Morocco’s future energy hub promises: a sustainable mix - by Cyril Widdershoven
As part of the preparations of the 2nd Morocco Oil & Gas Summit, IN-VR had the pleasure to get an analysis from Cyril Widdershoven, Director of Verocy, on Morocco's potential as an energy hub and insight on recent updates.
Analysis by Cyril Widdershoven
North African country Morocco is stepping up its strategy to propone itself as a possible new energy hub in North Africa. As one of the newest oil and gas producers in North Africa, the Maghreb Kingdom is currently assessing its strategic position as a possible bridge between West Africa’s booming oil and gas sectors and energy-hungry Europe.Morocco, which is well-known for its booming economy and growing renewable energy sectors, is stepping up its onshore and offshore oil and gas exploration activities. The country is making decisive moves to realise its oil and gas potential. The government is targeting the exploration of its vast unconventional oil and gas shale reserves and possible offshore developments.
At present, Morocco is actively investing on full-scale oil and gas operations. Between 2015 and 2018, investments in the sector have reached a level of around $2.8 billion (25 billion dirhams), 96% of which was paid by partners of the Moroccan hydrocarbons and mining office ONHYM.
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Upstream Success
Success have been made onshore, especially on the gas fields. In 2017, around $137 million was invested in upstream. The areas available for licensing covered 170,000 square kilometers, including 22 onshore and 77 offshore licenses as well as 9 exploration permissions. In 2017, 7 development wells were drilled targeting gas reserves, four of which were located in the Gharb region.
Exploration showed similar success in 2018, with several success stories being reported, such as SDX Energy’s confirmed gas discoveries in the Gharb region, and Sound Energy’s operations targeting the Tendrara concession and the Essaouira Basin.
Morocco is investing heavily in upstream oil and gas, to cover its growing needs. The country has proven oil reserves of 170,000 cubic meters and natural gas reserves of 1.7×109 m3. Most of its sedimentary basins are unexplored. Morocco produces oil and natural gas from the Essaouira Basin and natural gas from the Gharb Basin, but that is not enough to cover the need created by its growing economy.
In January 2018 Morocco’s government announced the development of an US$4.6 billion gas project, entailing the construction of a gas processing plant. The latter is going to be used to monetize future domestic gas production and the intake of LNG export volumes. Morocco is looking at upcoming LNG producers, such as the USA, for future supply.
Midstream Progress
Rabat is behind the well-documented Nigeria-Morocco Gas Pipeline (NMGP) project. Both countries already have signed a joint declaration laying out the next steps for the completion of the latter. Since 2016, both countries have been conducting feasibility studies. The latter concluded that economic, political, legal and security reasons a combined onshore and offshore route is needed. Morocco’s National Office of Hydrocarbons and Mines (ONHYM) and the Nigerian National Petroleum Corporation (NNPC) indicated that the pipeline will be 5,660 kilometers (3,516.96 miles) long, while construction is expected to take around 25 years. The costs and implementation of the project are still unclear, as the proposed routes involve several member countries of ECOWAS (Economic Community of West African States).
At the same time, the main success driver of the gas pipeline project is a potential direct link to the European gas markets. The proposed pipeline will not only supply Morocco and European markets, but also West African consumers, thanks to its partial onshore route. NMGP is already supported thanks to the positive effects of gas flaring reduction in Nigeria, while diversifying energy resources in the country. For Morocco, the pipeline project is also interesting as it could connect Mauritania’s ongoing gas production successes to its own market and connect it to European outlets too. Moroccan officials have been supporting the positive impact of the Atlantic pipeline on regional integration in West Africa. Experts estimate that a gas pipeline crossing the sea is safer for Nigeria to find new energy markets. West African onshore gas exports are confronted at present by severe security concerns, such as northern Nigeria, Niger and potentially the south of Algeria.
The energy hub equation
For Morocco, oil and gas are only a part of the energy hub equation. International investors and organizations have been supporting the ongoing renewables drive in the kingdom. By most, Morocco is already considered to be a potential renewable energy hub for the African continent. In November the AfDB and Masen (the Moroccan Agency for Sustainable Energy) have signed a partnership agreement with the aim to combine Masen’s expertise in the development of renewable energy projects with the African Development Bank’s operational experience in the sector.
The mix for the future is clear. Onshore and offshore oil and gas projects, combined with West African gas and international LNG supplies, could provide part of the current import dependency of the country. By becoming the bridge between West Africa and Europe, Morocco could not only reap the rewards of new gas supply options, but also increase its government revenues thanks to transit fees. At the same time, increasing its renewable energy volumes will set the country on the road for a commercially and economically sustainable future, potentially making it a new energy hub in the region. A strong energy mix is one of the instruments to build a strong future.
Find out more about these opportunities first-hand from Cyril Widdershoven, by attending and hearing from SDX Energy, ONHYM, and all major operators.
The 2nd Morocco Oil & Gas Summit is the Official Summit for the hydrocarbons industry of Morocco. The event will take place at Marrakech from 6th to 7th February 2019.