Sound Energy has struck a second gas sales agreement in Morocco with the local power utility.
The Office National de l’Electricite et de l’Eau potable (ONEE) covers gas sales from Tendrara for 10 years.
The new agreement has a number of conditions. Sound must reach construction approvals, the authorities must approve a final investment decision (FID) and a deal reached with the GME operator. It must satisfy these conditions within 90 days, Sound said, although an extension may be possible.
The take or pay agreement sets a fixed price for the supply of 300 million cubic metres per year.
Sound’s executive chairman Graham Lyon said the agreement was “an important and long-awaited step which will allow the company to progress development planning for the proposed TE-5 Horst Phase 2 development. It also underpins the ongoing discussions with potential and identified funding partners.”
The company has seen potential support in vendor financing, equity financing and alternative lending.
“Satisfying the conditions precedent within a tight 90-day timetable is challenging, however all parties have expressed support to conclude with financiers,” Lyon said.
By truck and pipe
The Tendrara partners will produce, process and deliver gas to the Gazoduc Maghreb Europe (GME) pipeline. This runs from Algeria, via Morocco, to Spain.
This second phase agreement follows a conditional phase 1 micro LNG plan, with Afriquia Gaz.
At the beginning of the month, Sound said it had extended this first agreement until November 30. The parties must meet certain conditions, including a contract for an LNG facility and regulatory approval for LNG transportation.
Lyon, speaking on November 1, said that the company had made strong progress.
“We are confident that all conditions precedent to the LNG SPA will be satisfied and FID and the ‘Notice to Proceed’ with Phase 1 development can be announced and all contracts executed.”
The agreement with Afriquia set a floor price of $6 per mmBtu and a ceiling of $8 per mmBtu.