Egypt Oil & Gas spoke with Kamel Al-Sawi, the President of Kuwait Energy Egypt to know more about the company’s latest developments, with a focus on brownfield optimization in Egypt.
Last year, the company’s then interim CEO met with the Minister of Petroleum and Mineral Resources, Tarek El Molla, and discussed expansion plans in Egypt. What has been the major developments across your portfolio in Egypt since this meeting? In your opinion, how will becoming part of United Energy Group boost Kuwait Energy’s presence in Egypt?
As has been declared earlier this year, the total share capital of parent company KEC plc had been acquired by a major Chinese company, United Energy Group (UEG), which is publicly listed the company in Hong Kong’s stock exchange market. UEG acquired major BP’s upstream asset in Pakistan, for a total consideration of approximately $750 million, and it is considered as the biggest foreign investor in the Pakistani oil sector. They almost invested $2 billion and succeeded to boost the production drastically from 17,000 barrels of oil equivalent per day (boe/d) to 98,000 boe/d. Being backed up by a strong investor like UEG, this gives us a great confidence to achieve our expansion targets in Egypt. This was even clear by the outstanding increase in our development and exploration activities post the completion of the acquisition and the increase in production from all of our assets. UEG is thinking very highly about the booming Egyptian oil and gas sector, especially after the reformation that the sector witnessed under the direction and guidance of H.E Eng. Tarek El Molla, Minister of Petroleum and Mineral Resources and the economic stability that Egypt is witnessing under the wise and strong leadership of our President, Abdel Fattah El Sisi, that reproduced a very competitive investment environment.
Can you please talk us through the company’s latest brownfield activities in Egypt?
I think Kuwait Energy company has presented a model of managing the brownfields. We continue to deliver value out of our operated field “Area(A)” in cooperation with General Petroleum Company (GPC), where we succeeded to boost the production of the field to around 9000 barrels of oil per day (b/d) at a time, and now it is stabilized around 8500 b/d. We had two discoveries, South Kheir and West Al-Khalig, during 2018 and one recent discovery during November 2019, which raised the total discoveries from the field since inception to six. This is considered a major success in a brownfield producing since 1958. Also, we continue our development activities by drilling more development wells to increase production, and we have commenced two water injection projects that proved successful results despite the doubts at the beginning of the execution.
When it comes to brownfields, what do you think are the best ways to maximize production while minimizing operating expenses?
I think the best way to increase production and optimize expenses is to adopt a model that forestalls the decline in production while optimizing CAPEX and OPEX by enabling new technologies, thorough analysis of the old data in the light of the recent advancement in reservoir characterizations and seismic interpretations, and, finally, to keep in mind that every barrel counts in the brownfields.
How can pre-existing infrastructure help in optimizing brownfield efficiency? And what do you think of the infrastructure in Egypt?
For sure the pre-existing infrastructure helps in optimizing brownfield efficiency as it is reflecting directly to better economics of the projects as it represents a major cost element of any development plan for the brownfields. I think Egypt is blessed by very good infrastructure whether in the Eastern desert, the Western Desert, the Nile Delta or the Mediterranean. This even secured a leading position for Egypt in the region to be a regional energy hub.
Besides infrastructure, how can brownfields leverage the Egyptian petroleum sector from the financial and technical perspectives?
As I indicated above, the analysis of the available old data of the brownfields in the light of the new techniques can reveal a big potential out of these assets. Our operated field is a tangible example of this, where we succeeded to boost the production from this field from 1200 b/d at inception to approximately 8500 b/d, and produced approximately 26 million barrels in almost ten years and had 6 discoveries so far. This gives you an indication of the role that the brownfields can play to leverage the Egyptian petroleum sector from the financial and technical perspectives.
Kuwait Energy was awarded in EGYPS 2019 for its development works of mature fields, in the framework of applying HSE rules. Why do you think Health, Safety, and Environment (HSE) is especially important within brownfields?
HSE should be a top priority whether in the brown or new fields, but it is more important in the brownfields because you are most likely faced by a bunch of issues related to facilities and flow lines integrity, produced water management, access roads to the field and to the wells, standard firefighting facilities, etc. All these concerns should be in the heart of our priorities while our efforts to unlock the remaining potential of the brownfields. Sometimes the efforts of the companies to adapt high HSE standards are hindered by the cost of the related projects. At Kuwait energy, we have proved that small actions at low cost can lead you to the required standard and in the meantime reflect better economics for the fields.
Can you please share with us Kuwait Energy’s newest models for tapping into a field’s reservoirs?
As the efficiency in production and enhancing recovery becomes an increasingly important issue in the oil field, we are adapting models based on our realization that in data, we own a major source of important facts and information. Integration of data from multiple sources, such as drilling, formation evaluation, well testing, reservoir engineering, reservoir modeling, wellbore modeling, artificial lift, surface facilities, etc., can result in cohesive workflows to minimize NPT in drilling, enhance completion design, build data-driven reservoir models, and, in short, change the way analysis, modeling, and optimization is performed in the upstream oil and gas industry.
What do you think are the latest brownfield technologies that Egyptian petroleum must adopt?
I think digitalization, enhanced oil recovery, and data-driven analytics to come up with the best way to optimize drilling, production, and enhance subsurface realization became a must.
What do you think are the best fiscal terms that could attract investments to brownfields?
There are no specific fiscal terms that can apply to all the brownfields. We should have a flexibility and transparency to set up the model that can suit each field on the basis of a win-win situation. Also, the most important thing is to be dynamic and ready to adapt when needed for the benefit of all parties.
What are other ways to increase brownfield investments in the Egyptian petroleum sector?
I think there should be a database for all the brownfields in Egypt with the challenges that are facing each with certain economic cut-offs for the government, and it is very necessary to give the investors the chance to present new techniques and business models to overcome these challenges and unlock the potential of these brownfields.
Kuwait Energy recently signed an agreement with the Ministry of Petroleum and Mineral Resources to train young oil and gas professionals. What are the latest practices the company can offer the new generation?
We are really happy being part of this modernization program and it gives us more confidence in the oil sector. We are great believers that “it is all about people.” An effective people development strategy is key for success and being able to react to changing business conditions and be more competitive. We are giving them the chance to live our business model, which focuses more on people, and offered them training opportunities through our designed program “4 Tiers Emerging Leaders Programme” to help them to be the future leaders.
What are the company’s future plans?
As I indicated earlier, we are focusing on unlocking the potential of our existing assets and maximizing their value through increasing reserves and production and optimizing expenditures. Also, we are fine-tuned to expand in Egypt through new bid rounds or merger and acquisition activities.