Sound Energy said Thursday it could delay a project aimed at developing a small-scale liquefied natural gas facility in Morocco due to the uncertainty created by the Covid-19 coronavirus pandemic.
The Morocco-focused upstream gas company announced plans earlier this year for the micro-LNG project to be fed with gas from the TE-5 Horst field in the Tendrara production concession.
The company sees this micro-LNG project as a fast way to garner cash flow from its gas discoveries in Tendrara ahead of a much bigger plan involving a 120-kilometer gas export pipeline.
Sound Energy aimed to take a final investment decision on this development during the second quarter of this year and produce first LNG during 2021. The fuel would be delivered to industrial customers in Morocco.
However, the company is now reconsidering its options as oil and gas prices crashed to record lows due to the outbreak of the Covid-19 coronavirus pandemic.
“There are unprecedented societal and market conditions following Covid-19 virus outbreak which increases the risk that there could be delay in the company’s micro-LNG strategy implementation”, Sound Energy said in its quarterly report.
Sound Energy currently sees no significant impact on its operations from Covid-19.
But if the current situation becomes prolonged then it could lead to a delay in the micro-LNG plan and the ability of the company to raise additional funds through an equity raise, both impacting Sound Energy’s liquidity, it said.