Day Three - MOC 2014

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Day Three
TECHNICAL SESSIONS EXPLORE THE
LATEST IMPROVEMENTS ON THE OIL
AND GAS INDUSTRY
12 Pages
www.egyptoil-gas.com
EL-MOLLA:
EGYPT IS FULLY COMMITTED TO ITS INVESTORS AND PARTNERS
CONFERENCE
TECHNICAL SESSIONS EXPLORE THE LATEST IMPROVEMENTS
ON THE OIL AND GAS INDUSTRY
The MOC 2014 technical sessions covered a variety of subjects, from offshore/deep
water technologies, reservoir characterization, subsurface imaging and modeling, to
production management and 3D application. Key note speakers from high ranking
universities, such as Cairo University and Aim Shams University, as well as oil and gas
experts from major oil and gas companies, among them GASCO, E&P, Edison, Schlumberger, Eni, EGAS, and BP presented the latest news on research and technology.
Nearly 70 papers were selected, out of 142, written by young, emerging figures. Mohamed Abu Mosalam, a representative of Agiba Petroleum, was pleased to present his
paper on business analysis in exploration, at MOC 2014 for the first time. The technical
sessions offered a wide variety of topics, targeting to the interests of geologists like
Mosalam.
“The technical sessions reflect the emergence of the Nile Delta and the importance of
the region,” said Abdurrahman Ayed from EGPC. “The presenters are very ambitious,”
he continued, showing great initiative.
“The MOC was keen to get variety in its technical sessions,” said Eng. Abou Bakr Ibrahim, Chairman of GANOPE.
The sessions were a good opportunity for the emerging talent in the oil and gas industry
“THE TECHNICAL SESSIONS REFLECT THE
EMERGENCE OF THE NILE DELTA AND THE
IMPORTANCE OF THE REGION,”
SAID ABDURRAHMAN AYED, EGPC DELEGATE.
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to acquire a new perspective on a myriad of topics pertaining to their specific fields.
“The sessions were great, very informational,” said Hanan Soliman, an Alexandrian
geologist attending the MOC for the first time.
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3
SPOTLIGHT
ENG. SHERIF ISMAIL at MOC 2014: Candid and Pragmatic
The Egyptian Minister of Petroleum Eng. Sherif Ismail launch point; the minister’s opening speech showed insight and a
of the conference and exhibition in MOC 2014 did not disap- realistic approach to Egypt’s current energy situation.
Eng. Ismail in MOC 2014
The minister’s speech was perceived by many as being
candid, realistic and insightful. He started his speech
with a half-hearted joke of having good and bad news.
He briefed the attendees on Egypt’s oil and gas current
situation, challenges, aspirations and objectives, and
strategies and tactics implemented by the government.
Ismail attributed Egypt’s current energy crisis to a few
factors including: the gap between supply and demand,
the lack of diversification in the country’s energy mix,
aging infrastructure, and the subsidies on petroleum
products.
Egypt currently relies on fossil fuels for 91% of its power
generation, compared to only 61% globally, while the
country’s demand is 700 mmscf of petroleum products
per day and its imports stand at 10 million tons.
The minister explained that the refineries in Egypt are
not utilizing their full potential as they’re currently operating with a maximum capacity of 70% only, due to
the lack of certain crude grades, recurring bottleneck
situations in the refineries as well as safety concerns.
He also stated that the sector currently relies on private
refiners as opposed to the state-owned ones as they
face difficulties raising sufficient funds and investments.
Obstacles also continue to be present in the aging
pipeline grid and ports.
Ismail added that the subsidies on petroleum products
have attributed to the increasing consumption in the
last ten years. Egypt’s energy consumption intensity
has reached 26,000 Btu/dollar of GDP, which is higher
than hydrocarbon rich countries such as Saudi Arabia,
Kuwait, United Arab Emirates, and five times more than
European countries.
Eng. Sherif Ismail then proceeded to highlighting the
government’s five-year plan to bridge the gap between
supply and demand. Of the tactics the government is
relying on is LNG imports, which are to start in March
2015 after successfully attaining the LNG floating storage unit from the Norwegian Hoeghs. The government
has secured a deal with Algerian Sonatrach to provide
500 mmscf of LNG, an amount Ismail expects to increase.
The government is also determined to proceed with
the payments due to international oil companies and
continue the negotiations regarding gas prices; such
actions would encourage the companies to invest in
exploration and production.
Other tactics the government is carrying out are gas
fields’ development, upgrading the pipelines grid to
enhance transmission, developing the petrochemicals
industry to increase added value of gas and subsidies
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reform.
The petroleum minister emphasized the importance of
the diversification of Egypt’s energy needs; he said that
within the next five years, Egypt is aiming to increase its
energy efficiency by 10-25%, relying more on other
resources than fossil fuels for power generation…etc.
Such measures would save $6-$8 billion per year. The
minister added that establishing a separate authority
responsible for energy efficiency planning and development would be of major support in achieving this goal.
Eng. Ismail’s brief on Egypt’s oil and gas situation was
concluded by his vision of Egypt becoming a hub for
energy in the region, using its unique location and
transport routes such as SUMID pipeline and the Suez
Canal.
On a different note, the minister of petroleum and mineral resources announced the approval and ratification
of the new mineral resources law by his ministry. The
law, which regulating procedures are to be implemented within 6 months, is pending approval by the cabinet.
The minister explained that the new law would help generate revenues by protecting resources and maximizing
the added value of petroleum products through reducing raw material exports. He stated that the government
is open to royalty tax and equity systems are opposed
to production sharing. He also announced a new bid
round soon for gold and more mineral resources.
Press Conference:
After the inauguration on the MOC 7th edition, Eng.
Sherif Ismail held a press conference with members
of the Egyptian media to help bring the on board with
the ministry’s strategy. Media representatives were
present from several newspapers including AlBoursa,
AlShorouk, Al-Ahram and many more.
During the conference, the minister expressed his
pleasure with such an occasion, as it makes way for
discussing issues and reaching agreements.
The Minister explained that gas prices for new discoveries are currently being negotiated to achieve a
balance with the risks involved in exploration. He also
highlighted the ministry’s action plan in regards to the
oil companies’ debts.
The press inquired about the country’s import plans
from neighbouring Mediterranean countries, which the
minister responded to by stating that Egypt is still in negotiations with Cyprus for gas imports as the parties are
currently assessing the technicalities of the agreement.
Eng. Ismail also added that similar discoveries might be
possible in Egypt, as the geological formation in Aphrodite and leviathan might occur elsewhere in the Mediterranean Sea. He said that the Italian company Eni is
exploring for gas in two blocks in the Egyptian national
waters that showed similar geological formations.
Ismail concluded by asserting that Egypt is working
on increasing its oil production from 600,000 b/d to
695,000 b/d. He stated that international oil companies to invest $8 million in order to increase oil production. He also added that the current production sharing
agreement has proved to be a successful model, but
modifications and flexibility with its terms are necessary
however.
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5
INTERVIEW
EL-MOLLA: “EGYPT IS FULLY COMMITTED TO ITS INVESTORS AND PARTNERS”
WE HAD OUR MAJOR PARTNERS, THE BIG PLAYERS, LIKE ENI, BP, BG, AND EDISON PRESENT THEIR
FULL COMMITMENT TO INVESTMENT IN EXPLORATION IN EGYPT.
THE MAIN PURPOSE FOR RESUMING THE CONFERENCE AFTER MISSING THE 2012 EDITION IS TO
REINSTATE THAT EGYPT IS BACK, AND THAT OUR
OIL AND GAS INDUSTRY IS BACK TO ITS POSITION
In an exclusive interview with Eng. Tarek El-Molla, the Chairman of EGPC and
MOC 2014, shared his impressions of MOC 2014 and his expectations for the
industry’s growth in the upcoming years.
Just outside the sound-proof conference room, Biblioteca Alexandrina was
packed with delegates absorbed in lively conversation; a clear sign of the key
player’s revitalized vigor to strengthen the energy industry. Inside, right next to the
dialogue taking place, El-Molla expressed his contentment with MOC:
What is the main reason behind this year’s MOC?
The main purpose for resuming the conference after missing the 2012 edition
is to reinstate that Egypt is back, and that our oil and gas industry is back to its
position. Egypt is committed to its investors and partners with full commitment of
necessary reforms to meet the required investments environment.
What impact does the MOC have in foreign investment
in Egypt’s oil and gas industry?
We had our major partners, the big players, like ENI, BP, BG, and Edison present
their full commitment to investment in exploration in Egypt. They have big plans
for exploration in Egypt.
What does the renewed impetus for foreign investment
will look like?
ENI and BP made the commitment to invest 12 billion dollars in the upcoming 5
years. ENI has big exploratory plans, while BG, the second largest gas producer
in Egypt, is fully committed. Additionally, Edison with its innovative thought for
creating value, outside of traditional ways, especially through their initiatives of
using gas to power. Collaboration with foreign investors will be possible with our
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support, we as the Egyptian oil and gas industry, and the electricity and power
authority.
How will Egypt benefit from the key player’s efforts for
collaboration?
The aim of the conference is to strive, incentivize and motivate the partners to
work with us to optimize the current stranded oil and gas in Egypt that we can
possibly get out of our land. Through innovative ways and high technologies,
coming from our partners, key players will help us see some of the potential that
we do not currently see. And for the potential which we already see, we still need
their support in pushing through.
How do the current challenges facing the oil and gas
industry play into unlocking Egypt’s potential?
Since we in Egypt have an extremely big consumption, each barrel has value for
us. We are becoming a net importer, so we need to optimize and maximize our
local production to reduce the imports. Of course, with the decline of the crude
prices now, this will definitely change the economics of the industry.
For this reason, everyone should recalculate his economics. We’ll be looking to
optimize what we have already and has not been yet developed. This is what we
need to look at. We need to look at what we have currently and that which needs
further development.
Would you call this year’s MOC a success?
After missing the 2012 edition and after the last 3 yeas of instability, change
of regimes, and economic instability, this is in itself a very good success for us.
We are sending a message loudly that we are here and ready for the bid rounds.
RWE Dea
SUCCESSFUL ENERGY PARTNERSHIP.
RWE Dea Egypt and its predecessor organisation have been operating successfully in Egypt since 1974.
As operator, the company can look back on three decades of oil production in the Gulf of Suez.
The company made a number of major gas discoveries in Egypt and boosted its activities considerably
with the acquisition of additional concessions. During just one year, RWE Dea has more than doubled its
total oil and gas production in Egypt, by getting the own operated gas project Disouq on stream. The
volumes produced from this project make an important contribution to Egypt‘s domestic production to
meet the needs of the country’s growing energy demand. RWE Dea has currently a total of 10 onshore
and offshore concessions in Egypt.
RWE Dea is a top-performing company for the exploration and production of natural gas and crude oil.
Geological expertise, state-of-the-art drilling and production technologies as well as a diverse range
of professional experience and know-how acquired over more than 115 years of corporate history make
RWE Dea a powerful company active in numerous international operations.
RWE Dea Egypt Branch I 16 Road 253 Degla-Maadi I P.O. Box 1146 Cairo, Egypt
T +20 2 2754 2630 I T +20 2 2522 1100 l E [email protected] I I www.rwedea.com/egypt
RWE Dea AG l Überseering 40 l 22297 Hamburg l Germany
T +49(0)40 - 63 75 - 0 l E [email protected] l I www.rwedea.com
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INTERVIEW
OMC’S CHAIRMAN, INNOCENZO TITONE’S TAKE ON MOC 2014
“IT IS WONDERFUL FOR ME TO BE BACK IN EGYPT AGAIN,
CONTINUING RELATIONSHIPS AND COOPERATION WITH
KEY PLAYERS IN THE REGION.”
“EGYPT HAS GOT THE INFRASTRUCTURE AND THE ADEQUATE LINES TO MEET THESE CHALLENGES. THERE IS
POTENTIAL. “
A radiant Innocenzo Titone, OMC 2015 Chairman, met with us to discuss the
successful outcome of this year’s MOC.
What do you think of this year’s MOC?
It is wonderful for me to be back in Egypt again, continuing relationships and
cooperation with key players in the region. The last MOCs have been very fruitful
and this one is a good sign that Egypt is stable from an energy sector’s point
of view.
During his opening speech, Titone emphasized on the difficulties brought by
recent years and the industry’s undying focus on maintaining the Mediterranean
an energy hub.
Is there a crucial difference between the MOC and the
OMC?
The OMC shares the same objectives and focus on the Mediterranean. They are
both very interesting from the point of view of exploration and discoveries. The
OMC 2015 will be themed “Focus on Change: Planning the next 20 years,”
where we will continue the conversation.
What are some of the potentials found in the Mediterranean?
The new discoveries of substantial oil and gas reserves in the Levant Basin
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Province show the potential of becoming important suppliers to satisfy Europe’s
demand for hydrocarbons.
The eastern Mediterranean region has been the center of interest to international
energy companies, said Titone, and new discoveries have the potential to provide
what’s necessary to meet growing regional demand and possibly spur exports. In
this framework Egypt is playing an important role, he said to a packed auditorium
on Tuesday’s inaugural speeches.
Do you think Egypt is ready to meet the challenges presented by Eng. Sherif Ismail?
Definitely. Egypt has got the infrastructure and the adequate lines to meet these
challenges. There is potential.
In addition, Titone addressed the pressing issues of availability and affordability
of energy, hinting to the topics that will be discussed in next year’s OMC. Titone
was glad to be back amongst local and regional partners, glad to be enjoying the
renewed sense of stability, and glad to be back in the beautiful city of Alexandria;
cradle of civilization and platform for debate and collaboration in the Mediterranean region.
RWE DEA: EGYPT IS OUR BIGGEST ASSET.
“WE HAVE WITNESSED A COMMITMENT ON THE GOVERNMENT’S SIDE… IT WILL BE OF MAJOR ASSISTANCE TO THE
COUNTRY’S OIL SECTOR”
At the exhibition of the MOC 2014, we sat with Maxmilian Fellner, RWE DEA
Egypt’s General Managing.
Do you expect any change to your investments in the
coming period?
Could you brief us on RWE DEA’s activities in Egypt?
Not in principle, since 2011, we have proven our good intentions regarding investments in Egypt. Though with the falling prices of crude, some projects might
not be economic at the current oil prices, which have dropped to $66 per barrel
as of yesterday. That will probably affect the investments in oil until the prices
recover. The gas prices on the other hand are already quite low, expectations are
they will not be substantially affected by the oil prices fall. However, RWE DEA is
to continue investing in Egypt.
RWE DEA established a joint venture with EGPC, SUCO. SUCO has been producing oil for 30 years from the Gulf of Suez from three fields, Ras Bubran, Ras
Fanar and Zeit Bay. We have produced more than 600 million barrels so far. We
have managed to stop the production decline for these three fields and production rates have been steady again since 2009. They have been producing at a
constant rate of 20,000 boe. We have also partially developed the Disouq field
cluster, which has seven gas fields. Our early production facility started producing in September 2013 and we started utilizing the central treatment facilities
in August 2014. The field’s production is now about 150 mmscf/d. As for our
offshore concessions where natural gas has been discovered, we are currently
considering the possibility of developing North ElAmria concession. Our biggest
offshore gas project is West Nile Delta, in which RWE DEA is a partner. Negotiations are ongoing for this development.
Where does Egypt stand in the company’s portfolio?
In our international portfolio, Egypt is our biggest asset in terms of reserves mainly
because of the gas reserves in West Nile Delta concession. These reserves make
our operations in Egypt a very vital part of RWE DEA’s overall operations.
What’s RWE’s share of Egypt’s oil and gas production?
We are currently producing about 40,000 boe per day, half of which is gas and
the other half is oil.
Do you expect a change in production rates soon?
We are working on increasing production from Disouq, the plans and negotiations are not yet finalized though. West Nile Delta project will also increase our
production, but overall, it would be at least two to three years until we see any
noticeable results. There is more gas but it is not just around the corner.
Does the company see any future opportunities in offshore Mediterranean concessions?
Definitely, our current offshore projects are promising. There’s a future especially
in terms of developing existing gas finds.
Do you think the government has changed its approach
to the country’s energy crisis?
They indeed changed their approach. There are ongoing negotiations in many
fields for field development, concession terms and many more. The government
is showing some flexibility. Outstanding payments to international oil companies
are still an issue however. We have witnessed a commitment on the government’s side to settle these receivables. The minister announced a plan to repay
an additional $1.5 billion to international oil companies by the end of the year and
settle the whole debt, hopefully, by June 2015. If this is the case, it will a major
push to the country’s oil sector.
What are RWE’s goals for 2015?
Our goal is to obtain projects sanctions for the implementation of our planned
projects and to proceed with these implementations. For SUCO, it will be to deal
properly with the low oil prices and to possibly still be able to develop our current
projects.
9
INTERVIEW
FUGRO: GOVERNMENT’S FLEXIBILITY IS A GOOD SIGN
Fugro’s Managing Director John Evans gave us an exclusive interview on the
sidelines of the MOC exhibition
What is your impression of this year’s MOC?
The event this year is very good. The turnout came as a pleasant surprise. The
exhibition has been very busy and we have had many visitors in our partition. It
is a great opportunity to make contact with potential customers and to engage in
discussions with other players in the field. The organizers have also done a great
job with the layout. It is practical and highly functional.
What are, in your opinion, the main hindrances behind
Egypt current oil and gas situation?
Definitely financial; the government and the international oil companies need to
resolve the pricing and debts issues. The clearance of debts and modifying the
prices will restore the companies’ confidence. Once that is accomplished, things
should be back on the right track.
Do you think the government’s approach to these issues has changed?
We can definitely see improvement. The government is showing more lenience.
That will help improve the current situation and create a more investment friendly
environment.
Do you see Egypt unlocking deep-water reserves in
the Mediterranean similar to those of our neighboring
countries?
It’s hard to predict such success. Investors need clarity in the laws and agreements to encourage exploration and discoveries.
Do you foresee an increase in Egypt’s gas production
soon?
There are many discoveries that seem very promising and hopefully, there will be
more in the next period. Egypt is a big energy market, the country would benefit
a lot from an increased production.
“WE CAN DEFINITELY SEE IMPROVEMENT.
THE GOVERNMENT IS SHOWING MORE LENIENCE”
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11

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