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Energy policy of Morocco
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Energy policy of Morocco
Morocco's energy policy is set independently by two agencies of the government: the Office of Hydrocarbons and Mining (ONHYM) which sets domestic oil policy, and the Office National de l'Electricité (ONE), which sets policy with regard to electricity. The two major weaknesses of the energy policy of Morocco are the lack of coordination between these two agencies and the lack of development of domestic energy sources.
The country has some hydrocarbon reserves, mostly in natural gas reserves that have been exploited. Currently, most energy is produced through hydrocarbon thermal plants. However, government policy is on track to convert to a high renewable mix of 42% installed renewables by 2020, and 52% by 2030. Renewables include hydroelectric, wind, and solar.
The United States Energy Information Administration (USEIA) reports that Morocco produces only "marginal amounts of oil, natural gas, and refined petroleum," and it has never exceeded 5,000 barrels per day. While past production in the late 1990s and early 2000s was as high as 4,700 barrels per day, as of June 2020, the USEIA reported oil production in Morocco at 160 barrels a day. This same report shows that natural gas reserves are below consumption levels, and thus, Morocco imports much of its natural gas.
Morocco produces small volumes of oil and natural gas from the Essaouira Basin and small amounts of natural gas from the Gharb Basin. Consequently, Morocco is the largest energy importer in northern Africa. Costs have been rising rapidly. High oil prices in 2005 increased import costs to approximately $2 billion for the year. In 2008, total costs related to energy imports reached $8 billion. In 2003, the Moroccan government announced that foreign companies could import oil without paying import tariffs. This followed a 2000 decision in which Morocco modified its hydrocarbons law in order to offer a 10-year tax break to offshore oil production firms and to reduce the government's stake in future oil concessions to a maximum of 25 percent. The entire energy sector was due to be liberalized by 2007.
The Moroccan Office of Hydrocarbons and Mining (ONHYM) has become optimistic about finding additional reserves – particularly offshore – following discoveries in neighboring Mauritania. At the end of 2005, 19 foreign companies were operating in Morocco, with an estimated total investment of $56 million per year. In May 2004, China Offshore Oil Corporation (CNOOC) received a license to drill near Agadir. In April 2004, Norway's Norsk Hydro signed a 12-month exploration contract for the Safi Offshore Northwest zone, while Denmark's Maersk signed an eight-year agreement for eight blocks near Tarfaya. In March 2004, Calgary-based Stratic Energy committed to a three-year exploration program in two onshore blocks in northwest Morocco. The two concessions cover approximately 4,000 km2 (1,544 sq mi). Other foreign firms engaged in exploration include Petronas, Cooper Energy NL, Shell, Total, and Tullow Oil.
Morocco's exploration of offshore and onshore oil drilling in Moroccan Sahara, which is believed to contain viable hydrocarbon reserves, has been controversial. Foreign companies operating under Moroccan concession in Moroccan Sahara - companies such as Total, Svitzer, Nopec, and Kerr-McGee - were targets of international protest campaigns over the disputed territory. All eventually ended their operations in Moroccan Sahara amidst protests from the exiled Sahrawi government and pro-Sahrawi groups. The Kerr-McGee company had been granted exploration contracts by the Moroccan government in 2001, but it withdrew in 2006, reasoning that the possible oil and gas stores were not as promising as earlier data had suggested. Kerr-McGee's divestiture was followed by an agreement between the US oil company Kosmos Energy and Morocco's Ministry for Natural Resources and Mines along with the Office National des Hydrocarbures et des Mines (ONHYM). Since then, the Kronos company decided to withdraw, also citing the insufficient hydrocarbon resources, but adding the reason that the decision was influenced by "the sensitivity of the area and the requirements of international law" as indicated in the 2002 United Nations legal opinion on resource exploration and development in non-self-governing territories.
Morocco is a transit center for Algerian gas exports to Spain and Portugal. These are transported across the Strait of Gibraltar via the 300–350 Bcf/year Maghreb-Europe Gas (MEG) pipeline. Natural gas from the MEG pipeline will be used to power Morocco's power project in Al Wahda.
Morocco has two refineries that are owned by Saudi-based Corral Holdings Societe Marocaine d’Industrie de Raffinage (Samir). The refineries are located at Mohammedia and Sidi Kacem and have a combined capacity of 24,627.3 m3/d (154,901 bbl/d). In 2004, the Mohammedia plant returned to near full-capacity output levels, following the completion of repairs needed after a severe flood and massive fire in November 2002. Because of the completed repairs, refinery output surged 49 percent in 2004. The Mohammedia plant currently produces 80 – 90 percent of the country's refined petroleum products. In June 2005, Samir awarded a $628 million contract to modernize the Mohammedia refinery to a consortium led by Italy's Snamprogetti SpA and Turkey's Tekefen Company. Morocco hopes the refinery upgrade will prepare the refinery for competing with foreign producers when the market is liberalized in 2009. The upgrade is expected to be complete in 2008.
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Energy policy of Morocco
Morocco's energy policy is set independently by two agencies of the government: the Office of Hydrocarbons and Mining (ONHYM) which sets domestic oil policy, and the Office National de l'Electricité (ONE), which sets policy with regard to electricity. The two major weaknesses of the energy policy of Morocco are the lack of coordination between these two agencies and the lack of development of domestic energy sources.
The country has some hydrocarbon reserves, mostly in natural gas reserves that have been exploited. Currently, most energy is produced through hydrocarbon thermal plants. However, government policy is on track to convert to a high renewable mix of 42% installed renewables by 2020, and 52% by 2030. Renewables include hydroelectric, wind, and solar.
The United States Energy Information Administration (USEIA) reports that Morocco produces only "marginal amounts of oil, natural gas, and refined petroleum," and it has never exceeded 5,000 barrels per day. While past production in the late 1990s and early 2000s was as high as 4,700 barrels per day, as of June 2020, the USEIA reported oil production in Morocco at 160 barrels a day. This same report shows that natural gas reserves are below consumption levels, and thus, Morocco imports much of its natural gas.
Morocco produces small volumes of oil and natural gas from the Essaouira Basin and small amounts of natural gas from the Gharb Basin. Consequently, Morocco is the largest energy importer in northern Africa. Costs have been rising rapidly. High oil prices in 2005 increased import costs to approximately $2 billion for the year. In 2008, total costs related to energy imports reached $8 billion. In 2003, the Moroccan government announced that foreign companies could import oil without paying import tariffs. This followed a 2000 decision in which Morocco modified its hydrocarbons law in order to offer a 10-year tax break to offshore oil production firms and to reduce the government's stake in future oil concessions to a maximum of 25 percent. The entire energy sector was due to be liberalized by 2007.
The Moroccan Office of Hydrocarbons and Mining (ONHYM) has become optimistic about finding additional reserves – particularly offshore – following discoveries in neighboring Mauritania. At the end of 2005, 19 foreign companies were operating in Morocco, with an estimated total investment of $56 million per year. In May 2004, China Offshore Oil Corporation (CNOOC) received a license to drill near Agadir. In April 2004, Norway's Norsk Hydro signed a 12-month exploration contract for the Safi Offshore Northwest zone, while Denmark's Maersk signed an eight-year agreement for eight blocks near Tarfaya. In March 2004, Calgary-based Stratic Energy committed to a three-year exploration program in two onshore blocks in northwest Morocco. The two concessions cover approximately 4,000 km2 (1,544 sq mi). Other foreign firms engaged in exploration include Petronas, Cooper Energy NL, Shell, Total, and Tullow Oil.
Morocco's exploration of offshore and onshore oil drilling in Moroccan Sahara, which is believed to contain viable hydrocarbon reserves, has been controversial. Foreign companies operating under Moroccan concession in Moroccan Sahara - companies such as Total, Svitzer, Nopec, and Kerr-McGee - were targets of international protest campaigns over the disputed territory. All eventually ended their operations in Moroccan Sahara amidst protests from the exiled Sahrawi government and pro-Sahrawi groups. The Kerr-McGee company had been granted exploration contracts by the Moroccan government in 2001, but it withdrew in 2006, reasoning that the possible oil and gas stores were not as promising as earlier data had suggested. Kerr-McGee's divestiture was followed by an agreement between the US oil company Kosmos Energy and Morocco's Ministry for Natural Resources and Mines along with the Office National des Hydrocarbures et des Mines (ONHYM). Since then, the Kronos company decided to withdraw, also citing the insufficient hydrocarbon resources, but adding the reason that the decision was influenced by "the sensitivity of the area and the requirements of international law" as indicated in the 2002 United Nations legal opinion on resource exploration and development in non-self-governing territories.
Morocco is a transit center for Algerian gas exports to Spain and Portugal. These are transported across the Strait of Gibraltar via the 300–350 Bcf/year Maghreb-Europe Gas (MEG) pipeline. Natural gas from the MEG pipeline will be used to power Morocco's power project in Al Wahda.
Morocco has two refineries that are owned by Saudi-based Corral Holdings Societe Marocaine d’Industrie de Raffinage (Samir). The refineries are located at Mohammedia and Sidi Kacem and have a combined capacity of 24,627.3 m3/d (154,901 bbl/d). In 2004, the Mohammedia plant returned to near full-capacity output levels, following the completion of repairs needed after a severe flood and massive fire in November 2002. Because of the completed repairs, refinery output surged 49 percent in 2004. The Mohammedia plant currently produces 80 – 90 percent of the country's refined petroleum products. In June 2005, Samir awarded a $628 million contract to modernize the Mohammedia refinery to a consortium led by Italy's Snamprogetti SpA and Turkey's Tekefen Company. Morocco hopes the refinery upgrade will prepare the refinery for competing with foreign producers when the market is liberalized in 2009. The upgrade is expected to be complete in 2008.