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:
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:
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.
Would you like to hear more on emerging gas markets and the latest developments? Register now for the 2018 Gastech Exhibition and Conference taking place in Barcelona 17-20 September to hear incredible insights from industry experts.
Image courtesy of Getty Images
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.