Sound Energy expects to close its previously announced LNG supply deal with Morocco’s LPG distributor Afriquia Gaz in December.
“Reflecting ongoing progress, the parties have agreed to extend the date by which conditions precedent to the LNG GSA are required to be satisfied or waived to December 17, 2021,” Sound Energy said in a statement on Wednesday.
In July, the London-listed firm had entered into a binding deal with Afriquia Gaz for a period of ten years.
Afriquia Gaz would buy not less than 171,000 cubic meters of LNG per year from Sound Energy’s small-scale LNG facility.
This equals about 100 million cubic meters a year of gas from the first phase of the LNG project which would receive gas from the TE-5 Horst field in the Tendrara production concession.
After the LNG supply deal, the duo worked on satisfying the remaining conditions precedent in order to complete the transaction.
Sound Energy said in the newest statement it had satisfied all conditions within its direct control.
However, the remaining condition that the duo still needs to complete relates to the loan note agreement. Under this deal, Afriquia Gaz would provide an $18 million secured loan with a 6% annual coupon to Sound Energy.
The firm added that it expects the duo to complete all other conditions related to the deal.
Graham Lyon, Sound Energy’s executive chairman, said the firm had completed “much work” in the last month, including finalizing contracts with Ital Fluids.
“We are confident that all conditions precedent to the LNG GSA will be satisfied imminently and consequently the ‘notice to proceed’ with Phase 1 development can be announced once all contracts are executed,” Lyon said.
Contract with ONEE
Besides the update, Sound Energy has this week revealed a gas supply deal with Morocco’s state-owned power company ONEE.
This 10-year deal relates to the second pipeline-based phase of Sound Energy’s Tendrara development.
The concession partners have committed to provide annual volumes of up to 350 million cubic meters of gas. This includes an annual take-or-pay volume of 300 million cubic meters.
They would provide the gas to the Maghreb-Europe pipeline connecting Algeria to Spain and crossing Morocco, it said.