The case of Morocco’s troubled Société Anonyme Marocaine de l’Industrie du Raffinage (SAMIR) refinery came to the fore again in December after its fate was raised with Minister of Energy Transition and Sustainable Development, Leila Benali, during a weekly session in the upper House of Councillors. She was asked by members of the Confédération démocratique du travail to update the chamber on the refinery’s rescue. Benali responded by stating that the government intended to engage with the findings of the Competition Council, which recommended carrying out an in-depth economic and technical study of the refinery’s viability in light of the evolution of the global refining sector.

The SAMIR refinery in Mohammedia has been a long tale of woe with its troubles dating back over many years. Established in 1959, the 150,000 b/d capacity plant was government run until 1997 when it was sold to the Corral Group which is a Saudi-Swedish enterprise. The sale did not work out well and by 2015, work at the refinery all but stopped, with the company dissolved the following year because it was unable to repay €4.0 billion of debt. 

In November 2018, the Casablanca Commercial Court ruled that the board’s mismanagement was the principal reason for the company’s failures. In 2019, however, Sheikh Mohammed Hussein al-Amoudi, — the Saudi billionaire, who heads Corral Morocco Holding — demanded US$1.5 million as compensation for what he perceives to be the government’s role in the refinery’s downfall. Al-Amoudi filed a complaint against Morocco at the World Bank affiliated International Centre for Settlement of Investment Disputes (ICSID) in Washington. 

Since the collapse of the refinery, Morocco has been unsuccessful in seeking a buyer for the plant but this is unsurprising. As former Energy Minister and former chairman of Royal Air Maroc Driss Benhima observed in December, ‘The privatisation of the SAMIR refinery was a long succession of failures whereby like some Greek tragedy all parties found themselves found themselves against their will set on a path that led to tragic results…. We won’t find many that want to buy this refinery unless we can give them some market incentives.’  

Although a host of international companies have shown expressions of interest over the years, none have committed to following through on the project which has been burdened with endless obstacles. 

Unclear stance

The current fuel price crisis has prompted some Moroccans to call again for something to be done about the refinery but these have met with somewhat contradictory responses by the government. 

In July 2022, Benali told the media that Morocco does not need the refinery and noted that the country is seeking alternative solutions to the fuel crisis. She also said that the refinery project is very complex and especially in light of the ICSID case. However, her words did not sit well with some constituencies and Benali later retracted her comments about not needing the SAMIR refinery. 

Meanwhile Baïtas said in September that the fuel price rises had been an important lesson for the Kingdom about the importance of a domestic refinery in order to secure the country’s energy supplies. He also stated that the government was not opposed to resuming operations at SAMIR but that its future was tied up in the ICSID case. Ouahbi then made it clear in October that he did not support the re-opening of the refinery, and clearly stated that it would not serve as a solution to the country’s fuel crisis. He also said, ‘To re-open the refinery now will cost us more than we can afford.’

Benali has further muddied the water by indicating that the government is open to studying the case again based on the recommendations of the Competition Council. She told parliament that the government is looking at five possible scenarios and will study them all thoroughly and take into consideration the interests of three groups: the country; the refinery workers; and the people of Mohammedia who complain about pollution from the plant. 

Objections

Benali’s comments did not go down well with certain groups including workers who are still contracted to work at the facility but on reduced salary rates. Some groups accused the Competition Council of opposing the reopening of the refinery. This includes the National Front to Save the Samir Refinery, which rejected Benali’s comments about the Competition Council, and argued that the latter is opposed to resuming operations. 

In December the front’s head, Hussain Yamani, indicated that the Council was in favour of private fuel companies who do not want the refinery to restart. He accused it of lacking credibility because it ‘listened to the views of fuel companies but didn’t listen to the views of the trades unions that represent consumers or of those who are concerned about the refinery.’ 

The front also used the opportunity to attack the Council for delaying the outcome of its investigations into fuel price fixing. One source in the front called on the council to act to ‘ensure real competition between operators to lower the prices of refined petroleum products….and limit the extortionate financial profits of the hydrocarbon distribution sector in Morocco, which in some instances reaches near to 80%.’

Anger over leases

The National Front to Save the Samir Refinery is also aggrieved at the commercial court’s recent decision to grant exclusive lease rights for the use of fuel tanks at the refinery to a private fuel distribution company without having put the bid out to tender. The company in question is said to be BGI Petroleum which owns the YOOM service station network and which is due to sign a contract to this effect any time now. 

This court ruling infuriated the National Front, whose executive board held a meeting at the end of November which resulted in a strongly worded statement expressing its anger and surprise at the state’s decision to ‘refrain from using the storage capacities of the SAMIR company to build up the stocks necessary to cope with the violent disturbances of the world oil energy market.’ The statement also held Prime Minister Aziz Akhannouch’s government responsible for the ‘headlong rush into preventing a normal return to production at SAMIR through the acquisition of its assets by the State via a conversion of public debts.’

Yet despite the pressure coming from this quarter, there is unlikely to be any move by the government to deal with the refinery in the foreseeable future. While Morocco is undoubtedly suffering from a major fuel price crisis, there still is insufficient political will to resolve the SAMIR refinery file, while the outstanding legal issues make it all the more problematic to deal with. As such, the SAMIR saga will rumble on.