British junior company Sound Energy makes progress in its Moroccan small-scale natural gas liquefaction project An agreement has been initialled with a service provider who will build and operate the plant for a period of 5 years.
Announced last February, Sound Energy’s project to set up a mini-plant for the liquefaction of natural gas in Morocco has just reached an important milestone. Sound Energy Morocco East Limited (SEMEL), a wholly owned subsidiary of Sound, has signed an exclusivity letter with service provider Italfluid Geoenergy to design, build, commission, operate, maintain and lease the plant to SEMEL for a period of five years.
Under the terms provisionally negotiated, once the infrastructure is completed, Italfluid will operate it on behalf of SEMEL in return for various payments and daily rental fees. In fact, SEMEL will be required to pay $5 million to Italfluid within 30 days of the issuance of the notice to proceed with Phase 1 development and $2 million within 30 days of its notification to Italfluid of the successful commissioning of the LNG plant.
In addition, for each day in each contract year during which Italfluid has proven to SEMEL’s satisfaction that the LNG Plant can deliver a guaranteed daily volume, SEMEL shall pay to Italfluid a daily rent of $36,000.
Both parties have until March 31 to agree on the terms of the collaboration and to enter into a final binding agreement.
The plant will also process raw gas from TE-5 Horst prior to liquefaction.
As a reminder, this will be a small-scale LNG production unit, building on the TE-5 Horst discovery on the Tendrara onshore concession.
It should be noted that in June 2020, Sound Energy opened similar negotiations with a local offtaker for the Tendrara gas. The negotiations were supposed to be completed by 31 December 2021. However, given the inherent link between Sound’s and Italfluid’s contract and the series of final agreements to be reached with the gas buyer, the gas company also agreed to extend the period of exclusivity with the gas buyer until 31 March 2021.
“The synchronization of the timing of these respective negotiations provides a clearer and less risky path to making a final investment decision with the joint venture partners on or before March 31, 2021,” explained a release from Sound Energy.
Source Ecofin Agency