean to Spain, speculates WSJ, which evokes the possibility of using the infrastructure dedicated to the base for the transport of Algerian gas dried up by unilateral decision of the eastern neighbor.

The promising deposits of Chariot, SDX, Predator and Sound. DR

“Today, Morocco is far from being a major player in the gas market. It consumes around 30 billion cubic feet of standard gas per year, compared to 1,000 billion cubic feet in Spain,” note the WSJ. In addition, the country must import most of the gas it uses, as current production is minimal. About 70% of national production is produced by SDX Energy PLC, the only international company currently producing gas in the country.

Crédit : SDX Energy

But London-listed companies Sound Energy PLC, Chariot Ltd and Predator Oil & Gas Holdings PLC (which published a favorable reassessment of its onshore facilities at Guercif on Thursday), intend to significantly increase gas production from the Morocco, to meet domestic demand and potentially export the surplus to Europe, adds the same source. The American oil major ConocoPhillips also recently landed in Morocco to carry out hydrocarbon exploration activities there.

“The kingdom offers very favorable tax conditions for businesses, including a 10-year tax holiday, and its domestic market is expected to grow, boosted by industrial energy consumption. In addition, it aims to replace coal-fired power generation with gas-fired power plants to reduce carbon emissions,” explains the newspaper.

In the summer of 2021, the Moroccan government indeed unveiled a national roadmap for the development of the country’s gas market, which assumes that domestic demand will triple by 2040.

“Natural gas being a clean fossil energy, it is well suited to be used as a lever for Morocco’s energy transition”, the government said. Although it still emits pollutants, natural gas generates fewer carbon emissions than coal.

As part of this roadmap, Rabat presented new regulations for the downstream gas sector and announced plans to deploy additional gas transport and storage infrastructure, dont the FSRU of Mohammedia.

“Morocco is hungry for energy. Industrial needs increase considerably Chariot Chief Executive Adonis Poroulis told Dow Jones Newswires.

Chariot owns the Anchois gas field, located off the west coast of Morocco (at Larache/Lixus where drilling via a new platform has recently started). The field was discovered by Repsol SA in 2009. Now, with dramatically higher gas prices, Chariot is pushing to make Anchois the first offshore gas development in the country.

Stena Drilling’s Stena Don platform mobilized at Lixus Offshore. DR

Monday, the company announced that an appraisal well at Anchois had confirmed the presence “significant accumulations of gas”, including new discoveries, pushing Chariot shares up 44%.

Chariot said it plans to develop Anchois to produce more than 25 billion cubic feet of gas per year from the end of 2024. The project would require capital expenditure of around $300 million, and the company has already concluded a 20-year sales contract for 15 billion cubic feet per year.

“We can sell the product locally, whether for electricity or for industry. And any excess gas we can vent to the GME pipeline and send it under the Mediterranean in Spain,” said to WSJ, Poroulis.

The GME Gas Pipeline can transport more than 400 billion cubic feet of gas per year. The pipeline has been shut down since November 1, but that could change in the future if Morocco develops enough gas fields.

“The fact that Anchois is located very close to Spain and Europe, and that you already have an existing pipeline that goes under the Mediterranean in Spain, is very advantageous for us”, Poroulis said.

Sound Energy also intends to capitalize on this existing infrastructure to transport gas from its Tendrara project in the east of the country.

Sound Energy’s operating areas. Infographics: Mohamed Drissi Kamili / Le Desk.

First, Sound plans to develop a small liquefied natural gas project to transport fuel by road, thereby unlocking cash flow. The company has already signed a sales agreement for up to 3.5 billion cubic feet of LNG per year with Afriquia Gaz SA.

The second phase of Tendrara’s development is larger and involves the construction of a gas pipeline with a capacity of 24 billion cubic feet per year to connect the wells to the GME gas pipeline, which extends 120 kilometers to the north. This phase of the project is estimated at approximately $250 million.

Sound Energy’s main borehole at Tendrara in eastern Morocco. Archive The Desk

In November, shares of Sound rose after announcing a 10-year sales contract with ONEE for up to 12 billion cubic feet of gas per year.

“What we envision at Tendrara is to be the pillar of the energy transition that Morocco is promoting at the moment,” Sound President Graham Lyon told Dow Jones Newswires. “I would expect gas to be produced at the end of 2023,” he blurted out.

Sound is also working to complete a financial package for the second phase of the project this year. This could allow production to start towards the end of 2024, with streams flowing through the GME pipeline.

“We are very enthusiastic about the idea of ​​working in Morocco. There is a great demand and there is a great need for energy production,” concluded Lyon.

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