Badawi’s Blueprint: A New Era for Egypt’s Energy Sector

Badawi’s Blueprint: A New Era for Egypt’s Energy Sector

In Egypt Oil & Gas Newspaper’s first-ever exclusive interview with Minister of Petroleum and Mineral Resources Karim Badawi, the minister shares his transformative vision for Egypt’s energy sector. With decades of experience in the private sector, Minister Badawi brings a fresh perspective to a pivotal role, emphasizing collaboration, innovation, and investment as the cornerstones of sustainable growth. From unlocking the nation’s untapped resources to harnessing the power of digitalization and regional partnerships, this candid conversation delves into the strategies shaping Egypt’s ascent as a global energy powerhouse.

Your Excellency, you have been through lots of different stages in your journey in the private sector. How does that journey impact your new role today as a Minister?

I feel very fortunate to have actually spent most of my professional career in a multinational company. The values around people and the values around technology have always been ingrained right in me when working in SLB.

I have been fortunate to have a diverse career, which I believe is incredibly valuable. This experience has allowed me to emphasize to members of our team that gaining exposure to different areas within an organization significantly enhances the value they bring.

Everybody in an organization plays a critical role in its success. This is why I firmly believe that everyone in the field and organization is important, which helped me realize that your success is our success.

In every organization, anybody’s success actually can only stem from the success of their teams. Ensure that you foster an environment where everybody can give their full potential to unlock the value that they have, and a lot of value for the shareholders.

I am really grateful for the exposure that I have had, working with amazing people and amazing mentors, both within the company and the sector. Working in our sector is really also very unique, right? It is a sector which really promotes the spirit of collaboration and partnership, ability to learn, ability to contribute. And it is up to all of us to enable that to happen everywhere in the organization.

Your Excellency, during your opening speech at EOGC 24, you highlighted various elements that contribute to building a more sustainable future—not only for the sector but also for the stakeholders involved. Could you share your main short-term targets that you aim to achieve based on these identified needs?

My short-term targets are very easy. I want to make sure all our partners are paid their monthly dues. I want to make sure that we are taking collaborative, active steps to increase production, and that we are working together to unlock what would be the next potential for production and hence exploration.

For me, if we focus on these three key areas, everything else will naturally follow. They form the foundation for creating a sustainable ecosystem that drives increased production, benefits all stakeholders through improved mechanisms, reduces actual costs for our partners, and fosters more constructive dialogues. This approach will alleviate much of the pressure currently felt across the sector, paving the way for new types of conversations—within companies and beyond—centered on operations, growth, and investments.

Success breeds success. As activity within the sector grows, it provides greater reassurance to those involved about its future potential. In summary, our focus is on supporting this growth by ensuring access to necessary materials, collaborating closely with our partners to boost production, accelerating exploration efforts, and fostering a spirit of collaboration across all stakeholders.

Could you elaborate on how we can attract further investments, not only from existing stakeholders but also from new ones? Specifically, how do you envision leveraging regional cooperation, existing partnerships, and current stakeholders to bring more investment into Egypt’s oil and gas industry?

Attracting investment to Egypt benefits everyone. It reduces operational costs and creates opportunities for existing partners to expand their investments. By streamlining processes and collaborating with regional partners, we can help our partners lower their future costs per barrel, unlocking their full potential in the region.

The other aspect is how we attract new investors to the sector. In this regard, we are addressing two key areas. One involves attracting further investment from Egyptian investors who possess the funds, expertise, and a proven track record of success in various sectors—both within Egypt and internationally—but may not yet be engaged in the oil and gas industry. The question is how we can open this new chapter for them, demystify the process of investing in oil and gas, and unlock their potential to contribute to the sector’s growth.

For us, this achieves two key objectives: attracting further investment and increasing production. This is why the session we held on September 30th with existing Egyptian investors, alongside prominent business leaders and Egyptians with significant assets in other industries, was so important.

This is why collaboration is important. Take the Egypt Upstream Gateway (EUG) team, for example, showcasing the available investment opportunities. Additionally, the collaboration between service companies and others helps facilitate the process. By working together, they can provide the necessary support to unlock those investments, making it easier for all parties involved.

The Parliament is also very important for us should we require regulatory framework changes, and so forth, beyond what we already did, which does not require regulatory requirements and changes, then we can leverage their support to be able to make investment attraction in the sector easier, not only for Egyptian investors but for everyone.

Initially, I expected there would be only one or two interested parties, but to our pleasant surprise, we had several parties expressing strong interest. We’ve already taken steps forward, as you’ve seen with the public announcements of Memoranda of understanding (MoUs) signed a few weeks ago. Ongoing discussions and engagements are in progress to move to the next step. Additionally, we have other highly interested investors who are actively working on this as well.

Last but not least, we need to explore how we can attract investors from outside Egypt into the sector. This is where support from our existing partners becomes crucial, as they bring diverse perspectives. Some partners want to operate, while others are interested in partnering on assets. The same applies to external investors who are not yet in Egypt but are interested in entering the market. These investors may not want to operate directly but are keen to partner with our existing stakeholders on current or future blocks, allowing them to gain valuable experience in the sector.

How is the gas supply situation progressing? Are we in a good position right now? With the strategy we’re currently working on, do you believe we will avoid another electricity shortage or cutoff?

This was part of how we are working in a very collaborative way with the Ministry of Electricity and Renewable Energy. I will say that the Minister of Electricity and Renewable Energy has taken significant steps, evolving from signing MoUs to actually signing contracts for renewable energy projects. Every contract signed in renewable energy is a very positive sign.

Those contracts focus more on operational execution aspects that will be required in different stages throughout the years. Between now and 2030, the plan is there, the contracts are there, and it’s more about execution in parts. All of that becomes very positive because it helps unlock the gas that moves into powering the electricity sector, and hence that frees up more gas to be used for exports and so forth.

I want to express my sincere appreciation and gratitude to our partners. The ongoing exploration activities in the Mediterranean and onshore for gas are highly promising and deserve recognition.

Hence, for me, the acceleration of actual exploration is very important, and it’s also a very positive sign because any exploration activity adds data for all the different models for the region to be able to accelerate further investment decisions, and reduce risks in further exploration.

They also open up the opportunities of unlocking what could be the next Zohr or what could be the next major fields and so forth. You cannot do that unless you physically explore and physically drill wells. We also understand that the outcomes are not immediate. The process from making a discovery to delivering gas into the network takes time and doesn’t happen overnight.

What we also know in Egypt, in collaboration with our partners, is that we all have the capability to do that in record time if we all work together. We did that before in Zohr and we can do that, again tomorrow with any major or small business.

I want to emphasize the critical role of technology in exploration. Exploration isn’t limited to frontier fields or unexplored parts of the Mediterranean; it also extends to ongoing activities in regions like the Gulf of Suez. Advances in technology, such as seismic imaging and new seismic data, have the potential to completely transform our understanding of the Gulf’s potential.

At its peak, the Gulf of Suez produced around 600,000 barrels per day, but current production is significantly lower. The region’s subsurface structures are highly complex, which has historically posed challenges. However, leveraging advanced technology to unravel and better understand these complexities can provide companies operating in the Gulf with improved visibility, lower risks, and higher success rates in drilling operations. This could mark a turning point for the region’s potential.

In addition to the vital role of technology, I want to stress the importance of onshore exploration alongside offshore activities in the Mediterranean and Red Sea. It’s a priority for me to ensure that we unlock the full potential of these regions in collaboration with our partners.

From a capital allocation standpoint, I understand that shareholders today prioritize investments in areas with lower risk, higher returns, and a sustainable framework to address their receivables effectively.

What is the importance of digitalization and artificial intelligence in boosting production, exploring untapped opportunities, and attracting investments in the industry?

Digitalization is very important and it has several elements. It fundamentally depends on data, but it also depends on understanding the processes you are trying to enable. It is important in terms of ensuring that your digital investment covers the value chain to unlock its value. For instance, when I look at our sector, the EUG serves as a prime example of digital integration.

EUG creates significant value for the country by attracting investments. It plays a key role in the broader workflow, including data collection and enhancement through advanced processing. Additionally, it contributes substantially to the government’s ability to launch bid rounds and present investment opportunities to the global market.

You have all the different elements. You have the data, you have the process of where it is in, and you have the business driver behind it, and they are integrated. So, when I talked about the example of attracting Egyptian investors who are not in the oil and gas field, I can tell you that this would not have been possible unless we had that digital enablement present.

Additionally, partnerships are essential for making “digitalization” happen. I firmly believe that digitalization can increase production. Many of our partners are doing a lot of digital initiatives. Digitalization brings together data, optimized processes, and targeted use cases to unlock new possibilities. Then the sky is the limit!

This is why when I look at our first priority to increase production, digitalization can help us maximize production from existing fields. Additionally, AI helps us de-risk investments in exploration activities.

I encourage everyone participating in the current workshops and future engagements to challenge us—the Ministry, EGPC, and other relevant entities—to identify where digitalization has already unlocked value, where it can create further opportunities, and what steps we need to take to scale and industrialize it to maximize value across the entire value chain.

Digitalization is also not free. It comes at a cost, and it is okay to invest in cost. Therefore, I want to emphasize that when we develop our yearly plans, I firmly believe that it is important to invest in digitalization not as a discrete project but actually to invest in terms of how you get digital as part of the workflow within a company or across a group of companies or across the sector in a coordinated manner that will unlock further value.

After almost five months in the office, how do you feel? Are you excited, optimistic, or confident?

I am genuinely very optimistic for several tangible reasons. Do we have subsurface potential? We have it. Everyone in the sector knows it, and that’s a significant advantage for us.

Do we have collaboration, in terms of having the right companies, the right people, and the right talent pool? We have it. I have no doubt and every day as I meet new people, my optimism grows even stronger.

Then, when we look in terms of political will, is it present? Is there coordination among the different members? Because you need collaboration, and I emphasize this repeatedly. I can guarantee to you that political will and collaboration among cabinet members for the sector’s success are indeed there.

If you also look at regional collaboration to unlock this potential, do I see it, do I feel it? I feel it and it’s there. I know we’re in a challenging time.  Do I see the light at the end of the tunnel? I can see it. Do I feel really getting there? We can see it. I genuinely feel it.

What drives me, even when sleep is scarce, is this vision of what we can achieve together. I encourage all of us to support one another as we navigate this journey of unlocking our potential.

It’s like planting a tree and there is a seed. We are not starting from scratch in this sector. There is a lot of ongoing work that will lead us to a sustainable and promising future.

I am unquestionably very optimistic and very thankful to everyone in this room and all our partners for sticking together to make that a reality.

 

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