SDX Taps Bank For Morocco Financing
The European Bank for Reconstruction and Development (EBRD) said July 18 it is to lend up to €10mn ($11.7mn) to AIM-listed Morocco explorer and gas developer SDX Energy.
It will help finance enhancement of upstream gas production and related gas transport infrastructure to Kenitra industrial zone customers, facilitating a switch from polluting fuel oil that could, said EBRD, thus reducing local CO2 emissions by 20,000 tons per year. SDX produces gas in the nearby Gharb region. The city of Kenitra is on the Atlantic coast between Casablanca and Tangier.
EBRD said that Kenitra’s recent industrial growth led to an increase in energy demand, especially in its newly-created Atlantic free zone where the French carmaker Peugeot-Citroen plans to start production in the coming months. Victoria Zinchuk, EBRD’s acting director in Morocco, said: “The project is in line with Morocco’s sustainable energy strategy goals while promoting the development of cleaner fuel supplies, energy efficiency and the transition to a lower carbon economy.” Eric Rasmussen, head of the EBRD’s natural resources team, said SDX is developing Morocco's domestic gas potential in the Gharb region: “SDX’s project sets an example of how private sector investors can help raise safety and environmental standards in Morocco’s energy sector and reduce the country’s dependence on imported energy.”
SDX said earlier on July 18 that the loan is a three-year US$10mn [sic] credit facility "with an 'accordion' feature taking total potential availability up to $20mn." It has has multiple assets in the northern Gharb basin with a 75% operated working interest in Sebou, a producing concession, plus exploration and appraisal assets in its Gharb Centre and Lalla Mimouna concessions (75% operated for both). In March, it said it expected gross production of 8-10mn ft³/day in Morocco by end-2018 and achieved an average 2017 net gas price of $9.72/'000 ft³.
Another AIM-listed gas developer Sound Energy needs to lay a 120km gas pipe to connect its Tendrara fields in eastern Morocco to the export pipeline to Spain, which also serves Moroccan cities. However in a preliminary deal last month, it chose Spain’s Enagas to build, fund and operate the $184mn planned pipe – rather than build it itself with financing. However Sound has worked closely with Moroccan banks and funds, as partners in its upstream gas development.