With little domestic production, Morocco imports more than 90% of its energy needs, which makes it beholden to wildly fluctuating global energy prices and the relative stability of the energy supply chain. A net energy importer must constantly manage and mitigate geopolitical risk that impacts the security of its supply, such as when Algeria ceased providing natural gas to Morocco in late 2021, due to the two countries’ political differences around Western Sahara. Today, Morocco relies on oil and coal imports as well as gas delivered via the Maghreb-Europe Gas Pipeline (MEG) from Spain.
To overcome its hydrocarbon import dependency, the North African kingdom has implemented an aggressive green and renewable energy strategy and seeks to expand domestic gas usage. Over the past several years, the Moroccan government has explored (though never executed) the construction of capital-intensive regasification terminals along the coast and developed a three-point gas strategy that includes increasing gas usage in the country. However, no new interregional or international gas pipelines are planned, and the aforementioned conventional regasification terminals have not progressed much beyond the early planning stages; therefore, the government should consider alternative import schemes, such as liquefied natural gas (LNG) import via ISO tank containers, utilizing its well-developed port, rail, and road infrastructure.
Cost-competitive ISO tank import volumes are, by their nature, small, typically produced at small-scale LNG plants (ssLNG); as such, they will not replace conventional LNG import schemes. However, they can provide supply redundancy and fuel for remote users while utilizing existing port and distribution infrastructure. Utilization of ISO tank LNG generated by a single 0.25 million tons per annum (Mtpa) ssLNG plant can provide sufficient energy supply to power one 400 Megawatt (MW) gas-fired power plant. It follows then that imported ISO tank LNG combined with domestic ssLNG output could reasonably provide sufficient energy supply for several gas-fired power plants. ISO tank LNG shipping can also offer insurance fuel when natural disasters, such as last month’s devastating earthquake, damage the power distribution grid. Importation of ISO tank LNG can become an essential component of Morocco’s fuel supply portfolio. At the same time, the country should develop a domestic network of ssLNG plants underpinned by minor domestic gas accumulations, thereby exploiting its local resources.
Natural gas demand
Although Morocco has adopted an aggressive and, thus far, successful green energy strategy, most of its electricity production — 63% in 2021 — still comes from non-renewable resources. Moreover, Morocco imports approximately 90% of its energy needs overall, thus exposing it to energy price fluctuations, exacerbated by increasing domestic demand as its economy grows
In 2021, the country announced a comprehensive, nine-year natural gas plan, which lays out three main directives:
- Establish and modernize a framework for the natural gas sector, increasing governmental oversight and the regulatory regime.
- Complete a detailed domestic market analysis that develops a robust forward-looking gas demand curve.
- Assess potential solutions for natural gas and LNG supply to the country via various methods, linking the solutions to fuel transport and storage, thus increasing Morocco's energy security.
With sustained investment, Morocco will continue building up its green energy infrastructure. However, in the near and medium term, the government will require additional hydrocarbons, particularly natural gas, as it seeks to reduce oil- and coal-based power generation.
Natural gas supply
Morocco holds 0.05 trillion cubic feet (Tcf) of proven gas reserves, according to data from 2017, which is equivalent to 1.2 times its annual consumption or approximately one year of gas, based on current consumption levels and excluding new discoveries.
In 2022, the British energy company and operator Chariot announced it found a modest natural gas field off Morocco’s shore. Called the Anchois Gas Field, it has estimated recoverable resources of up to 1.4 Tcf. The discovery well was drilled in 2009 by previous license holders, but Chariot re-evaluated the geological potential and drilled the Anchois 2 well, which confirmed the gas accumulation. The project’s final investment decision (FID) was expected in 2022, but the operator now forecasts an FID date in 2023, with first production in 2024.
Anchois production will provide domestic gas to a historically gas-short country. The gas will be linked to the existing government-owned MEG pipeline, which currently carries imported gas volumes from Spain. The MEG pipeline initially provided gas from the Hassi R’Mel Field in Algeria to Morocco and Spain; but it has since been reversed and now delivers gas from Spain to Morocco.
While Moroccan coastal waters have repeatedly garnered energy industry interest over the years, no material and commercial hydrocarbon discoveries have ever been made; however, Chariot’s Anchois discovery provides some welcome news for the country. More such findings may lie ahead; but the track record thus far has been a slew of dry holes with non-commercial accumulations.
With the political relationship between Algiers and Rabat deteriorating over Western Sahara, Algeria ceased supplying gas to its northwestern neighbor in November 2021. Consequently, the Moroccan government had to quickly negotiate and secure gas purchases from Spain, to be transported via the until-then unused MEG pipeline. The pipeline reversal and Spanish gas export plan was completed within one year and has provided some relief to the gas-poor North African country.
While Morocco has been in the news recently regarding the proposed Nigeria-Morocco Gas Pipeline (NMGP), the over $25 billion project is still years away from reality. Per recent announcements, Nigerian gas would traverse 13 national borders to reach Morocco, theoretically providing gas to all countries along the route. In late 2022, Nigeria and Morocco signed a memorandum of understanding (MoU) agreeing to work together to progress the project. However, large-scale international pipelines crossing multiple national jurisdictions are notoriously complex from a geopolitical, financial, and technical perspective, with initial cost estimates and project timelines often overly optimistic. Should the project ever materialize, it would no doubt benefit the Moroccan economy and energy balance, but initial gas would not flow until well into the next decade, if at all.
Over the years, various efforts have been launched to build regasification facilities and floating storage regasification units (FSRU) along the coast. None have matured to date. Meanwhile, the MEG pipeline bringing in gas from Spain and even the potential development of the Anchois Field are both still woefully inadequate to meet Morocco’s domestic needs.
Two economically attractive, commercially viable, and technically plausible options exist to help address this gas shortfall:
- The import of LNG volumes via ISO tanks into ports and distribution via established infrastructure to end users.
- The development of ssLNG plants in the country and distribution of domestically produced LNG via ISO tanks to end users.
A technical and commercial feasibility study conducted under the umbrella of the recently announced national gas plan would identify risks and associated mitigations and demonstrate this scheme’s commercial viability. An integrated ssLNG business with ISO tank import and domestic ssLNG production can be realized within five years and complements efforts to reduce greenhouse gas emissions. With LNG ISO tank imports and the development of a domestic ssLNG business, Morocco can displace oil and coal burning, thus definitively decreasing harmful emissions. Longer term, the country can implement LNG as a transport fuel, aiming to displace diesel-powered longer haul trucks and heavy fuel oil-powered vessels.
LNG import via ISO tanks
The push to increase gas import capacity should lend itself to the development of piped gas from Europe as well as LNG imports directly into the country. While conventional LNG import schemes rely on costly capital expenditure (CAPEX)-intensive regasification terminals, another option with lower CAPEX and a significantly shorter time frame is to import LNG via ISO tanks into existing conventional ports. Standard 20- or 40-foot containers each holding 22,000 and 40,000 liters, respectively, of LNG can be shipped via cargo vessels and offloaded onto existing distribution modes such as railways and trucks.
Cost-competitive ISO tank LNG can be delivered directly to end users via existing infrastructure — ports, road, rail, and marine. Landed costs are estimated at $7.00-$9.00 per million British thermal units (mmBtu). The fuel can be delivered to isolated demand centers, industrial users, and power facilities, offering supply redundancy and providing insurance against pipeline disruption caused by geopolitical issues or natural risks such as earthquakes. Considering Morocco’s geographic location, LNG import from the United States would be the most logical, timely, and cost-effective option.
Domestic ssLNG development and distribution via ISO tanks
In parallel with the realization of the aforementioned ISO tank LNG import scheme, Morocco should adopt a domestic ssLNG plan focused on developing and commercializing onshore stranded gas accumulations. SsLNG plants — that is, ones that produce less than 0.25 Mtpa — can be constructed for less than $250 million each, with the period between the FID and first production lasting less than 24 months. Several upstream operators, such as Predator Oil & Gas Holdings, Sound Energy, and SDX Energy, have reported encouraging initial results with minor gas discoveries. A 0.2-0.25 mtpa ssLNG plant only requires a stable 20-30 million standard cubic feet of gas per day (mmscfd) of natural gas and can fill approximately 30 40-foot ISO tanks daily. Lower capacity ssLNG plants could be anchored on smaller gas volumes. A single 40-foot ISO tank holding approximately 1.0 mmcf of gas could supply the daily needs for a 400 MW power plant. While further evaluation is required, the Moroccan government should encourage commercialization plans utilizing ssLNG plants.
Conclusion and the way forward
Per the announced three-point gas plan, Rabat acknowledged that increasing domestic gas usage and displacing coal and oil imports is an integral part of Morocco’s energy transition strategy and complementary to developing renewable energy sources in the country. Thus, while Morocco is taking steps to develop material green and renewable energy supplies, gas will play a significant role in the domestic energy supply portfolio for the near and longer term.
With the kingdom seeking tangible and capital-efficient solutions to reduce oil and coal imports and supplement its energy supply portfolio, it should consider LNG ISO tank imports and the development of domestic ssLNG plants as part of that approach. Developing and implementing the ISO tank strategy will diversify the country’s energy supply and reduce reliance on costly oil, coal, and conventional LNG imports. Moreover, a commitment to developing an ssLNG concept will utilize and commercialize stranded gas resources while positively impacting Morocco’s local economy.
The Moroccan government should initiate an ssLNG and ISO tank import feasibility study in the near term to further define these concepts. A plan to implement the ISO tank import scheme and domestic ssLNG could deliver initial tangible results within 12-18 months. Not only will this strategy strengthen the country’s energy security, improve its internal resilience to supply or transit interruptions, and boost local economic conditions, but equally importantly, this solution will push Morocco further along to meeting its carbon emission reduction goals.
Wayne Ackerman has more than 30 years’ experience in the upstream exploration and production sector and major capital project development, including LNG. He is also the founder and president of Ackerman and Associates Global Consulting, LLC, and a member of the Advisory Council for the Program on Economics and Energy at the Middle East Institute.
Photographer: Christopher Dilts/Bloomberg via Getty Images
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