London-listed energy company Chariot has signed an agreement with Vivo Energy, a pan-African retailer and distributor of fuels and lubricants, for the future sale of natural gas from the Loukos Onshore license in Morocco.
Chariot holds a 75% operating interest in the Loukos licence, with ONHYM holding the remaining 25%.
According to a joint statement from Vivo and Chariot, the agreement aims to commercialize domestic gas and create a midstream compressed natural gas (CNG) partnership to meet Morocco’s energy needs.
“The agreement aims to establish the terms for implementing a gas-to-industry business through the commercialization of domestic gas and the creation of a midstream compressed natural gas (CNG) partnership. This partnership is designed to meet Morocco’s growing industrial energy needs,” Chariot stated.
Chariot recently completed its first drilling campaign on the Loukos license and is now planning flow test operations at the OBA-1 well. The Loukos area contains numerous gas resources in existing undeveloped gas discoveries and an “attractive exploration portfolio which together offer additional production potential.” Data gathered from the drilling campaign and recently reprocessed 2D and 3D seismic indicate that the area could have more resource potential than anticipated.
Terms of Chariot and Vivo Energy’s deal
Per the agreement, Chariot is set to sell an initial volume of up to 3 million standard cubic feet per day to the midstream CNG business under a long-term gas sales agreement from potential future production from Loukos.
Moreover, Vivo Energy plans to design, fund, construct, and operate a CNG plant and virtual distribution network to transport natural gas from various sources to existing and new industrial customers in Morocco.
Further, This midstream CNG business will be operated through an SPV in which Chariot can acquire up to a 49% interest.
Pierre Raillard, Chariot Morocco’s Managing Director, expressed his company’s enthusiasm for the new collaboration.
“We are delighted to extend our collaboration with Vivo Energy into the onshore, which benefits both of us as partners and aims to instigate further development of Morocco’s gas network. This agreement sets out a path where we can look to rapidly commercialise future production from Loukos, potentially unlocking the development of pre-existing gas discoveries as well as the OBA-1 well and enabling organic growth through future exploration. This will be undertaken in coordination with our upstream partner ONHYM with an initial focus on the existing markets. It will also leverage our gas production to support Vivo’s wider development of CNG virtual pipeline infrastructure and, as part of a potential midstream partnership, Chariot could have direct exposure to not only Loukos sales but also gas distribution income in the country from a wider pool of sources,” Raillard explained.
Matthias de Larminat, Vivo Energy Maroc’s Managing Director, echoed Raillard’s sentiments noting that the deal and subsequent construction of a CNG facility will help in decarbonising Morocco.
“Natural gas is a key component of the energy equation aimed at decarbonising Morocco, as defined by His Majesty the King. This project fully aligns with this ambition and meets the needs expressed by Moroccan industrial stakeholders,” he said.
This move comes as the world is moving towards decarbonisation with Africa striving to be part of this trend and a key player in the clean energy sector.
So far several countries including South Africa and Nigeria have joined the clean energy movement be it in mining or even refining minerals such as cobalt, nickel and lithium essential in renewable energy generation technologies.
While Morocco’s natural gas is still a fossil fuel, it’s cleaner and more efficient than other traditional fuels. Natural gas produces less greenhouse gases and will therefore go a long way in advancing Morocco’s broader clean energy strategies.
