Following the country’s first national elections under a new constitution meant to reduce monarchical authority, Morocco has shown signs of more decentralized state and new governing style. However, a lack of policy specifics, insecure funding methods and worries surrounding King Mohammad VI’s remaining authority have left the country’s energy sector without a clear path forward.
Called as a response to a growing movement in favor of government reforms, last week’s elections saw the moderate Islamic Justice and Development Party claim a majority victory with approximately 80 seats claimed out of the 288 seats announced. This showing does not grant the party a governing majority, as it allows them less than a quarter of the 395-seat body, but will guarantee that the country’s next prime minister, as selected by King Mohammad VI, will come from their party. Any ruling majority will have to come with the party’s efforts to create a parliamentary coalition, which can be pursued after the final votes are tallied and the final 90 seats are allocated proportionally.
However, despite the election and new constitution, it is unclear what this new government will mean for the country and its energy sector. While the Justice and Development Party have issued support of an Islamic financial system and a streamlining of regulations related to infrastructure development, issues of religion, security and most importantly the economy remain in the hands of the King, according to The Guardian. Faced with deep investment deficits, the country’s energy sector will need significant government support to sustain and continue to pursue new strategies, though the election has not offered much clarity about where that will come from.
A Desired Path Forward?
Currently reliant on imports for 97 percent of its energy needs, Morocco has long aimed to reduce its dependence on foreign sources through the development of domestic projects, including exploring newly-found traditional reserves, shale projects and more recently, alternative energy plans. So far, these efforts have fallen short due to slow government progress, insufficient investment and partnerships with foreign firms that are too small or unprepared to sufficiently address the needs of the local energy development needs.
These obstacles have been most pronounced recently with efforts to exploit the country’s shale potential at sites located near Tangiers, Tarfaya and Timahdit. While the sites have been estimated to hold significant reserves by the Moroccan government and the U.S. Energy Information Administration, progress on the sites has been slow as firms such as Ireland’s San Leon and Brazil’s Petrobras have yielded little in the way of significant results. Last year, the Moroccan government has reached out to government energy actors in the United States to lend technical support to shale efforts in the country, as well as signing a consulting agreement with Estonia’s state-backed Eesti Energia to further aid the effort. Just this month, the country’s Office National des Hydrocarbures et des Mines (ONHYM) agreed to an eight year exploratory deal with Canada’s East West Petroleum to further shale efforts, with the company taking on a 75 percent stake of the Doukkala Block, southwest of Casablanca.
Still, shale progress has been slow and has been made worse by a significant decrease in availability to investment brought on by the global economic slowdown and an increasing domestic budget deficit. The country’s spending drove the deficit to a ten year high as the government offered significant food and fuel subsidies to help calm a growing protest movement inspired by a broader regional reform campaign. While the spending and a new constitution passed by a public referendum in June, followed by answered calls for early parliamentary elections, helped the government escape the sort of movements that toppled leaders in Tunisia and Egypt, it has left the country low on funds when it needs it most.
The country’s economic challenges could worsen still in the coming months as potential investors and production partners to the north become more cautious ahead of an expected slowdown across Europe. While funding has continued for renewable energy efforts with fresh World Bank solar support and the country’s tourism industry, in the form of a $2.5 billion fund from three Gulf States announced last week, further support shale exploration efforts remains elusive and insufficient.
While government officials and regional analysts remain positive about the country’s long-term shale potential, the high initial costs of the method’s technology and infrastructure will continue to be a stumbling block to greater energy independence and energy development. In the meantime, traditional and renewable energy efforts remain an option for some industry actors. Earlier this month, representatives of the ONHYM began promoting the development of 22 blocks around the country at a hydrocarbons conference held in South Africa, boasting geological similarities between the region and Nova Scotia as selling points. Boasting sizable offshore reserves, Nova Scotia was once adjacent to the Moroccan coast, suggesting the potential for similar findings.
Inspired by such thinking, Australia’s Tap Oil and Karoon Gas have partnered to create Pure Vida Energy to advance oil exploration efforts off the country’s Atlantic coast, according to the Wall Street Journal. Currently seeking $3.9 million to move the effort forward, the partnership has cited geological similarities with the Jubilee field off the coast of Ghana as reason enough to pursue what they believe to be an estimated billion-barrel reserve.