The African-funded gas company, Sound Energy, has hit all the targets required to make its LNG gas sales agreement unconditional, however, it faced challenges in achieving the required steps. As a result, the deadline for the long-standing suspension was pushed back and in its latest extension, the deadline was set for December 31.
Sound announced a secured loan agreement with Afriquia Gaz for $18 million. The 6% loan matures in December 2033.
In return for the loan, the company has pledged its shares in Sound Energy Meridja. Sound will have access to the cash in full or in tranches over three years, starting December 24, 2021.
“We are delighted to have executed all loan note documentation, which ensures that Sound Energy will be fully funded for its share of Phase 1 development capital,” said Sound’s executive chairman Graham Lyon.
“This is a key milestone for the company and we will now move to issue the Notice to Proceed to Italfluid and drawdown initial funding from the Afriquia Gaz loan in order to proceed with execution of the Phase 1 development,” Lyon specified.
LNG will supply about 100 million cubic meters per year under the LNG agreement.
Sound now needs to sign a project agreement with Italfluid Geoenergy to build a processing and liquefaction facility. To be able to draw down the loan, Italfluid must also receive notice that it intends to proceed.
As part of the second phase of development, a gas sale agreement will be negotiated with Morocco’s National Office of Electricity and Drinking Water (ONEE).
The agreement with ONEE would result in volumes of gas of up to 350 mcm per year being transported through the gas pipeline, Gazoduc Maghreb Europe (GME).
On November 30, the company signed the contract with ONEE. Sound has 90 days to meet all the conditions before the end of February. Lyon described this as “challenging” but stated that “all parties are in favor of reaching an agreement with financiers.”
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