2011: the petroleum kick-off year

Though many believes that the year of 2010 brought some kind of relief to the petroleum industry worldwide, but the concerns now revolves about the new year of 2011 and what would it bring to the Egyptian sector?

The Egyptian oil and gas community saw the year 2010 as the year of successful agreements; it witnessed the signing of many deal between Egypt and many countries, whether Arabian, African, Asian, or European ones. The Ministry of Petroleum paid special attention to rapidly place any discovery, whether oil or gas, on the production line. This strategy serves the Ministry’s plan to boost the country’s oil and gas production rates.

Asked about his 2011 expectations, Omar Bibars, Chairman and Managing Director of PetroAmir said, “I believe that 2010 was an excellent year for the petroleum sector” and its shadow will continue in 2011. Bibars pointed to the joint venture agreement signed with the Italian company ENI and PetroAmir, which included exploration, production, and the transfer of hydrocarbons.

The terms of this joint venture also comprised the exchange of information and studies between the Egyptian and Italian sides, with the aim of bringing more expertise and up-to-date technologies to the exploration and development projects.

“These kinds of agreements can be considered a backbone to the Egyptian companies, which help to increase the reserves of oil and gas,” he added.
“Currently, Egypt should look closely to strengthen ties in the African Continent. Africa should be the future goal and more petroleum deals should be signed. The late agreement signed between Egypt and South Africa is considered the door to many deals to come, especially that the South African agreement included the full cooperation in the various petroleum sectors, whether oil, gas, mineral…etc.”

“Petroleum Oil and Gas Corporation of South Africa (PetroSA) was able to win a contract in South East Warda in Gulf of Suez. This is the first company to ever operate in Egypt, and this symbolizes the beginning of more collaboration between the two countries,” Bibars noted.

Bibars continued to empress the role of the ministry mentioning the first establishment of a services company in Sinai, “That was a major event in the history of this ministry.”
Recently, the Egyptian Minister of Petroleum Eng. Sameh Fahmy issued his orders to found the first ever services company in Sinai. The company will provide all the petroleum services and all that is needed for the oil and gas activities. Fahmy stressed on the fact that 50% of the workers should be Egyptians to maintain the upper hand for the Egyptian workers.

Eng. Abdul Alim Swaf, Operation Manager in Petroshahd and Norpetco, said that the sector witnessed lots of achievements considered mainly in the signing of many important deals, “Signing deals with major companies like British Petroleum (BP) and the German RWE in the areas of North Alexandria and West of the Mediterranean.”

He further added, “The deal included the development of reserves valued by 5 trillion cubic feet of gas and 55 million barrels condensates to support the daily local demand of gas starting from October 2014. The amount will be considered by 900 million cubic feet of gas per day and 10,000 barrels of condensates per day.”

“The total amount of investments reached $9 million to meet the local demand of natural gas in Egypt to help the local financial system through the development plan of the ministry,” said Swaf.

Moreover, Swaf shed light on the fact that such agreements lift a huge load off the ministry as the foreign partner pays most of the operating cost and the investments required for the development plan, “The ministry carried out contracts with the ideal terms that guaranteed it will not have to pay back all the investments made by the foreign partners.”
“In addition to that, the ministry alliance with Azerbaijan in the various areas of oil and gas to transfer gas to Europe through the Nabucco line,” Swaf added.
“Let’s not forget the declaration by the minister that the Arab Gas Pipeline will be a future source to transfer gas to Europe.”

Moreover, a trust worthy source from the ministry, told Egypt Oil and Gas newspaper, “The Arab Gas Pipeline was able to pump 30 million cubic feet of gas into Lebanon per day”.

He added that last year was a good year for the Egyptian oil and gas sector that led to many achievements and promising future plans set by the Ministry officials, the results of which will be felt over this year.
“The ministry is also seeking more explorations in the upcoming period, more agreements to be signed with Syria to drill for gas in the deep waters of the Mediterranean in a similar agreement of the Arab Gas Pipeline, and more activities to be done to add to the success value of the ministry.”

A total of three contracts were signed to further develop the area of the Western Desert. “The Ministry signed three exploration agreements in the area of the Western Desert, aiming to increase the reserves to meet the local demand of petroleum products and natural gas. We need to secure the future of the next generation,” clarified the official source.
“The Western Desert is considered a successful area running with a fully integrated system, which will strengthen the position of Egypt in the present and future of the petroleum industry,” he added.

The top official source highlighted that the wheel of development is not limited to a specific area in the country; on the contrary, the Ministry of Petroleum is expanding its activities in the remote areas of Egypt’s Southern, Western and Eastern sides. Eng. Fahmy announced that the next stage of the development plan would witness more petroleum operations and services in the undeveloped areas.

“The announcements were combined with the signing of three agreements. The first deal, targeting the area of Beni Suef in the Western desert, between the Egyptian General Petroleum Corporation (EGPC) and Apache Corp. and Dana Petroleum to extend the exploration periods with a total investments of $12.5 million in addition to the drilling of five wells and $6 million bounce signature.”

“The second agreement, targeting the area of Fayum in the Western Desert, between EGPC and Merlon International to add more exploration periods with investments commitments with a minimum spending of $24 million and to drill six wells in addition to $3 million bounce signature.”
“The third agreement was signed with GANOPE which will witness their first ever exploring operation in the area near Sudanese-Libyan border with a minimum spending of $8 million to conduct a 2D seismic survey and other studies, besides the drilling of two exploratory wells over an area of 34,000 km2,” elaborated the ministry source.
Besides, the source pointed to the deal signed with Iraq to continue the previous signed contract in 2009 in the oil and gas sector. He also praised the role of the Supreme Committee, which was constructed to support the implementation stages and to report to the two ministers on regular basis.

“The joint collaboration between Egypt and the Ukrainian side to develop the economical relations between the two sides and to attract investments into the two countries.”
This year, we are expecting a more leading role in the natural gas sector. “We have to consider that one of the most important achievements of the last year is the selection of Eng. Sameh Fahmy as the new head of the ministerial meeting, during the coming Ministerial Conference of the Forum of Gas Exporting Countries in Sharm El-Sheikh during the month of June in 2011.”

“The conference will held the discussion of the current matters of the international market of gas, and the prices of gas which will affect the investments in the new gas fields and the infrastructure of these investments. Also it will be prompted that prices of gas to equal the prices of oil considering the privileges of the natural gas,” the ministry source indicated.
The recent petroleum report showed that the current production rate of crude oil and condensates reached 712,000 barrels per day. The past fiscal year had a total of 66.3 million tones of oil products and natural gas to meet the local demand. The report added that the total investments in the last fiscal year reached $7.2 billion in addition to $22 billion spent in new projects to develop in North Alexandria, West Mediterranean, and the implantation of two refineries in Mostorod and Suez.

The report also added that gas industry witnessed a huge development following the new strategy made by the ministry. The natural gas is now considered 65% of the total petroleum production compared to a ratio of 30% in the past ten years, and considered 75% of the total petroleum reserves as the proven reserve multiplied from 36 trillion cubic feet to 78.1 trillion cubic feet. The production rate in the same amount of time reached 18 trillion cubic feet.
The main goal for the ministry is to meet the local demand of natural gas, as the ministry declared that the exported shares are to be currently decreased from 31% to 26%.

By Shady Ahmed


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