According to January 2006 estimates by the Oil and Gas Journal (OGJ), Morocco has proven oil reserves of 1.07 million barrels and natural gas reserves of 60 billion cubic feet (Bcf). Morocco may have additional hydrocarbon reserves, as many of the countrys sedimentary basins have not yet been explored.
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, Norways Norsk Hydro signed a 12-month exploration contract for the Safi Offshore Northwest zone, while Denmarks 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 1,544 square miles. Other foreign firms engaged in exploration include Petronas, Cooper Energy NL, Shell, Total, and Tullow Oil.
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. The countrys total yearly costs for energy imports range from $1- $1.5 billion. However, high oil prices in 2005 increased import costs to approximately $2 billion for the year. 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 governments stake in future oil concessions to a maximum of 25 percent. The entire energy sector is due to be liberalized by 2007.
Recent activity in Western Sahara, which is believed to contain viable hydrocarbon reserves, has been controversial. In 2001, Morocco granted exploration contracts to Total and Kerr-McGee, angering Premier Oil and Sterling Energy, which previously had obtained licenses from the Polisario government. In 2005, the government-in-exile of the Western Sahara invited foreign companies to bid on 12 contracts for offshore exploration, with hopes of awarding production sharing contracts by the end of 2005. Both Premier Oil and Sterling Energy received conditional exploration rights. Foreign companies operating under Moroccan concession in Western Sahara have become targets of international protest campaigns. These companies include Total, Wessex Exploration, Svitzer (the British subsidiary of the Dutch company Fugro), Wales Robertson Research International and Norways TGS Nopec. All have ended their operations in Western Sahara, with the exception of Kerr-McGee. As of November 2005, the company was the last to be drilling in Western Sahara, although the Polisario government has pressured it to pull out.
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 Moroccos power project in Al Wahda.
Morocco has two refineries that are owned by Saudi-company Corral Holdings Societe Marocaine dIndustrie de Raffinage (Samir). The refineries are located at Mohammedia and Sidi Kacem and have a combined capacity of 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 countrys refined petroleum products. In June 2005, Samir awarded a $628 million contract to modernize the Mohammedia refinery to a consortium led by Italys Snamprogetti SpA and Turkeys 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.