(Alliance News) - Chariot Ltd on Monday announced it has signed a heads of terms agreement with Vivo Energy Ltd.

The Africa-focused transitional energy group said the agreement relates to future natural gas offtake from the Loukos onshore licence in Morocco, in which Chariot holds a 75% interest as operator.

As outlined in the agreement, a midstream compressed natural gas partnership will be created.

Chariot will sell volumes of up to 3 million standard cubic feet per day to the midstream business under a long-term gas sales agreement from the potential future production from Loukos.

In addition, Vivo will design, fund, construct, and operate a CNG plant and virtual distribution network to transport the gas across Morocco.

This midstream CNG business would be operated through a special purpose vehicle in which Chariot can acquire 49% interest.

Chariot Morocco Managing Director Pierre Raillard said: "This agreement sets out a path where we can look to rapidly commercialise future production from Loukos, potentially unlocking the development of pre-existing gas discoveries as well as the OBA-1 well and enabling organic growth through future exploration.

"It will also leverage our gas production to support Vivo's wider development of CNG virtual pipeline infrastructure and, as part of a potential midstream partnership."

Chariot shares were up 2.2% to 7.55 each in London on Monday afternoon.

By Elijah Dale, Alliance News reporter

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