Delivering for Today While Transforming for Tomorrow: An Interview with Karim Alaa Regional President – BP North Africa

Delivering for Today While Transforming for Tomorrow: An Interview with Karim Alaa Regional President – BP North Africa

Since the early 1960s, we have been a main player in the Gulf of Suez which continues to be a major oil production area.

Building on the success we have achieved over the last 5 decades, bp has decided to focus on gas, going forward, particularly in the Nile Delta Basin. It is a world-class gas basin with a lot of growth potential, and we have already invested billions of dollars there building an extensive gas infrastructure. Today, together with our partners, bp currently produces around 60% of Egypt’s gas through a joint venture with the Pharaonic Petroleum Company (PhPC) and Petrobel (IEOC JV) in the East Nile Delta as well as through the bp-operated West Nile Delta gas development.

Speaking of milestones, the ~$9 billion WND gas development, the company’s first operated asset in the country, is considered a significant contribution to fulfilling Egypt’s growing energy needs.  Total current gas production from the WND has reached ~ 1 billion cubic feet a day (bcf/d).

As for the East Nile Delta, we are immensely proud of the Atoll field development which now produces around 0.30 bcf/d and feeds the country’s national gas grid. I can certainly say that with over 20 years of production, bp has established a strong and reliable track record in the END through its PhPC JV and other partner-operated assets.

Another important investment, as part of our existing gas portfolio in Egypt, is bp’s 10% interest in the Shorouk concession, acquired in 2017, that contains the giant Zohr gas field. bp is also a 33% shareholder in UGDC, an NGL plant, as well as being present in the customers and products sector through our 40% interest in the Natural Gas Vehicles Company (NGVC) which was established in 1995 as the first company in Africa and the Middle East to commercialize natural gas as an alternative fuel for vehicles.

We take pride in our long-standing history, successfully operating in the country for almost 60 years and investing more than $35billion to become a major pillar of the Egyptian energy industry in partnership with the Ministry of Petroleum.

Throughout this impressive journey in Egypt, what were the factors that helped you achieve such success?

bp enjoys a strong and productive partnership with the government under the leadership of H.E. President Al Sisi. Also, H.E. Minister Tarek El Molla’s support allows us, and other players, to develop Egypt’s own resources to meet the country’s growing energy demands.

We know Egypt well at bp – we’ve completed a wave of 35 major project start-ups globally since 2016 – four of them are here in Egypt, and we have assets in both the West and East Nile Delta. Egypt is a big part of our strategy and we are part of the Egyptian energy industry.

Successful relationships are built on mutual trust, value creation and shared vision and this is what shapes our operations in the country. The government, represented by the Ministry of Petroleum, has entrusted us over the years, during good and difficult times, to develop the country’s own resources. In return, we’ve invested billions of dollars and brought in the latest cutting-edge technologies to develop national gas resources. We are all working towards the same goal which is to provide Egypt with energy that is reliable, affordable and clean.

It doesn’t stop there! We also believe that a business can’t succeed in isolation from its community. Over the last seven years, we have invested more than a quarter of a billion Egyptian pounds in social investment projects, with a significant portion of this investment being directed toward allowing the best and brightest Egyptians to pursue learning opportunities at the top educational institutions in the UK.

We have been operating successfully in Egypt for 60 years and we hope to remain in the country another 60 years.

Recently, President Abdel Fattah Al Sisi issued directives to continue coordination and cooperation with bp and overcome any obstacles that may hinder its operation. What is the significance of this presidential support for the cooperation between Egypt and bp?

We have been privileged to receive tremendous presidential support since His Excellency President Al Sisi’s appointment in 2014.

In 2015, on the sidelines of a visit to the UK by His Excellency, we signed a significant acceleration Heads of Agreement to accelerate a major project that contributes to gas growth.

Also, under the patronage of His Excellency, the annual EGYPS exhibition has become a regional energy event which bp is proud to support and has been a participant in since 2017. Every year, His Excellency President Al Sisi and His Excellency, Minister El Molla meet with bp’s leadership to discuss our current progress in the country as well as our future investment plans. This annual meeting is a reiteration of the ways in which Egypt fosters strategic relationships, promotes cooperation, and helps overcome challenges.

This outstanding partnership has encouraged us at bp to make every effort to meet Egypt’s growing energy demands.

What is bp’s strategy for Egypt for the upcoming years?

Egypt remains a core area of the bp exploration portfolio. bp’s strategy is to focus on prospects that can be quickly tied back to existing infrastructure, keeping facilities full to meet Egypt’s growing domestic gas market.

We intend to work together with partners on increasing gas production rates by 2024 through drilling several both onshore and offshore wells. This year, for instance, we expect to spend over a quarter of a billion dollars to maximize gas business value by leveraging our strong infrastructure, competitive gas prices, and the strategic partnerships we have with the Ministry of Petroleum.

What is bp’s strategy to strengthen its position as a leading energy company?

When bp outlined its vision to reimagining energy and become a net-zero company by 2050, it set a strategy that focuses on three areas: resilient hydrocarbons, convenience and mobility, and low carbon energy. As our CEO Bernard Looney said back then, by following this strategy, we expect bp to be a very different energy company by 2030.

We know that there are challenges associated with reimagining energy, but we are taking the bull by the horns. We are confident and excited about the tremendous opportunities that exist as bp reinvents for a lower carbon future. bp is continuing to deliver for today while transforming for tomorrow and in only two years the company has delivered 11 major hydrocarbons projects, almost doubled our EV charging points, quadrupled our renewables pipeline, and built a portfolio of significant hydrogen opportunities. Imagine what our company will have achieved eight years from now.

In Egypt, our operations are integral to delivering the company’s strategy with hydrocarbons fueling the transformation for the future. Egypt remains a core area of the bp exploration portfolio and bp’s strategy is to focus on prospects that can be quickly tied back to existing infrastructure. This will take less time and cost to develop future resources, and the good thing about it is that you don’t need huge discoveries to make it economical.

This year, for instance, we expect to spend over a quarter of a billion dollars to maximize gas business value by leveraging our strong infrastructure, competitive gas prices, and the strategic partnerships we have with the Ministry of Petroleum.

After acquiring 50% of the exploration rights of the EGY-MED-E5 concession area, what are bp’s plans to operate in the concession area?

At the moment, we are looking at the ratification of the E5 block. We foresee potential in this block as it ties inadequately with our resilient gas strategy and we look forward to fulfilling our commitments.

What is your outlook for Egypt’s oil and gas industry?

It is obvious how much the COVID-19 pandemic has impacted the market in Egypt and across the world. However, the Egyptian government has successfully managed the crisis, by setting the right policies to weather the storm as well as allowing the Egyptian energy market to grow.

Currently, Egypt consumes all produced gas domestically and surplus gas is exported from two LNG plants with a total capacity of 1.7 bcfd. We believe that the government’s recent plans to accelerate gas project developments, efficient utilization of existing infrastructure, latest incentives to encourage exploration activities, and recent bid rounds can help fill supply gaps.

Egypt is also taking a balanced approach to increasing the renewables share of the Egyptian Energy mix (20% of the electricity mix in 2022 and 42% by 2035) while actively encouraging further exploration and development activities in the Egyptian oil and gas sector.

What are bp’s insights for Egypt’s vision to become a regional energy hub?

Egypt has everything it needs to be a regional energy hub. We are witnessing the efforts being exerted by the government day in and day out to transform Egypt into a strategic regional energy hub.

On the side-lines of EGYPS, Bernard Looney and I met with H.E. President Al-Sisi and H.E. Tarek El Molla the Minister of Petroleum and Mineral Resources to present the progress of our projects and our future business plans to continue supplying Egypt with the energy it needs to support its transition plans to become a regional energy hub.

Geographically, there is no doubt that Egypt is blessed with a strategic location between the Red Sea and the Mediterranean that facilitates exports in all directions. Also, the existing energy infrastructure and network in Egypt make it ideal as a potential hub in the East Med with the Suez Canal, LNG plants in Damietta and Port Said and refineries on two coasts that can readily be integrated as part of the masterplan to establish a gas hub in the region. Speaking of which, bp has an existing LNG SPA with EGAS to purchase LNG from Damietta plant.

On the other hand, renewables have come a long way in reducing their costs thanks to the available technology and economy of scale, and Egypt is blessed with one of the best locations for wind and solar energy in the world. Also, incentives from the government will help renewables to compete with other forms of energy.

Egypt’s geographic location, robust infrastructure, and its world-class natural resources make it a global crossroads and a mecca for future energy investments.

In terms of sustainability and climate action, what does bp plan for the energy transition?

bp aims to globally grow its renewables and bioenergy business, seek early positions in hydrogen and carbon capture, utilization and storage, and strengthen its gas position.  These activities form an integrated low carbon portfolio that will help transform bp as we transition from an international oil company (IOC) to an integrated energy company (IEC). bp has successfully concluded several transactions in that area. In Egypt, we are consistently evaluating opportunities to support the country’s energy transition plans in collaboration with the relevant Egyptian authorities.

Could you share with us some of bp’s impressive CSR activities?

As I always say, our commitment to developing the communities where we operate is equally important as our commitment to providing Egypt with the energy it needs. bp Egypt delivers a wide-ranging social investment program focused on education, training, and skills development.

As part of the Ministry’s fast-track middle management programme, bp extended an existing agreement for another three years to sponsor future Ministry of Petroleum leaders, providing them with the opportunity to spend six months in Egypt and the UK in bp’s offices and project sites to gain on-the-job experience in the latest business and technologies applied globally. In addition, candidates receive a Project Management degree from Manchester University and on-the-job learning.

We also provide scholarships for top Egyptians to pursue post-graduate studies at the prestigious Cambridge University in the UK, in addition to scholarships through the Chevening scheme. To date, I am proud that bp has supported the funding of scholarships for over 100 highly talented Egyptian graduates.

The WND community investment program with our partner Wintershall Dea, is the biggest ever implemented in the Behera Governorate, in which the Project is located. Around $10m is being invested in education, healthcare, entrepreneurship, and infrastructure development projects touching the lives of thousands.

Recently, we renewed our partnership with the Egyptian National Paralympic Committee to support the Committee and Egyptian athletes on their road to the Paris 2024 Paralympic games. Over the years, we have been proud to build a sustainable legacy and to show that no business can thrive in isolation from its community. I believe that business and social responsibility are meant to go hand in hand.

What are the main strides implemented at bp to cope with the sector’s digital transformation?

Digitization is a key underlying enabler in bp’s transformation. One of the tools bp uses empowers well planners, geologists, engineers, and executives to make better decisions based on quality data and real insight, in order to reduce risk, improve efficiency, reduce non-productive time and increase production. Also, we have deployed a tool to leverage technology and capability, enabling new goals to bring transformational benefits, i.e., big data manipulation, automation, faster and more powerful analysis, along with improving control while reducing risks. In addition, we are using more digital tools to further enhance team collaboration.

We plan to invest ~$50m in the first deepwater Ocean Bottom Node seismic project in the Nile Delta in 2022, over the Atoll area in the East Nile Delta, to find the next generation of gas projects.

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