The arrival of financing agreements such as this one is a natural consequence of the close relationship between Rabat and London. Morocco's gas capacity is booming. Aware of this, Attijariwafa Bank decided to support the natural gas production project proposed by the British energy giant Sound Energy.
The Tendrara region in the east of the country will therefore see its gas infrastructure strengthened. The completion of the project will bring unparalleled economic growth to the region with the creation of many jobs and increased investment in the area.
According to a press release issued by the UK company, the funds will be used to complete the drilling and operation of wells and the construction of a pipeline to transport the planned natural gas to the buyer, the State National Electricity and Drinking Water Board.
"This financing is the largest of its kind for the development of a gas field in Morocco," Graham Lyon, chief executive of the London Stock Exchange-listed company.
The effect of the investment was soon felt. On Wednesday morning in London, Sound Energy shares rose 6.2% to 1.49 pence per share in response to the news before reversing some of its gains. On 23 June last year, the company began talks with the Moroccan bank to raise this funding. The investment will be repaid over 12 years with a grace period of two years from the date the policy is taken out, after which all services will be available.
The Tendrara region's reserves are the largest natural gas discovery in the Kingdom, with estimates of around 377 billion cubic feet, according to information on the company's website. Sound Energy owns the largest area for hydrocarbon exploration in Morocco, totalling 28,000 square kilometres.
Currently, the country produces 100 million cubic metres of natural gas per year, which represents 10% of the 1 billion cubic metres of annual consumption, which is covered by the international market.
The Maghreb-Europe pipeline is a gas pipeline that connects Spain with Morocco and allowed Morocco to import a significant amount of natural gas from Algeria. However, the Kingdom resorted to the reverse exploitation of the section of the pipeline located in its territory to obtain liquefied natural gas from the European market through Spain after the expiry of the contract signed with Algeria in October 2021, after the Algerian country broke diplomatic relations with the Moroccan kingdom.
In an interview with Economy of the East, the Moroccan Minister of Energy Transition and Sustainable Development, Leila Benali, indicated that the country's natural gas production would increase by 300 million cubic metres as a result of the discoveries that are being developed. In the coming years, the Moroccan government forecasts that natural gas production could reach 400 million cubic metres, or 40% of the country's energy needs, thanks to the development of the Tendrara and Larache regions.
"These agreements are part of the State's plan for its energy transition, which aims to reach 52% of the country's electricity production capacity from renewable energy by 2030", Leila Benali
In order to ensure a more stable local power system, electricity and energy-intensive industries, Morocco is committed to increasing production and creating the necessary infrastructure to secure gas supplies from abroad. This will help counter fluctuations in energy production from renewable sources.