Eypt’s energy future promises new opportunities

Tarek El Molla, Egypt’s Minister of Petroleum and Mineral Resources speaks to Pipeline Magazine ahead of the Egypt Petroleum Show in February about the country’s new oil and gas investment opportunities and new petroleum projects that will meet domestic needs as wells as make it an exporter and a regional energy hub

Can you summarise Egypt’s new petroleum and gas strategy?

The Ministry of Petroleum adopted a new integrated strategy in the petroleum, gas and mineral resources domains, in which its primary targets are ensuring energy security, fulfilling local demand requirements, achieving value-added and optimal utilisation of Egypt’s natural resources, in addition to raising human resources qualifications and efficiency.

The strategy consists of several axis that aims at narrowing the gap between production and consumption throughout a five-year plan, supported by short and long term plans by reforming the subsidies and managing energy demand, plus encouraging and attracting new investments in exploration and development domains. Fast-tracking development of new gas discoveries, enhancing infrastructure, developing petrochemical industries, diversifying Egypt’s energy mix and increasing its efficiency, transforming Egypt into a regional hub for trading and exchanging gas and oil, restructuring the petroleum and gas sector in addition to developing mineral resources.

To ensure the success of the strategy’s goals, we are currently implementing the petroleum sector’s Modernisation Project, which aims at realising the petroleum sector’s full potential by 2021 as a sustainable development engine and a role model for the modern Egypt.

What are the factors behind the restoration of the oil and gas upstream agreements in Egypt? And what are the new opportunities in the domain that EGYPS 2018 participants should be aware of?

Signing of new agreements came to a protracted halt for three years due to the challenges the country experienced in the aftermath of the 30 June 2013 revolution. Recently, Egypt has witnessed the inflow of major investments from IOC’s operating in the country due to the political stability and solutions implemented by the petroleum sector to incentivise our partners into pumping more investments.

 These solutions include a commitment to payments of IOC’s arrears as well as including investment-attracting clauses in new agreements that create stability for all parties.

Due to these solutions, the petroleum sector succeeded in concluding new petroleum upstream agreements and increasing investments in developing discovered fields which in turn led to achieving huge and promising discoveries in the Mediterranean.

We’ve signed 83 new upstream agreements during the recent period with investments valued at about US$15.5 billion.

There is no doubt that producing areas in Egypt have enormous and promising oil and gas potential. For example, the Mediterranean has witnessed consecutive success stories of natural gas exploration and production in offshore deep water.

We still aspire to achieve further gas discoveries in this region for its distinct potentials in different geological layers or in the onshore Nile Delta, Western Desert and Gulf of Suez areas, where we aim to intensify our exploratory activities in a way that leads to achieving new discoveries, which in turn will bolster the production of our petroleum resources.

We continue to review available areas at the Western and Eastern Deserts and the Suez Canal along with taking the needed procedures preluding to offering the areas in international bid rounds for investors interested to invest in oil and gas domains in Egypt.

The exclusive economic zone at the Red Sea will be of interest to investors in the exploration domain, where we intend to offer the first upstream bid–round in the Red Sea during 2018, based upon the results by specialised companies in aggregating geological data for that region.

Out of the Ministry’s interest in attracting more investments, the petroleum sector’s development and Modernisation Project includes a work programme with specific mechanisms dedicated to attracting more investments through the development of the bidding system in the exploration domain, simplification of procedures, and the shortening of timelines to create an attractive investment climate in the petroleum sector.

 What is the significance of the refining and petrochemical sectors?

We believe the development of the refining industry will achieve some of Egypt’s vital objectives such as bolstering fuel supplies, meeting the growing domestic demand of petroleum products (gasoline, diesel, LPG) and reducing the pressure on foreign currency.

Developing the refineries is one of the main axis of the programme of transforming Egypt into a regional hub for trading and exchanging oil and gas. Therefore, we are currently implementing an ambitious work programme to develop and upgrade the efficiency of refineries, which includes the establishment of new refining projects and development of existing ones with investments of over $8.2 billion in Cairo, Suez, Alexandria, and Assiuot, in order to increase the efficiency of domestic refining capacities.

During 2018, the largest project in the refining industry, the Egyptian Refining Project in the Mostorod region in Cairo, will be completed with investments of over $3.7 billion, while the rest of the projects will be completed successively.

As for the petrochemical industry, it is the driving force of development that contributes to maximising the value added of petroleum resources, along with providing the products and materials on which complementary industries are based. It provides a wide domestic production of projects needed by the Egyptian market, as well as direct and indirect job opportunities.

Egypt possess all the factors needed for a distinct petrochemical industry at the Suez Canal in cooperation with the Japanese to set up the project in the economic zone of the axis of the development of the Suez Canal with investments exceeding $3 billion. It is the only complex being developed in the region in cooperation with EGPC and Tsu Shou, in the establishment of such major projects.

It is planned to complete the detailed feasibility study of the complex by the end of the first quarter 2018 and to be put on the production map by 2021, producing about 3.5 million tons per year of petrochemical products; propylene and ethylene derivatives.

Part of its production will be used to cover the needs of the domestic market, and export the rest to global markets, which will increase the State’s economic return from such a large project.

There are also projects under study and development namely propylene and its derivatives at the expansions of Sidpec Co, ammonia and its derivatives at ANRPC co., and formaldehyde and its derivatives production project. Furthermore, the second phase of the project will increase ethane extraction of the Western Desert Gas Complex.

 What are your ambitions for the second edition of EGYPS?

Organising the second edition of EGYPS on Egyptian grounds is considered a significant and leading step for all major players in the oil and gas industry whether regionally or globally to participate in a unique industry gathering to discuss the future of the petroleum industry in Egypt, taking a closer look on available investment opportunities in all related activities of the industry, as well as a bonding platform for Egypt with its oil and gas resources development partners.

Personally, I aspire that the second edition of the Egypt Petroleum Show will deliver a rich and effective discussion opportunity that achieves aspired goals and to present successful models and experiences that serves the development of the petroleum and gas industry in Egypt as well as bolstering the efforts of modernising this vital sector.