Page 8 - GLNG Week 31 2021

GLNG AFRICA GLNG

Sound Energy,

Afriquia Gas sign

agreement on

supplies from

micro-LNG plant

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

P8 www. NEWSBASE .com Week 31 06•August•2021