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Morocco gas and fertiliser project activity surges

13 July 2023

> Maghreb energy project activity doubles
> Morocco fertiliser project progresses towards approval
> Morocco fertiliser company plans four solar plants
> Nigeria to invest $12.5bn in Morocco pipeline
> Genel in talks to develop Moroccan oil assets
> Design completed for Moroccan gas project

 

Over the past three years, Morocco has seen a surge in early-stage gas and chemical project activity that could potentially be worth multibillion dollars.

The country is taking advantage of its proximity to Europe and demand for fertilisers as well as its potential to benefit as a possible transit route for natural gas.

At the same time, it is advancing exploration and production projects for natural gas that may pay dividends over the long term.

While many of the projects are in their early stages, and some of the largest projects are highly speculative, it is likely that some will ultimately see contracts awarded over the coming years.

Nigeria pipeline

The planned $25bn Nigeria-Morocco gas pipeline is currently the biggest project in Morocco’s gas sector and is also one of the most speculative.

As the project spans 13 countries, it is complicated and will need cooperation between all of the nations involved to succeed.

Despite the challenges, there has been significant progress on the project.

In April, Nigeria’s National Petroleum Company (NNPC) said it was preparing to invest $12.5bn to secure a 50 per cent equity stake in the project.

At the time, Mallam Mele Kyari, group CEO of NNPC, said the first phase of the front-end engineering and design (feed) work had been completed, and the second phase of the feed work was under way.

Earlier this month, NNPC tendered contracts to carry out survey work for pipeline sections with a bid deadline of 20 September this year.

Morocco will host 1,672 kilometres of the pipeline. The country’s head of state, King Mohammed VI, has described it as a strategic turning point that will significantly advance the development of West Africa. The project will extend for 5,600km in total.

The 13 countries involved in the project signed a memorandum of understanding (MoU) with Morocco’s National Office of Hydrocarbons & Mines in December 2022.

Regasification

Other midstream gas projects active in Morocco include two liquefied natural gas (LNG) regasification terminals.

One of these was first announced in 2021 after Algeria shut down a gas pipeline between the two countries.

The client on this project is Morocco’s Ministry of Energy & Mining, and the terminal is due to be developed near the capital city of Rabat.

It is part of a gas-to-power project, and the entire project is estimated to have a value of $1.3bn.

Contractors have submitted bids on this project, but contracts are yet to be awarded.

The second regasification terminal has an estimated value of $200m and is due to be located in Morocco’s Mohammedia Port.

This project is also being developed by Morocco’s Ministry of Energy & Mining and was first announced in 2021.

Like the project slated to be developed near Rabat, bids have been submitted, but contracts are yet to be awarded.

Upstream

Although Morocco continues to be a net gas importer, there has been progress on upstream gas projects within the country since 2021.

In December last year, the Anchois project offshore Morocco took a step forward after London-based Chariot agreed the key principles of a gas sales deal.

Anchois hosts about 1.5 trillion cubic feet of potential gas resources and is being developed via subsea wells tied back direct to an onshore gas processing plant.

Chariot said that, together with its field partner, state-owned ONHYM, it had agreed key principles for long-term gas sales from Anchois with Morocco’s National Office of Electricity & Drinking Water (Onee).

These principles included gas sales of up to 600 million cubic metres a year on a take-or-pay basis for a minimum of 10 years, with gas to be delivered via the Maghreb-Europe gas pipeline.

Earlier this month, another London-listed oil company, Sound Energy, secured funding to execute the second development phase of the company’s Tendrara production concession in Morocco.

The company confirmed the funding arrangement in a statement and said it has “now received a conditioned offer from the arranger for a maximum financing of $237m”, subject to certain conditions being met by September 2023.

Morocco’s Attijariwafa Bank will finance the gas field’s second development phase.

Sound Energy said that the financial facility will be used for the “design, drilling, construction and operation of wells, a treatment facility and a gas pipeline to transport and sell the natural gas produced under the Tendrara production concession”.

The Tendrara gas development project has a total estimated value of $1bn.

Additionally, in December last year, the Israeli independent oil and gas company NewMed Energy struck a controversial deal to take a stake in an exploration licence offshore the disputed territory of Western Sahara.

Morocco currently controls Western Sahara, although the African Union and United Nations do not recognise Rabat’s sovereignty, while the indigenous Saharawi people are fighting for independence.

NewMed Energy signed an agreement with the Moroccan Ministry for Energy & Mining and Adarco Energy to explore and produce natural gas in the offshore Boujdour Atlantique block.

NewMed and Adarco will each have a 37.5 per cent stake in the licence partnership, while the Moroccan ministry will hold the remaining 25 per cent. The licence has been granted for eight years.

The Boujdour Atlantique block was previously operated by US oil company Kosmos Energy, which held a 55 per cent stake in the permit, while its partner UK company Capricorn – a subsidiary of Cairn Energy – had 20 per cent.

The remaining 25 per cent was in the hands of ONHYM.

Fertilisers

Morocco has seen an uptick in activity in ammonia and fertiliser projects in the wake of the Russia-Ukraine war.

In June 2022, the Moroccan phosphate giant OCP announced that its net income had more than doubled compared to the previous year, mostly attributed to the rise in fertiliser prices due to the war between Russia and Ukraine.

Morocco is among the world's top four exporters of fertiliser products, after Russia, China and Canada.

It has a large fertiliser industry, mainly due to its large phosphate reserves, one of the key minerals from which fertilisers are produced.

In January, OCP announced that it had signed supply agreements with India for 1.7 million tonnes of phosphate-based fertilisers in 2023.

Under the deals, OCP will supply India with 700,000 tonnes of a nitrogen-free fertiliser known as triple super phosphate (TSP), in addition to 1 million tonnes of diammonium phosphate (DAP).

One Moroccan fertiliser project that is seeing progress is the Khemisset potash project in the north of the country.

In April, Emmerson, the company developing the project, said it was progressing towards final approval for the project’s environmental permit.

The potash project is anticipated to have a pre-production cost of $387m. It is expected to be able to produce, on average, 810,000 tonnes of muriate of potash (MOP), with a potassium content of 60 per cent, every year over the mine’s first 19 years of production.

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Wil Crisp

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