International oil and gas companies are looking to tap Morocco's latent hydrocarbon reserves, but commercial-scale production is some way off.
"Exploration is a risky business, and even in a success case, it will be a very long time before Morocco sees the kind of benefits associated with oil and gas production," Carl Atallah, Chevron Corp.'s vice president and country manager told an audience of oil executives at a conference in Marrakesh last month.
The event attracted the likes of Repsol SA, Genel Energy, Andarko Petroleum Corp., Cairns Energy and Kosmos Energy, as Morocco looks to replicate the success of neighbors Libya and Algeria in exploiting hydrocarbon reserves.
Forty oil and gas companies are active offshore in Morocco, and the National Office of Hydrocarbons and Mines (ONHYM) estimates 30 new exploration wells will be drilled offshore, with capital expenditure exceeding USD 1 billion.
"Recently there has been increased interest in upstream activities, largely because Morocco is believed to hold untapped shale resources, and the country also offers favorable fiscal terms for foreign investment in the energy sector," said the U.S. Department of Energy in a May study.
According to a recent Energy Information Administration study, Morocco has 11 trillion cubic feet of technically recoverable shale oil and gas resources, mostly in the Tindouf basin, with smaller amounts in the Tadla basin.
Results have been encouraging so far, although commercial-scale production is some way off. Longreach, an independent Canadian oil and gas company, said it identified two prospective natural gas zones, located in the Sidi Moktar license area in the Essaouira Basin. The firm has a 50% operating interest in Sidi Moktar covering 2,683 square kilometres and is working with ONHYM to develop.
In April, Gulfsands Petroleum said it agreed with ONHYM to acquire operatorship and a 75% working interest in a new permit which extends east of the existing permit to the boundaries of the onshore Fes Block. Gulfsands will undertake a 500-kilometre 2D seismic survey during the two-year exploration period and a legacy oil field reactivation study as part of a USD 3.5 million program.
Earlier in the year, Irish firm San Leon Energy Plc signed a memorandum of understanding with Chevron Lummus Global LLC, to build an oil shale upgrading technology. The company will produce synthetic crude oil from the raw shale oil produced in its Timahdit oil shale license area.
"An updated feasibility study for the Timahdit Oil Shale project is currently planned to be completed by year-end," the company said. "This will facilitate the completion of project finance to fund the construction of the proposed plant envisaged to begin after 2015. Initial reactions from financial institutions have been very encouraging based on the strong interest in investing in Morocco's energy future."
MACROECONOMIC STABILITY
Investors are drawn to Morocco as it offers a business-friendly fiscal regime and greater political stability compared to its North African neighbors.
In addition to its push on oil and gas the country is also looking to tap its renewable energy resources. The push for solar power would help cut energy imports and could even transform Morocco into a major exporter of renewable energy to Europe and neighboring countries.
Morocco's new energy strategy aims to make renewable energy 42% of its energy source by 2020.
The World Bank and Clean Technology Fund are helping Morocco develop a Solar Plan, which has already seen the development of the first phase of the 500W Ouarzazate concentrated solar plant (Noor I) project. The World Bank also intends to support the government in pursuing regional collaboration opportunities with Maghreb and EU countries.
Coupled with large-scale commercial development of shale gas and oil, Morocco could turn around its energy fortunes.
The feature was produced by alifarabia.com exclusively for zawya.com.
© Zawya 2014
