Sound Energy, the London-listed energy company, signed a 10-year deal with the Kingdom’s state-owned power company ONEE for the sale and purchase of gas from its Tendrara concession in Morocco, announced the British company late on Tuesday.
“The Tendrara JV Partners have conditionally committed to producing, processing and delivering gas from the Tendrara Production Concession, in accordance with required ONEE gas specifications, to the Gas Maghreb-Europe pipeline connecting Algeria to Spain and crossing Morocco for an annual contractual volume up to 350 million cubic meters of natural gas per year for a period of 10 years, with an annual take or pay volume of 300 million cubic meters,” said Sound Energy in a published statement.
The company’s deal with ONEE comes just weeks after Algeria’s decision to end the contract of the Maghreb Europe Gas Pipeline due to Morocco’s “hostile acts.”
The pipeline had been supplying Spain with gas from Algeria through Morocco since 1996.
The deal includes a fixed unitary price for the annual volume of 0.3 business continuity management (BCM) per annum which will result in annual gross revenues attributable to the Tendrara concession (100%) as envisaged in the original binding memorandum of understanding between the parties announced by the Company on 30 October 2019.
Sound signed in late 2019 a memorandum of understanding to supply 300 million m3 of gas to ONEE from Tendrara, enough to meet around one-third of its gas needs.
Executive Chairman Graham Lyon said the gas sales agreement allows the company to progress with the development of the project and underpins discussions with funding partners.
“We are delighted with this confirmation that the UK-Morocco, ONHYM, and Sound Energy partnership is working well, and such a business partnership can enhance, with the strong support of our shareholders and our local partners, the expected 5.7% economic growth of the Kingdom of Morocco despite the COVID-19 pandemic,” he added.
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