American Firms Launch Consortium to Build Hydrocarbon Terminal in Morocco – Jean R. AbiNader
Site of Nador West Med Port to Boost Regional Capacity Responsibly
Jean R. AbiNader, MATIC
March 18, 2016
In a promising boost to Morocco’s efforts to construct a modern port at Nador on the Mediterranean coast, a US-based investment advisory company, lixia Capsia Gestionis (LixCap, www.lixcap.com) has assembled a consortium to build and manage a “break and build” bulk hub for the storage and re-export of hydrocarbons and its products.
Nador West Med (NWM), as the new port is known, is ideally suited for the project. It is a natural deep-water harbor, with extensive surface area on land and sea encompassing a free trade zone, a friendly FDI regime thanks to the only US FTA in the region and a pool of Moroccan government incentives, land availability, low labor costs, and extensive land and sea routes to Europe, North, and West Africa.
Given the success of the Tanger-Med Port as a platform connecting Europe, the Middle East, North and West Africa, and beyond, NWM is a natural extension of that project, especially as a specialized venue for hydrocarbon logistics. The concept is to use NWM as a storage facility for off-take that is transiting the Mediterranean from GCC and producers around the Basin. Given the aging of refining facilities in Europe, it makes sense to locate new facilities in NWM that meet global environmental standards and support the large infrastructure needs of industry.
As noted in the project’s executive summary, “A specially-commissioned Wood Mackenzie study indicates that promising opportunities exist for diesel, kerosene, gasoline, LPG and bunker fuel at NWM. To take advantage of this opportunity, the port authority of NWM is building an industrial free trade zone…allowing private sector operators to develop market-based business opportunities.”
What this means is that national oil companies, bulk hydrocarbon traders, the international oil companies, and third-party storage companies can use this location to store products, refine them according to a customer’s specifications, and ship in a tight timeframe. This is especially promising for the domestic market in Morocco, which has experienced shortages and disruptions at the country’s only refinery.
As the summary makes clear, “Strategic location and a long history of political stability under the business-friendly monarchy make Morocco a compelling investment destination…Morocco has sensible environmental regulation harmonized with European norms.” NWM is fully financed by international lenders, including the European Bank for Reconstruction and Development, the European Investment Bank, and the International Finance Corporation.
The consortium promoting the project received a grant from the US Trade and Development Agency (USTDA) to perform a market analysis and pre-FEED engineering study to interest global operators and investors. In addition to LixCap, the engineering lead is Lonquist & Co. based in Houston. Both companies have operations in Morocco, and LixCap won the 2015 AMCHAM-OCP Morocco Trade and Investment Award. The team is support by Jacobs Engineering, which brings its critical EPC skills and specific hydrocarbon expertise to the project.
While the construction is not expected to be completed until 2020, given the vagaries of the hydrocarbon markets and the growing needs in Africa, the timing for the hydrocarbon terminal seems right on target.