Sound Energy signs gas sales agreement with ONEE

Moroccan upstream gas company Sound Energy has signed an agreement with Office National de l’Electricité et de l’Eau Potable (ONEE) for the sale of the company’s natural gas production in the Tendrara concession in eastern Morocco.

Sound noted that a detailed gas sales agreement (GSA) is still under negotiation and added that the latest one is a binding agreement that the ongoing talks will incorporate the MoU.

ONEE is Morocco’s state-owned power company.

This agreement covers the first 0.5 billion cubic metres (bcm) per annum, which is equivalent to approximately 48.4 million cubic feet per day (mcf/d) of production of natural gas from Tendrara, with payment for any excess production to be part of the final GSA.

According to Sound, the gas is priced and sold to ONEE at the M04 tie-in point of the Gazoduc Maghreb Europe natural gas pipeline.

Sound will also get a fixed price for a minimum annual volume of 0.3bcm per annum.

Attributable to the Tendrara concession, Sound Energy’s gross revenues for the first year are expected to reach $84m, with the fixed price element designed to give higher certainty when it comes to arranging the necessary funding to build the infrastructure.

Sound Energy and ONEE have signed a memorandum of understanding (MoU), under which they have agreed to use their reasonable endeavours to continue talks with a view of signing a binding GSA, incorporating the MoU key terms, prior to the end of CY2019.

Furthermore, the MoU stipulates a ten-year initial term, which starts after the signing of GSA. It is automatically renewable for further periods of five years thereafter.

In June 2018, Sound Energy submitted an application for development concession regarding the Tendrara gas discovery.