Sound strikes second gas deal in Morocco
London-listed Sound Energy announced on November 30 it had entered into a binding deal to sell gas from the second stage of its Tendrara project in Morocco to local state-owned power company ONEE.
Sound reached a 1o-year agreement in late July to sell LNG from a micro-sale liquefaction plant it plans to build at the Tendrara concession under the project's first phase. The second stage is much larger in scale, and will involve connecting the concession with the Gazoduc Maghreb Europe (GME) pipeline 120 km away which runs to Spain.
Under the deal, Sound and its state-owned partner ONHYM have committed to delivering 350mn m3/year of gas to the GME pipeline over 10 years. The take-or-pay requirement is set at 300mn m3/yr.
The contract is conditional on Sound and ONHYM securing necessary authorisations and permits for Tendrara's second stage of development, as well as taking a final investment decision on the project. The partners must also sign an interconnection agreement with the GME pipeline's operators.
These conditions must all be satisfied within 90 days, according to the deal, although an extension is possible if both sides agree to it.
Commenting, Sound chairman Graham Lyon said the agreement underpinned its ongoing talks with potential funding partners for the Tendrara project.
"These potential partners have expressed strong interest in participating in the proposed regional infrastructure and asset development via vendor financing, equity participation and alternate lending solutions, in order to build the long-term domestic infrastructure and gas supply in and for Morocco," he said. "Satisfying the conditions precedent within a tight 90-day timetable is challenging, however all parties have expressed support to conclude with financiers."
The GME pipeline is used to carry Algerian gas to Spain via Morocco. But supplies were halted in late October after a long-term transit deal expired without renewal. The two north African countries have been locked in a bitter dispute over control of the Western Sahara region for decades, and a recent flare-up in tensions led Algeria to sever political ties with Morocco in late August.