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Foreign partner investments to reach $10bn in FY 2017/2018: El-Molla - Daily News Egypt

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Foreign partner investments to reach $10bn in FY 2017/2018: El-Molla

The ministry pays its dues to foreign partners regularly


The Egyptian petroleum sector has witnessed the launch of a number of new large natural gas projects that will contribute to achieving self-sufficiency in natural gas supply, bringing Egypt once again among gas exporting countries after a several-year hiatus.

Daily News Egypt interviewed Minister of Petroleum and Mineral Resources Tarek El-Molla to learn about the ministry’s next steps in the coming period, as well as the message that the ministry aims to send during the second round of the Egypt Petroleum Show 2018 (EGYPS 2018).

What is the message that the ministry aims to send during the second round of the EGYPS 2018?

Holding the Egypt Petroleum Show 2018 (EGYPS 2018) for the second consecutive year represents an important occasion to bring together major oil and gas companies regionally and globally in a special forum to discuss the future of the petroleum industry in Egypt.

EGYPS 2018 will offer its participants the chance to know about promising investment opportunities in the petroleum sector. We also consider this conference as part of Egypt’s campaign to announce its development plans in the oil and gas sectors. Egypt seeks to make the most of its available natural resources to support its national economy.

What is the volume of investments of Egyptian government’s foreign partners in the fiscal year (FY) 2017/2018? 

 

Foreign investments in the oil and gas sector will reach about $10bn during the current FY 2017/2018, an increase of $2bn against last fiscal year, as many foreign companies seek to increase production from Mediterranean gas fields. Moreover, Egypt’s investment climate has become more attractive for foreign companies as the government became fully committed to paying its dues to foreign companies regularly as well as reducing the accumulated payables from previous years.

Does the ministry intend to pay part of its dues to foreign partners before the end of the first half of this year? And how much is it expected to pay?

The ministry pays its payables for foreign partners regularly, and we plan to continue reducing the accumulated dues to foreign companies as soon as possible.

The ministry repaid about $2.2bn to foreign oil companies last June, including exploration costs, reducing the total amounts due to $2.3bn, the lowest level since 2013.

Will new bids be offered for oil or gas exploration by the Egyptian General Petroleum Corporation (EGPC), the Egyptian Natural Gas Holding Company (EGAS), or the Ganoub El Wadi Petroleum Holding Company this year?

The ministry intends to pose new international bids this year to search for oil and gas in Egypt’s land and sea areas, especially the Mediterranean. A new international bid will be announced in the second half of FY 2017/2018 to search for natural gas and oil in the Eastern Mediterranean and the Nile Delta regions. We also aim to conduct a seismic survey in the western region of the Mediterranean in preparation for launching a global marketing campaign for this region.

The ministry is currently implementing geophysical data collection in the Red Sea Egyptian economic waters and southern Egypt in preparation to offer the first international bid for oil and gas exploration in this area.

The global bids for gas and oil exploration come within the framework of the Ministry of Petroleum’s strategy to attract new investments in this field to increase foreign exchange reserves and petroleum production with the aim of meeting local market needs.

What is the current volume of Egypt’s natural gas and crude oil production? And what is the ministry’s target production by the end of this year?

New natural gas discoveries in 2017 will increase the country’s production to more than 6bn cubic feet of gas per day by the end of FY 2017/2018, while the current production level is about 5.5bn cubic feet per day. The average oil production currently reached about 650,000 barrels of crude oil and condensates per day, with plans to increase them to about 700,000 barrels per day.

When will Egypt become a regional energy hub?

Egypt has a clear potential to become a trading and exporting hub for natural gas and oil over the next few years through a clear strategy that benefits from Egypt’s infrastructure and facilities for refining, storage, and trade. These facilities include the liquefaction factories in Idku and Damietta, as well as the storage and regasification unit in Ain Sokhna.

On the other hand, the issuing of the new law regulating the gas market, prepared by the Ministry of Petroleum, played a major role in attracting foreign investments to the gas sector. A committee was also formed by the cabinet, headed by me and involving a number of concerned ministries to follow this national project and provide the required support.

There are two liquefaction plants in Egypt: the first is located in Idku, and it is owned by the Egyptian Liquefied Natural Gas Company (Egyptian LNG). It has two liquefaction units. The other plant, owned by Unión Fenosa, is in Damietta and has one liquefaction unit.

Egyptian LNG is the largest operator in the gas industry in the Mediterranean region and used to be among the 13th largest LNG exporters in the world before the sharp drop in gas supply to the units.

Will we stop importing LNG this year? And when will Egypt start exporting gas again?

Egypt is likely to achieve self-sufficiency by the end of this year after the gradual increase of production from the new fields, bridging the gap between production and domestic consumption. Hence, we will not be obliged to import LNG.

After fulfilling our consumption needs of gas, we aim to achieve a surplus to do two things: first, we aim to expand value-added industries such as the petrochemicals industry. Second, we have contractual obligations for gas exports that we could not meet over the past years because of the challenges that we have experienced that led to a gap between gas production and local consumption.

How would the ministry deal with the current floating storage and regasification units (FSRUs)?

 

We will maintain only one vessel to receive and regasify LNG. The system of providing energy supplies to the local market requires a strategy with ready alternatives to meet market needs continuously.

We are aware of the importance of maintaining the required infrastructure to supply and receive natural gas in accordance with the gas market regulations issued by the state to allow the private sector to trade in natural gas using the infrastructure of the sector.

The EGAS has leased two liquefaction vessels in 2015. The first one, affiliated with Hoegh Gallant, arrived in Egypt in April 2015, while the second, BW Singapore, arrived in Egypt in November. This FSRU is owned and operated by Norwegian BW Gas.

When will Egypt start importing gas from Cyprus?

As you know, Egypt is in the process of becoming a regional hub for oil and gas trade. Our agreement with Cyprus on the transfer of gas to Egyptian liquefaction plants is one of the axes of this national project. We are still studying the transport of Cypriot natural gas to Egypt via pipelines, in the framework of the memorandum of understanding signed on the sidelines of the economic conference held between Egypt and Cyprus in this regard.

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