Major gas investments expected in Morocco

François-Guilhem Vaissier's picture
François-Guilhem Vaissier, Partner, White & Case LLP
Renaud Nething's picture
Renaud Nething, Associate, White & Case LLP
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To meet the growing demand for electricity and address specific issues arising from the significant expansion of renewable energy, the Kingdom of Morocco has decided to diversify its generation mix by increasing the use of liquefied natural gas (“LNG”) with an ambitious Gas to Power project.

A two-stage development plan:

The Kingdom of Morocco is currently supplied by Algerian gas as part of the compensation/royalty arrangements of the Maghreb-Europe gas pipeline.  However, the long-term gas supply agreements between Office National de l’Electricité et de l’Eau Potable the Moroccan public body in charge of electricity (“ONEE”) and the Algerian state-owned company Société Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures (“SONATRACH”) will expire by 2021.  While engaging in negotiations and talks to find alternatives for the future supply of liquefied natural gas with other countries, the Ministry of Energy, together with ONEE and major national operators, has decided to implement a LNG Development Plan for the period 2015-2025 and pursuing the following objectives:

  • To meet medium and long-term gas-fired electricity generation needs, as the Moroccan Ministry of Energy forecasts an increase of the annual gas consumption for power generation, from 0.9 BCM in 2014 to 3.5 BCM in 2025
  • To secure a future gas supply for the existing facilities of Tahaddart CCGT (358MW) and Aïn Beni Mathar ISCC (470MW); and
  • To develop a downstream gas market

The roadmap for the implementation of the LNG Development Plan comprises two stages.  First, the “Gas to Power” stage plans to satisfy the need for additional electricity generation and to provide for the construction of key gas and electricity infrastructures.  Second, the “Gas to Industry” stage ambitions to develop the use of natural gas in the Moroccan industrial sector and the adoption of a Gas Code.

The Gas to Power Project:

The Gas to Power project is estimated to amount to around USD 4.6 billion. It should be developed as a “single package” project, with the following sub-components: 

  • A maritime jetty located north of the existing port of Jorf Lasfar, for the reception and unloading of LNG tankers, which will include an onshore LNG regasification unit with a total capacity of 5 billion Nm3 and LNG storage tanks
  • Over 400 km of gas pipelines, to connect the LNG terminal to the existing Maghreb-Europe pipeline and to deliver natural gas to the proposed CCGTs
  • Two combined cycle gas turbine power plants with a combined capacity of 2400MW located in Jorf Lasfar and Dhar Doum

The technical consultant, financial adviser and legal adviser have already been selected by ONEE for the Gas to Power project.  The three steps selection process of the developer of the Gas to Power project is ongoing.  An international call for expression of interest has been issued on 28 December 2015 and 93 interest files were received by ONEE.  A pre-qualification tender will now be issued to shortlist pre-qualified companies and the developer of the Gas to Power project will be selected among them.

As of today, the Gas to Power project has been delayed for several months and concurrently, little details have been made available by ONEE regarding the structure of the project and its contractual framework. However, despite this delay, the Gas to Power project remains strongly supported by the public side. This being clarified, the project remains the first of its kind in Morocco. As a consequence, it will for sure raise major challenges and debated issues, such as LNG sourcing, tariff structure and scope of the Kingdom’s support.

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