LNG

Sonelgaz, the national electricity and natural gas company of Algeria, has been put in charge by Minister of Energy and Mines Mohamed Arkab of helping to manage “a gradual and responsible” energy transition backed by gas while noting Sonelgaz has run renewable integrated energy projects since the 1980s.

During a speech at Algeria’s 27th Energy Day held on March 4 with an event at the National Polytechnic School of Algiers, the Minister outlined the North African nation’s approach to complement its domestic energy needs while exporting more LNG and pipeline gas to Europe.

“Algeria's energy policy aims to move forward resolutely towards the realization of a progressive and responsible energy transition,” said Arkab.

“This requires the adoption of a diversified energy mix taking into consideration all the energies available, the least expensive and the cleanest while benefiting from the achievements of improving energy capacity and working to control energy consumption and to preserve natural resources for future generations,” explained Arkab.

In this regard, Arkab recalled that Algeria has worked since the 1980s, through Sonelgaz, to integrate renewable energies, by supplying 20 villages with solar energy in the South of the country with the creation of solar power stations with a total power of 344 megawatts (MW) and the launch of hybrid projects with capacity of 50 MW.

Various roles

As part of the development of the use of electric vehicles in Algeria, the Minister said that Sonelgaz would carry out experimental projects with a view to setting up 1,000 charging stations for electric vehicles.

Arkab added that natural gas flaring in Algeria was targeted to reach zero and that was the responsibility of oil and gas company Sonatrach.

The Minister also explained that similarly, Sonatrach was working with the Algerian Space Agency and in collaboration with the World Bank to carry out scientific and technological research with a view to measuring and definitively limiting methane gas emissions.

The Minister said that Algeria’s Energy Day was an important opportunity to debate and exchange views between experts, economic operators and sectors concerned with energy, scientific research and the environment.

This was an opportunity for energy experts to lead several conferences, and engineering students to present presentations on themes related to energy resources and the project of an efficient energy model by 2035 and 2050. .

Sonatrach spending

Sonatrach already plans to invest more than $30 billion in the exploration and production of hydrocarbons and to upgrade facilities to improve its position in global markets for LNG as well as pipeline gas for Europe.

As part of Sonatrach's five-year investment plan (2023-2027) the sum of $40Bln has been set aside and more than $30Bln will be allocated to exploration and production with the objective of increasing production in the short and medium term.

Nearly $1Bln will be devoted to Sonatrach’s projects aimed at the company's contribution to the energy transition. These include flared gas recovery projects at production sites and the LNG plants at Skikda and Arzew.

Sonatrach signed a contract in 2022 with two Chinese engineering companies, Sinopec Luoyang Engineering and Sinopec International Petroleum Services Corp., for improvement work at the Skikda LNG plant.

The contracts include the dismantling of two 20-year-old storage tanks and the construction of a new tank of 150,000 cubic metres capacity and the modernization of the jetty and loading facilities to accommodate larger vessels.

Sonatrach, the Algerian national energy company, plans to invest more than $30 billion in the exploration and production of hydrocarbons, notably natural gas, and to upgrade facilities to improve its position in global markets for LNG as well as pipeline gas for Europe.

SDX Energy Plc, the UK-based exploration and production company with interests in Morocco and Egypt, has announced a successful two-well Moroccan drilling campaign that opens up a new producing area.

Algeria and Italy said they had signed an agreement for the North African nation to supply more natural gas to European Union member Italy to replace falling supplies from Russia.

Sound Energy, the UK company with natural gas assets in Morocco and an LNG production proposal, has reported progress on several fronts, including sales, finance and engineering.

The company is planning to develop a micro-LNG plant for the Tendrara 5-Horst gas well in its Tendrara production concession in eastern Morocco, near the Algerian border.

The micro-LNG plant is part of a full field development plan centred around the construction of a 120-kilometre pipeline going north to link with the Maghreb-Europe pipeline.

Graham Lyon, Executive Chairman, said that there had been positive developments for the Tendrara concession, including on a commercial gas sales contracts and Phase 1 engineering of the micro-LNG plant.

A company called Afriquia Gaz SA has signed a conditional LNG sales agreement.

Afriquia Gaz  is Morocco-based and is currently engaged in the refining and marketing of liquefied petroleum gas (LPG).

“The agreement covers a 10-year, take-or-pay LNG sale and purchase at Tendrara,” said Lyon.

Sound Energy is also negotiating an $18 million loan from Afriquia Gaz.

The company added that there has also been activity covering the pipeline development discussions.

“A huge amount of work has been completed so far this year and much remains to be concluded during the remainder of 2021,” said Chairman Lyon.

“Having secured a long-term LNG sales agreement with Afriquia Gaz, we have established a route to market for our gas and following completion of the proposed $18M loan from Afriquia Gaz, the company will have financing for the Sound Energy share of the Phase 1 development,” he explained.

Afriquia Gaz has received £2.0 million ($2.8M) of share equity at 1.25 UK pence per share in connection with the LNG sales agreement, thus providing Sound Energy with more liquidity.

The LNG sales agreement with Afriquia Gaz commits the buyer to purchase not less than 100,000 cubic metres per annum produced and liquified from the Phase 1 development concession joint venture.

“With important catalysts to come in the near term, I look forward to updating shareholders further as we progress towards the development phase of the project and to becoming a revenue generating business,” he stated.

The company said the Tendrara Horst field would help provide domestic LNG to industrial users in Morocco, displacing presently imported fuels with a deeper carbon footprint.

Sound Energy was also able to successfully restructure its Luxembourg-listed €28.8M, 5-percent senior secured notes by engaging proactively with noteholders to agree a suitable restructuring without substantial equity dilution.

Predator Oil and Gas, the Jersey-based company listed on the London Stock Exchange and with operations in Trinidad, Morocco and Ireland, said it submitted a bid to supply and operate a floating LNG import terminal in Morocco after the North African kingdom’s Energy Ministry invited bids with a deadline of May 31.

Sound Energy, the UK company with natural gas assets in Morocco and an LNG production proposal, has held a share placement and is considering another to raise more cash for operations.

The company is planning to develop a micro-LNG plant for the TE-5 Horst gas well in its Tendrara Production Concession in eastern Morocco, near the Algerian border.

The LNG plant is being pursued alongside a full field development plan centred around the construction of a 120-kilometre pipeline going north to link with the Maghreb-Europe pipeline.

“The placement and announcement of an opportunity for existing shareholders to participate under the same terms and conditions provides Sound with a stronger financial base to progress our planned activities,” said Graham Lyon, Sound Energy's Executive Chairman.

“We have confidence in our strategy to bring Sound into a cash generating position and look forward to updating the market as future milestones are met,” added Lyon.

The company at the end of June 2020 entered into a deal with a Moroccan fuel distribution group for the purchase of the LNG from the TE-5 Horst well development, as well as the partial financing by the partner.

Exclusivity has been granted to the partner in relation to the proposed transaction until 31th of December 2020.

Sound Energy is listed on the Alternative Investment Market of the London Stock Exchange.

The company has now placed 129.4 million new ordinary shares at a price of 2.125 UK pence to raise £2.75M million ($3.56M) before costs.

The company also announced a proposal to raise up to a further £1.75M by way of a broker option through the issue of up to 82.35M additional new ordinary shares.

Sound Energy noted that front-end engineering and design is underway for both the gas processing facility and the pipeline.

The company bought into the Tendrara licence in June 2015, taking a 55 percent working interest and assuming operatorship.

Its partners are the Moroccan state company for hydrocarbons, ONHYM with 25 percent and the Oil & Gas Investment Fund with 20 percent.

The forward Tendrara-Anoual work programme is focused on accelerating the exploration activity to unlock the ultimate potential of the Basin and advancing preparations to early first gas.

The net proceeds of the £2.57M share placement and any additional proceeds will be used to strengthen the company's cash position in adding to its unaudited cash balances of approximately £4.2M at the end of June 2020.

The Anoual exploration permit terms have been restructured while the company continues to progress its phased development strategy.

Sound Energy said it continued to engage with multiple other potential farm-in stakeholders who have expressed interest in supporting the company's strategy.