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  • Writer's pictureFelix Tsourakis

Everything you need to know about Morocco 2019

Updated: Jan 23, 2019

Morocco has a very attractive investment environment and huge exploration potential within the oil and gas sector, often referred to by many as one of the last remaining frontiers in North Africa.

In addition to that, Morocco has excellent infrastructure across the country, which supports exploration and production, and includes major pipelines located near core cities.

The Moroccan sedimentary basins have many viable petroleum systems, brimming with hydrocarbon potential available to be accessed. To this day, only 338 onshore and offshore exploration wells have been drilled, 43 offshore and 295 onshore.

In the past few years Morocco has seen a surge of interest from international oil companies, small and large, who want to tap into the country’s immense hydrocarbons potential. In recent years interest in Atlantic conjugate margins has increased, shifting eyes to Morocco and the neighbouring countries. Meet Morocco's government and top companies here.

What makes Morocco so attractive to IOCs?

Morocco is rapidly becoming one of the fastest developing oil & gas market for a unique set of important reasons:

  • Great geographical location in the Mediterranean with several onshore and offshore blocks available in prominent locations

  • Geology that encourages shallow low-cost drilling

  • Phenomenal fiscal terms that are highly welcoming to new investors

  • ONHYM’s ethic of treating investing companies as partners and maintaining excellent relationships

  • International pipeline projects that are turning Morocco into an energy node for North Africa and potentially West Europe

  • High energy consumption is creating increasing demand for hydrocarbons and alternative sources of energy

Morocco’s Rich Basin and excellent position

- What makes Morocco so attractive in the geological aspect? Morocco shares analog basins with major recent discoveries

The country is surrounded by many discoveries in recent years, with the most important discoveries of 2017 taking place in the direct vicinity of Moroccan Basins.

On the eastern side, Morocco is a continuity of the Algerian Triassic Province where significant hydrocarbon layers are exploited at the Triassic and Cambrian–Ordovician levels and the Saharan Hercynian platform where more than 100 Mboe is being produced.

On the western side, Morocco is bordering the Atlantic Meso-Ceozoic Passive Margin where discoveries of more than 1000 Mboe has been made

In the West Mediterranean Basin 47 shale tectonics and diapirism related leads and prospects were identified with Miocene and Pliocene turbidite sandstones as main objectives. Middle and Lower Miocene series are mature and capable of generating substantial hydrocarbons, as confirmed by ONHYM at the Med Petroleum Summit 2018.

Morocco, Oil, Gas, Concession, SDX Energy, Sound Energy, Chariot Oil & Gas, Eni
Offshore Morocco has attracted a lot of attention thanks to its rich potential

In the offshore Atlantic, 7 wells were drilled within the Agadir-Tarfaya Atlantic offshore segment, with 3 wells targeting the Jurassic Carbonates in shallow waters, 2 of which confirmed the presence of oil with 12 API at the JM-1 well and 26 API at the SM1 Well.

In deep waters, 4 wells were drilled aiming for the Jurassic and Cretaceous Turbidites, with 3 of them encountering oil and gas, confirming working petroleum systems.

The discovery of gas and condensate in the Cretaceous Turbidites reveals a lot of opportunities for the Boujdour Offshore prospect on the Atlantic side.

The Alboran Basin, bounded to the west by the Gibraltar arch, in the Moroccan Mediterranean sea is a syn-orogenic to post-orogenic basin.

The Mediterranean Deep Water of Morocco is an interesting exploration frontier area with good traps that is expected to be the future exploration target. The area is of high need of new 3-D seismic data, and thorough reprocessing of its existing 2-D coverage, opening the door to many new opportunities for cooperation and investment.

Considering the expected improvement of seismic quality, it is necessary to acquire 3 D seismic data including adequate reprocessing of the existing 2 D coverage to better image the geometry and distribution of the various reservoir facies.

Recent discoveries confirm Morocco’s high exploration potential

Within the last two years, many discoveries have been made in Morocco, thanks to Morocco’s rich potential and ONHYM’s great business practices. The country’s attractive fiscal environment welcomed investors with favourable terms, including 2018’s success story, SDX Energy. In January 2017, SDX Energy acquired three concessions in the Gharb Basin, located in northern Morocco. Within two years, SDX Energy concluded a very successful nine well drilling programme in Morocco, which saw the business achieve over 80% drilling success rate, with seven discoveries made from nine drilled wells.

These discoveries have created many midstream opportunities, waiting to be tapped.

The Moroccan sedimentary basins have many viable petroleum systems, brimming with hydrocarbon potential available to be accessed.

To this day, only 338 onshore and offshore exploration wells have been drilled, 43 offshore and 295 onshore.

There are many major companies operating in Morocco, none more prominent these days than SDX Energy. Morocco has many opportunities and favourable terms for smaller companies as well.

A wave of recent discoveries

The Sebou Permit

Morocco, Oil, Gas, Concession, SDX Energy, Sound Energy, Chariot Oil & Gas, Eni
Pictured: The Sebou Permit located in North Morocco

In March 2018, SDX Energy officially confirmed a gas discovery at its SAH-2 well on the Sebou permit, with the reservoir thickness far-exceeding pre-drill expectations.

SDX Energy encountered an entirely new gas system in April 2018, located in the LNB-1 well, which is an exploration well in the Lalla Mimouna concession. This discovery is significantly larger than most recent discoveries in the Sebou area, estimated at 10.2bn cubic feet of conventional natural gas and 55,000 barrels of condensate.

This discovery followed the ONZ-7 discovery made by SDX on the Gharb basin permit, a discovery that surpassed all initial forecasts. This took place a few weeks after SDX drilled the ELQ-1 well, also located in the Gharb Centre permit, and deemed it to be not sufficiently commercial. This proves that opportunity in Morocco is just around the corner, and that options are plenty and profitable.

The Moroccan field was described by Paul Welch, President & CEO of SDX Energy as a “simple business” with the gas needing “little to no treatment,” no royalties paid to the Moroccan government thanks to a 10-year tax holiday, low drilling costs, and a pipeline capable of 24m cf per day currently transporting 6m cf/day.

Meet SDX Energy here.

The Tendrara Discovery

Morocco, Oil, Gas, Concession, SDX Energy, Sound Energy, Chariot Oil & Gas, Eni

In June 2015, Sound Energy acquired 55% of the Tendrara licence, assuming operatorship.

When Sound Energy drilled TE-6, the first wel, in 2016, it achieved a gas flow rate of 17 MMscf/d, a highly commercial rate above initial expectations. The flow was achieved in both pre-stimulation and post-stimulation.

When they drilled the second well, TE-7, they encountered a gas flow almost double that of TE-6. The flow was 32 MMscf/d surpassing all predictions. Successful extended tests confirm the good deliverability of the TAGI reservoir and Sound Energy’s view of the field’s major potential.

Meet Sound Energy here.

Morocco’s Top Fiscal Terms

Or, in other words, why is Morocco the modern oil and gas investor’s paradise?

Morocco’s current hydrocarbon exploration developments, and immense oil and gas potential, reveal a lot of available and future business opportunities.

Morocco has moved fast and smart; they have quickly recognised the potential they possess and took initiative by proceeding to update its fiscal and investment environment. This bold move had a huge impact on its investment attractability- Morocco instantly managed to create an attractive and hospitable framework for Operators and service providers looking for a new venture and to reward existing ones with better terms.

Morocco, Oil, Gas, Concession, SDX Energy, Sound Energy, Chariot Oil & Gas, Eni
ONHYM presents Morocco's attractive terms at the Mediterranean Oil & Gas Summit

Morocco has evolved its laws to accommodate its high exploration and investment potential, by including several advantageous terms in its Hydrocarbons Code, such as:

  1. An exception from the national corporate income tax when IOCs start commercial production for 10 years

  2. A maximum of 10% on onshore and offshore royalties on oil production and of 5% on gas in waters shallower than 200 metres

  3. A favourable 25% state participation within contract terms through Morocco’s Office National des Hydrocarbures et des Mines (ONHYM)

  4. All equipment, materials, products and services required for the activity are exempted from custom duties and VAT

  5. Tax exemption on export of profits and dividends of concession holders

The success of this system is made evident by the recent consecutive upstream activities and discoveries of several medium-sized companies, including SDX Energy, which will be discussing its activities, experience and opportunities this February, at the 2nd Morocco Oil & Gas Summit.

ONHYM is the driving force behind Morocco’s hydrocarbon growth

Morocco, Oil, Gas, Concession, SDX Energy, Sound Energy, Chariot Oil & Gas, Eni
Amina Benkhadra will meet with key players at the 2nd Morocco Oil & Gas Summit

ONHYM is Morocco’s National Office of Hydrocarbons and Mines Agency, headed by Amina Benkhadra, General Director of ONHYM and former Minister of Energy and Mines. ONHYM is focused on the study and interpretation of Morocco’s geological and geophysical data, including several promising areas in onshore and offshore sedimentary basins.

ONHYM rightfully boasts rich and accessible geological and geophysical databases, that played a key factor in companies such as Sound Energy and SDX Energy achieving success so quickly after the signing for the concessions.

ONHYM is more than a National Agency for Morocco’s investors.

Their strongest point and pride is how they deal with their partners.

They care about their investors, whom they call “Partners”, and they share it in every relevant comment they make. They want to ensure their partners’ satisfaction with working in Morocco, and take special care to address them with professionalism. This has the effect of building a relationship similar to a thriving ecosystem, rather than a stiff state-investor relationship.

Morocco is building an offshore & onshore gas pipeline with Nigeria

Morocco, Oil, Gas, Concession, SDX Energy, Sound Energy, Chariot Oil & Gas, Eni
H.E King Mohammed VI of Morocco meeting with Geoffrey Onyeama, Foreign Affairs Minister of Nigeria

On June 2018 Morocco and Nigeria signed a joint declaration laying out the steps necessary for the completion of a gas pipeline connecting the two countries. The project is supervised by ONHYM and the Nigerian National Petroleum Corporation (NNPC) and will span over 5,660 kilometers, onshore and offshore. The construction will take a total of 25 years to be completed.

Currently, the financial cost is being assessed and funding opportunities from development banks are being processed.

A front-end engineering design will take place after that, in order to involve the countries that the pipeline will cross and calculate the amount of gas that will be available for exporting to Europe.

This project will create a steady influx of opportunities for the next 25 years, as many midstream specialists will be called to assist and advice on the planning and construction of this important project, that will turn West Africa into a prime exporter to Europe, as imports from Russia and Eastern resources is starting to decline.

Discover more about these opportunities directly from Mrs Amina Benkhadra, General Director of ONHYM, on 6th and 7th of February, at the 2nd Morocco Oil & Gas Summit.

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