Israeli energy firm eyes gas exploration in Morocco

Israeli company NewMed Energy is negotiating gas exploration licenses with Moroccan authorities, as the kingdom becomes a hot spot for oil and gas firms.

In a press conference on Monday, NewMed CEO Yossi Abu said that “[the company] is in an advanced process for the receipt of exploration licenses in Morocco (...) in both the Mediterranean and the North Atlantic Ocean.”

Known before as Delek Drilling, the company’s goals in Morocco are part of a new plan to expand its investments in the region.

This is not the first time that an Israeli company shows interest the in kingdom's gas reserves.

Last year, in August, Israeli company Ratio Petroleum secured exclusive rights to study and prospect the Atlantic Dakhla block in water depths of 3,000 metres.

The bloc is located off the coast of the disputed Western Sahara. The agreement was therefore understood as a win-win deal for Israel, which seeks normalisation with MENA governments, and Morocco, which seeks international recognition of its sovereignty over the disputed territory. 

In December 2020, Morocco normalised ties with Israel in exchange for the US recognition of Morocco’s sovereignty over Western Sahara.

Since then, the two countries have been strengthening ties through cooperation deals in the military, economic, and education sectors.

Othman Mefdaoui, a Moroccan environment and energy engineer, told The New Arab that exploration deals could reduce the kingdom’s dependency on foreign gas supplies, which reached 91.7% in 2018.

“If the new deals lead Morocco to find natural gas, ... [they] will increase the share of natural gas in the electricity mix, as a better and cleaner energy source than coal and fuel, which represent around 64% in the electricity mix in Morocco today,” added Mefdaoui.

In January, the British Morocco-based energy company Chariot announced  a "significant" discovery of gas in the northern city of Larache. The firm did not articulate further on the size of this specific field but said it estimated Moroccan gas reserves to amount to around 28 billion cubic metres. Exploration and drilling can take more than three years before Morocco can actually start consuming its own gas.

Since the early 2000s, Moroccan and foreign companies have invested 27 billion Moroccan Dirham (MAD) ($2.8 billion) in oil and gas exploration in different sites across Morocco.

The kingdom's annual gas production totals 110 million cubic metres, while its annual consumption is 1 billion. It is expected to reach 1.1 billion in 2025.

Until 2021, Morocco benefited from 700 million cube metres of natural gas per year through the Maghreb–Europe Gas Pipeline (GME), which used to link the Hassi R'Mel gas field in Algeria with Cordoba in Spain, through Morocco.

Last year, Moroccan-Algerian bad blood pushed Algeria’s president Abdel Majid Tebboun to end the GME deal though, despite Spain's endeavour to rescue the 26-year-old gas agreement.

The move was partially understood as a response to the kingdom's decision to normalise ties with Israel, which Algeria perceived as a threat to its national security. Algeria continues to back the Polisario Front, an armed group that fights for the independence of Morocco's Western Sahara region.

As a result of the collapse of the deal with Algeria, the kingdom turned to leasing deals with foreign energy companies, issuing more than 70 drilling licenses last year. Foreign firms are set to secure more than 70% of the profits of these deals though.