The Moroccan Oil & Gas Connection

North Africa led the way into the "Arab Spring," with unrest moving from one country to another and resulting in the only changes in rulers to date.

First, the Jasmine Revolution catapulted strongman Zine el-Abidine Ben Ali from his 23 years of police state rule in Tunisia. Hosni Mubarak was the next to go, ending almost 30 years of military-supported rule in Egypt. In Libya, Muammar Gaddafi is still holding on after 42 years, but the prognosis for continuing command is not good.

The situation with Gaddafi, along with concerns that it will spill over to renew unrest in neighboring countries, focuses attention to the Maghreb – the western section of North Africa that includes Libya, Tunisia, Algeria, and Morocco.

Algeria – currently the largest Maghreb provider of natural gas to Europe – continues to experience elements of an uprising that began, in its latest version, 18 years ago and has never really ended. Just yesterday, militants attacked police outside capital city Algiers.

However, one nation has this far bucked the trend, providing a welcome example of order and calm. And that's where I'm camped out this week.

On Friday (July 1), Morocco's referendum on constitutional change passed with an overwhelming 98% of the vote. Even with a boycott by opposition parties, more than 70% of the electorate voted.

These changes reduce the power of King Mohammed VI and increase those of the Parliament. On paper, therefore, they are certainly more democratic. The real test will come in the King's acceptance of the same reforms he himself proposed. Yet his political leverage may be limited.

In a nation where opposition to the king remains strong, the continuing moderate liberalism and openness to the West seems likely to continue, too.

That's good news for investment coming into the country.

Outside companies – from retail and construction to computers and oil/gas – are coming to regard Morocco as the preferred base in the Maghreb, as it's close to Europe and provides an entrance to the much broader African market. In fact, the Spanish (and European Union euro-based) trade zones of Ceuta and Melilla are actually located on the continent of Africa (although they are claimed by Morocco as well).

Over the last decade, potentially significant deposits of oil shale have been discovered in Morocco. Some of that is border territory (still in dispute with Algeria) that includes portions of the western Sahara – most of which is now effectively controlled by Morocco but has a nationalist independent movement recognized by Algeria.

Nonetheless, negotiations are now underway in earnest to develop the oil shale and accompanying shale gas finds.

And that is why I am here.

Meetings in Agadir, Rabat, Marrakech…

I am using the "new" coastal city of Agadir as my base of operations.

It is on the Atlantic Ocean – across from the Canary Islands and a one-hour plane ride south of Casablanca. A remarkable example of rapid development, Agadir's inviting coastline has become a target for considerable outside investment lately.

On the edge of the desert and up against the Atlas Mountains, five-star resorts have emerged to cater to a rising international tourist trade. Agadir boasts a modern airport, excellent roads and infrastructure (including the most reliable Internet access in the region), and a genuine multilingual professional population.

For my own purposes, it is a very good location to hold some of my meetings (especially with oil companies working just south and east).

However, I also have sessions scheduled with ONHYM (the national bureau of hydrocarbons and mines) and ministry personnel in the capital city of Rabat. That is at least an eight-hour train ride away.

Tomorrow I have a meeting with financial interests about half that distance north. It takes place in the fabled city of Marrakech, the previous capital of Morocco. I must admit wanting to go there ever since Crosby, Stills, and Nash sang about a certain express. That I am apparently taking that same train only adds to the mystique.

Later in the week has me out at some of the fields east of here and in the desert proper. Somebody mentioned "camels," but I do hope that is just the local Berber word for "Jeep."

Here is what is so important about Morocco – and the reason I consented to be here in the desert in the summer.

The Field Potential Is Big (and It Could Become Vital)

The local oil and gas reserves are estimated at around 55 billion barrels of oil equivalent (BOE). Should Libyan exports remain cut off, and should the unrest intensify in Algeria, Morocco may become an immensely important source for meeting European energy needs.

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