Circle Oil Inks MoU Regarding Gas Supply to SBS Porcher in Morocco

Circle Oil has announced that it, together with its partner Office National des Hydrocarbures et des Mines (ONHYM), has signed a memorandum of understanding (MOU) with a potential new gas customer in Morocco, SBS Porcher. 

The memorandum forms the basis for Circle to sell the gas discovered during the successful 2014/15 Sebou drilling campaign and all parties expect to sign binding documentation in the coming months, Circle Oil said in a press note published Monday.

As part of this arrangement, a new pipeline extension would be constructed linking the existing Circle-owned pipeline in the northern Kenitra region to the Porcher factory in the central Kenitra area.

As per the MoU, Porcher would pay for (and own) the required pipeline extension of approx. 15-18 km (estimated cost of $2.5m) to central Kenitra, with construction estimated to start in May 2016 and first gas anticipated to flow during Q4 2016. Estimated gross offtake volume would be 10,000 cubic metres per day (approx. 0.35mmcf/d) with a price of MAD 4.25/cubic metre ($12/mcf). The gas price would be fixed with no linkage to oil prices. The contract duration is 5 years

This new contract when signed, will result in Circle achieving demonstrably higher gas prices, the company stated, adding that it also enables Circle to access a potential new customer base in central Kenitra.