Page 13 - DMEA Week 31 2021

DMEA TERMINALS & SHIPPING DMEA

Sound Energy, Afriquia Gas

sign supply deal for mLNG plant

AFRICA UK-BASED Sound Energy said last week that indices,” Sound Energy added.
it had signed a long-term supply agreement It went on to say that execution of the SPA was
with Afriquia Gaz (Morocco) for LNG from the dependent on the parties’ ability to meet several
small-scale liquefaction plant that will be built conditions by October 29, 2021. These condi-
at the Tendrara licence area in eastern Morocco. tions include securing the approval of the joint
The latter company is a partner in the joint ven- venture, signing a loan agreement under which
ture that is operating the site, which will support Sound Energy will take out an $18mn secured
a micro-LNG project. loan from Afriquia Gaz with a 12-year repay-
In a statement, Sound Energy reported that ment term and a 6% annual interest rate and exe-
its wholly owned subsidiary Sound Energy cuting a project contract under which Italfluid
Morocco East Ltd (SEMEL) had entered into a Geoenergy (Italy) will provide a gas-processing
binding 10-year sales and purchase agreement and liquefaction plant for Phase 1 development.
(SPA) with Afriquia Gaz. Under this agreement, Additionally, Afriquia Gaz must secure agree-
it explained, SEMEL will sell the Moroccan com- ment in principle for the sale of at least 60% of
pany at least 171,000 cubic metres per year of minimum take-or-pay volumes to downstream
LNG, equivalent to about 100mn cubic metres buyers and obtain regulatory approval for the
per year, on behalf of the joint venture that is transport of LNG via tankers and the sale of
developing the concession. The LNG will be pro- LNG.
duced using gas from Phase 1 of development Sound Energy did not comment on its plans
work at Tendrara, it said. for meeting all these requirements. It did say in
Sound Energy did not say exactly when LNG the statement, however, that it had entered into
deliveries would begin. It did state, though, that an equity subscription agreement with Afriquia
SEMEL had committed to supplying Afriquia Gaz. This deal provides for the latter company
Gaz with 475-546 cubic metres per day of LNG to make a GBP2mn ($2.78mn) subscription for
for 360 days each year over a period of 10 years. 159,731,651 new ordinary shares in the former,
In turn, it said, Afriquia Gaz has pledged to a it said.
take-or-pay arrangement under which it will Graham Lyon, the executive chairman of
take delivery of at least 475 cubic metres per day Sound Energy, commented: “We are delighted
of LNG. The latter company will receive the LNG to announce the signature of a binding 10-year
at the TE-5 site at the Tendrara field and will then LNG sales agreement for the Phase 1 develop-
be responsible for transporting and delivering it ment covering the sale of not less than 100mnn
to Morocco’s domestic gas market, it noted. cubic metres of gas in a liquefied form per year.
“Pricing under the LNG SPA will be within a In addition, the execution of the previously
range, the floor price being $6 per mmBtu and announced equity subscription agreement and
the ceiling price commencing at $8 per mmBtu the GBP2mn equity placing cements the stra-
and increasing during the course of the LNG SPA tegic alignment between Sound Energy and
to $8.346 per mmBtu, and will be determined Afriquia Gaz. This is a key milestone in moving
using an indexed formula [that] applies a com- forward towards the final investment decision
bination of the European Title Transfer Facil- [FID] and notice to proceed for the Tendrara
ity and United States Henry Hub benchmark Phase 1 Development.”™

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