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Putting the ‘E’ & ‘P’ Back into Egypt

With an investment-friendly administration in place, growing domestic demand, a staunch tradition of innovation, and huge discoveries in recent years, Egypt’s E&P sector is once again punching above its weight on the global stage.

“Egypt has maintained outstanding and long-lasting relationships with our international partners for over a century. We remain open to all investors and all companies … as a trusted and supportive partner.”

Abed Ezz El Regal El Mallahy, EGPC

Egypt has never been a top producer though its openness to foreign investment, willingness to collaborate and diversity of producing basins have ensured it has always punched above its weight in E&P. Abed Ezz El Regal El Mallahy, CEO of the Ministry’s main executive arm, Egyptian General Petroleum Corporation (EGPC), emphasizes that “Egypt has maintained outstanding and long-lasting relationships with our international partners for over a century. We remain open to all investors and all companies … as a trusted and supportive partner.” Egyptian National Gas Holding Company (EGAS) Chairman and CEO Osama Elbakly concurs: “We have significant partners already in Egypt and we are keen to build a diversified petroleum sector, which requires the participation of a broad spectrum of international companies” … this means “focusing on maintaining win-win relationships with our partners.”

Egypt’s domestic demand continues to grow voraciously so despite the low oil price, exploration still remains a top priority. Elbakly affirms, “The hydrocarbon business is a direct function of how much exploration is being done.” The 2015 Zohr supergiant discovery in the Shorouk concession in offshore Mediterranean was an eye-opener for the world regarding the scale of offshore potential in Egypt, but Eng. Elbakly demurs, “the Zohr discovery is merely the first step in a much larger process. Egypt’s upstream proposition is really the potential of the entire country as a complete package.”

No one appreciates this better than BP, which has invested over USD 10 billion in the past few years and is running another high-profile development, the West Nile Delta (WND) project. BP’s CEO, Bob Dudley, proclaimed the Nile Delta “a world-class basin” at EGPYS 2017 and was vindicated only a month later when BP made their third gas discovery in their North Damietta concession. As Regional President Hesham Mekawi enumerates, “Roughly a quarter of the group’s total worldwide spend … and a third of BP’s Upstream budget worldwide is in Egypt. Last year, this year and probably next year, Egypt is the highest receiver of funds within the Group.”

Part of BP’s staunch confidence in Egypt comes from the fact that “there is collaboration at the highest levels of management. For instance, the Minister himself chairs a steering committee that oversees the WND progress through regular meetings.” This personal attention has reaped rewards: two WND fields, Taurus and Libra, came online in May under budget, almost eight months ahead of schedule and higher-than-expected rates. Hesham concludes, “BP is an excellent partner to support Egypt because we have proven ourselves to be able to deliver results efficiently and quickly.” Against this backdrop of success, “we expect to be the largest gas producer in the country within the next few years.”

Other IOCs are similarly bullish about investment opportunities in Egypt. As VP North Africa and Middle East Operations for Edison, Nicolas Katcharov, explains, the company has invested significantly in new, rather complex E&P projects in 2017, such as North Port Fouad, their first deepwater concession in Egypt promisingly located adjacent to the Zohr field in the Mediterranean. The hope is that by 2020, the world will see “Edison announcing a major discovery in the East Mediterranean.”

This vibrancy is founded on a history of innovation. Baker Hughes Country Manager Sameh Hussein exults, “it was our drill bit that was used to drill the first well [in Egypt] in 1910. Over the past century, we have grown our footprint significantly by tapping into the local talent pool, expanding our product lines and service portfolio here, and learning from past projects.” As a result, “there is a huge role for Baker Hughes to support the mega offshore gas projects currently being undertaken in Egypt.”

While offshore gas has dominated headlines in the past few years, oil producers have struck gold in the Western Desert, an area spanning two-thirds of Egypt’s land mass. This is where Apache has established a veritable kingdom of 4.8 million gross acres in 23 separate concessions over the past two decades. In line with other players, Apache has increased its investment level for Egypt in 2017 with the trend expecting to continue on the basis of past solid performance. Apache’s Chi boasts, “I am proud that Apache Egypt was able to deliver on all performance metrics in 2016, where we managed to exceed our production goals while managing our costs … because we reacted faster than others and maintained capital discipline in a very challenging price environment.”

Writer: Karen Xi

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