Officially, Morocco’s much-anticipated LNG import scheme remains a key element in the next decade’s energy mix, but the project is likely to disappoint most of the potential suppliers and contractors who lined up to participate during earlier iterations, writes Jon Marks
Ever keen to put a positive spin on developments, the Moroccan government is planning to create a national gas logistics company to make the state a key stakeholder in a new gas sector strategy, which is now planned for introduction “before 2030”. Energy, mines and sustainable development minister Abdelaziz Rabbah told Casablanca business monthly Economie Entreprises that this would promote public-private partnerships (PPPs) in major gas sector developments, adding that tenders were being prepared for advisers to draw up an appropriate PPP platform.
However, the timetable set out by Rabbah effectively further delays and scales down the much-anticipated integrated liquefied natural gas (LNG) scheme, whose original timetable envisaged imports of 5bcm/yr (at one stage increased to 10bcm/yr) from 2021-22 (AE 360/6, 366/1). It leaves open the prospect of a more pragmatic project, possibly based on floating regasification and storage units (FRSUs) rather than a conventional fixed terminal – although this outcome has yet to receive any official sanction.
Rabbah indicated that amounts to be imported to fill a gap in supply in 2028-29 were likely to be less than originally planned, due to successful efforts to control demand and substantially increase the amount of solar and wind in the next decade’s energy mix. He made no mention of potential increases in natural gas output from Sound Energy’s Tendrara-Meridja Basin project (AE 371/12) and other schemes. However, Sound said in early March that it was continuing talks with the energy ministry on a gas sales agreement for the Tendrara production concession. A reserves estimate completed in January 2018 estimates Tendrara contains mid-case resources of 18bcm of unrisked gas originally in place.
The minister was insistent that the gas import terminal at Jorf Lasfar will be built and “we will have in 2028 at the latest our LNG platform”. The initial gas pipeline system will run through the industrial region around Jorf Lasfar, Kenitra and Casablanca. Building the rest of the pipeline system, as set out in the plan, should probably only happen once there is proven demand. If LNG is required for the 384MW Tahaddart independent power plant, the pipeline will be extended to run into the existing Maghreb-Europe Gas Pipeline (GME). “The logistics are going to follow demand and utilisation,” Rabbah said.
Rabbah is one of the most prominent ministers of the Islamist Parti de la Justice et du Dévéloppement (PJD) in the government coalition; he is mayor of a major town, Kenitra, and is seen as a potential prime minister were the party to again come out on top in general elections, next scheduled for 2020 – not least because he has better relations with the Palace than many other PJD leaders.
The government, state utility Office National de l’Electricité et de l’Eau Potable (ONEE) and their team of financial, legal and technical advisers continue to meet to discuss a scheme Rabbah now costed at MD30bn ($3.1bn). This is a much lower figure than earlier estimates. The original project had been made more complicated by combining gas purchases with infrastructure construction all along the value chain, but the minister said they would now be separate elements, in a move recommended by industry experts to reduce the project’s complexity and exploit market flexibility.
Officials have been guarded about amendments to the LNG import plans, but Rabbah pointed to substantial shifts in thinking in his Economie Entreprises interview. Not only did this include a revised LNG scheme, but also a notably less antagonistic attitude towards maintaining gas imports from regional rival Algeria after the GME’s Moroccan tranche reverts to the kingdom’s ownership in 2021. The government was still assessing what to do with this major piece of infrastructure, which will be operated by a Moroccan company working with qualified international partners. Morocco could emerge as a gas import-export hub, Rabbah said – a logic also written into plans to develop a gas pipeline system running from Nigeria to the Mediterranean coast (AE 384/17) – with studies under way to assess the possibilities.
A new contract to offtake Algerian gas through the GME is not excluded, Rabbah said in an apparently more emollient statement over the strategically sensitive supply than has often come from Rabat. “The option of buying Algerian gas is equally on the table given that the [existing purchase convention] is extendable. We haven’t yet started the negotiations,” Rabbah said. He observed that Algeria and Spain had recently extended their gas supply agreement for eight years, but with Sonatrach to supply only 9bcm/yr, rather than the 14bcm/yr originally planned. Algeria could pay transit fees to maintain sales through the GME – Sonatrach has other pipeline and LNG options – but it could also supply gas to Morocco for the existing Tahaddart and Aïn Beni Mathar plants.
The much longer timetable than previously envisaged for the LNG import plan reflects shifts in the Moroccan electricity supply outlook to integrate ever more renewables into the energy mix – which, as Rabbah observed, is a policy promoted from above by King Mohammed VI.
The new “state-controlled” national gas logistics company will play an important role in this new policy, as it will oversee the procurement of the gas import terminal, some 400km of pipeline and other infrastructure for the PPP, working alongside the private consortium expected to finance and build the scheme. Despite the change of dates, Rabbah told Economie Entreprises that there was “no delay” in the LNG scheme. However, he wanted to “clarify” the question in the light of regular shifts in energy planning since the strategy was originally launched in 2009. Projections for the share of renewables in the energy mix have been consistently increased – from an earlier target of 42% by 2020 to 52% by 2030 announced at the COP21 climate talks, and recently by even more still, “on his majesty’s instructions”, to reach 58% by 2030.
Meanwhile, rises in electricity consumption were less than expected, not least due to the impact of energy efficiency initiatives on demand – another major theme of Moroccan policy. Rabbah observed that in 2018 total installed electricity generation capacity had reached around 10,641MW, but demand peaked at 6,310MW, leaving a healthy reserve margin even when system instabilities due to outages and renewables use were taken into account. It was within this framework that Morocco would need to import gas from 2028-29 to balance the system, Rabbah said.
Gas could be used to fuel export-oriented power plants and to supply Office Chérifien des Phosphates and other industrial users. ONEE exported around 123m kWh to Spain in 2018 – a figure the government intends to expand. Plans now envisage developing 1.2GW of gas-fired capacity in the period to 2030 and another 1.2GW thereafter.
Industry would emerge as a client, the minister observed, but he also noted how many industrial users had already turned to renewable solutions. However, private gas suppliers are reporting rising business. In its latest performance update, SDX Energy said it had secured three new customers for its gas in 2018, and was expecting two more this month; these include companies supplying a new Peugeot plant. SDX has a 9mcf/d-11mcf/d target for production by end-2019.
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