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    Morocco Offers Sound a Brent-based Gas Price

Summary

A contract will allow Sound to take TE-5 into production.

by: William Powell

Posted in:

Exploration & Production, Infrastructure, , News By Country, Morocco

Morocco Offers Sound a Brent-based Gas Price

Morocco's energy ministry is offering Sound Energy a Brent crude oil-based price in its proposed gas purchase agreement for the entire output from the Tendrara production concession, the explorer said May 1.

There is no liquid gas market nearby in north Africa for indexation, so using Brent allows gas buyers and sellers to hedge their positions. 

Under the offer, the sales price of the gas from 2022 is proposed to also have a fixed element, to fully cover the cost of transportation in the planned Tendrara gas export pipeline. These fixed transportation costs are expected to be capped at some $12.2mn/yr under the terms of the build-own-operate-transfer proposal under negotiation with a consortium led by Enagas of Spain, Sound said.

Based on current oil prices of around $70-$75/barrel Brent, the gas price would be between $8.50/mn Btu and $9.00/mn Btu, including a $1/mn Btu pipeline fee. Sound said it would continue to negotiate the offer and added that the GSA "is an important milestone in the progression of the TE-5 field to commercial production."