Shell, through its affiliate Shell International Trading Middle East Limited FZE, has signed a 12-year LNG supply agreement for 0.5 bcm/year with the Moroccan National Office of Electricity and Drinking Water (ONEE). In the first years, LNG will be supplied through Spanish ports and shipped to Morocco via the Maghreb-Europe Gas Pipeline. At later stage, gas could be delivered through future Moroccan LNG terminals.
Until this agreement, Morocco was relying on the spot market to buy LNG, after Algeria ended exports via the Maghreb-Europe Gas Pipeline crossing Morocco to supply Spain and Portugal in 2021. As transit fees, Algeria used to provide Morocco with a portion of the transported gas (approximately 1 bcm/year), which accounted for 90% of the country's gas demand.
The rise of renewables in Morocco's power mix creates a higher need for flexibility. Consequently, ONEE is currently developing more than 2 GW of gas-fired power plants. The share of renewables in electricity production (excluding hydro) rose from 3% in 2010 to 16% in 2021, while the share of gas declined from 12% to 8%.