Gas Sales Agreement for Phase 2 Tendrara Development

Source: www.gulfoilandgas.com 11/30/2021, Location: Africa

Sound Energy is delighted to announce that it has entered into a binding gas sale and purchase agreement (the "GSA") in respect of the Phase 2 development of the Tendrara Production Concession with Morocco's state-owned power Company ONEE (Office National de l'Electricite et de l'Eau potable) for the sale of natural gas from the Tendrara Concession in Eastern Morocco over a 10 year period.

The Company has entered into the GSA, which is in addition to the conditional Phase 1 micro liquified natural gas TE-5 Horst development related gas sales agreement entered into by the Company with Afriquia Gaz and announced by the Company on 29 July 2021, alongside its state-owned Tendrara Production Concession partner ONHYM (Office National des Hydrocarbures et des Mines and together with the Group the "Tendrara JV Partners").

Under the GSA, the Tendrara JV Partners have conditionally committed to producing, processing and delivering gas from the Tendrara Production Concession, in accordance with required ONEE gas specifications, to the Gas Maghreb-Europe pipeline connecting Algeria to Spain and crossing Morocco (the "GME Pipeline"), for an annual contractual volume up to 350 million cubic meters of natural gas per year for a period of 10 years, with an annual take or pay volume of 300 million cubic meters.

The GSA includes a fixed unitary price for the annual volume of 0.3 bcm per annum (approximately 29.0 MMscf/d or a minimum amount of energy of approximatively 10.5 million MMbtu per annum to be delivered at the point of sale), which will result in annual gross revenues attributable to the Tendrara concession (100%) as envisaged in the original binding memorandum of understanding between the parties announced by the Company on 30 October 2019

The GSA is conditional upon, inter alia: (i) all necessary authorizations and permits having been granted for the construction of the Phase 2 gas installations (ii) the final investment decision, when taken, by the Tendrara JV Partners, being approved by the Moroccan Ministries of Transition Energy and Sustainable Development and Economy and Finance; and (iii) the entry by the Tendrara JV Partners of an interconnection agreement with the operator of the GME Pipeline, and the commencement of works, for the connection of the Tendrara Production Concession to the GME Pipeline. The conditions to the GSA are required to be satisfied within 90 days of signature, however an extension is allowable with the consent of all parties.


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