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‘Encouraging’ signs for UK firm’s $206m Moroccan gas deal

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The companies can negotiate the binding terms of the financing agreement by December 15
  • Sound Energy will supply Morocco’s ONEE with natural gas for a decade
  • It’s also seeking $60m from co-investors for Tendara Phase 2
  • Demand for natural gas is forecast to more than triple by 2040

British firm Sound Energy has announced that it is extending negotiations with Morocco’s largest bank over a $206 million deal for the Grand Tendrara and Anoual exploration permits.

The London-headquartered company, which has a wholly owned subsidiary in Morocco, has until December 15 this year to agree terms of a financing agreement with Attijariwafa Bank.

In order to reach a binding term sheet by that date, the bank needs independent legal and technical specialists to confirm the data set that negotiations are based upon.

Graham Lyon, chairman of Sound Energy, told AGBI: “Attijariwafa Bank has engaged international standard specialists to conduct certain due diligence.

“This is encouraging and we are happy to provide all documentation required.”

The talks over exploration permits for Phase 1 will be followed up by Phase 2 of the deal, production concessions for Tendrara gas field, which is expected to cost $330m.

Under an agreement between Sound Energy and Morocco’s National Office of Hydrocarbons and Mines (ONHYM), Sound Energy will supply Morocco’s state energy firm ONEE with natural gas from Tendrara, in east of the the country, for a decade.

Garry Dempster, chief financial officer of Sound Energy, said: “Alongside the company continuing to make good progress on executing the Tendrara Phase 1 gas development, I am pleased with the progress that the company is making in advancing project funding for the proposed Tendrara Phase 2.

“Strategically, for Sound Energy, its licence partner ONHYM and for Morocco this is a critical project that will propel the company’s future growth, along with forming a key pillar of Morocco’s energy strategy centred around the energy transition.”

The company is also seeking out $60m from co-investors to fund the expected balance of Phase 2 development, exploration and appraisal costs.

Dempster said he was encouraged by the strong level of interest in the ongoing farm-out process, from “well-established and notable industry players”.

“This is testimony not just to the increased appetite for investment in well-positioned gas portfolios such as ours but to the quality of the underlying opportunity upon which Sound Energy’s strategy is centred.”

The company has already struck a deal with Italian firm Italfluid Geoenergy to operate Tendrara’s gas treatment and liquefaction facility on its behalf, in partnership with Sinmarco, a Moroccan consulting firm.

A number of other natural gas exploration and exploitation projects are currently underway in Morocco, including the Anchois Gas Development Project, in which British company Chariot and Morocco’s ONHYM hold a 75 percent and 25 percent share respectively.

Imported fossil fuels including refined oil, gas and coal currently provide over 90 percent of Morocco’s energy needs, but the government plans to increase its domestic natural gas production.

Its Ministry of Energy estimates that demand for natural gas will more than triple from around 1 billion today to 3 billion cubic metres by 2040.

Morocco also plans to increase its renewable energy target to over 52 percent of the energy mix by 2025.

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