Made a historic deal at a time when everybody was cutting down their investments, believed in the high potentials of Abu Qir Concession and trusted their expertise and abilities to achieve prosperous accomplishments, Edison promises more vigorous plans this year in Egypt as Mr. Maurizio Coratella, Edison Country Manager, told Egypt Oil & Gas
What is the volume of Edison investments in Egypt in 2010?
In 2010, we definitely will have very aggressive plan for investment, as I might say, we will invest approximately $400 million, which will be of course mainly dedicated to the Abu Qir concession, with our partner the Egyptian General Petroleum Corporation (EGPC). We recently had a general assembly with the EGPC, during which Edison presented its 2010-2011 plan that would start in July, with the beginning of the fiscal year. These investments will be targeting some exploration goals in addition to some development activities that would help us increase our production with respect to our 2009 production and experience.
Can you specify how would Edison allocate the $400-million budget exactly?
For development phase, an average of $270-300 million will be directed for this phase, which is more than half the budget, as we will need to develop our assets, few number of additional wells, some interventions in the offshore (around three new platforms to be likely built) in addition to some other activities in the onshore facilities that need specific interventions to increase productivity.
Hence, major investment will be targeting capital and developmental expenses and mainly directed to the Abu Qir Concession.
The remaining budget will be allocated for exploration activities. We are currently on the exploration phase in two concessions in the Western Desert.
Are you expecting new discoveries for Edison this year?
We hope so! We are very much committed that after the first year of signing the Abu Qir Concession deal at the beginning of 2009, we now understand the geological and physical nature of this concession and therefore, we are confident that our exploration activities will lead us to many discoveries that would be of a great interest to the country.
In the other concessions, we have ongoing exploration activities, which results were very encouraging.
How do you compare your 2010 investment plan to last year?
Given the current situation of the market and the status of other contractors, I believe that this year we have a very aggressive and vigorous investment plan this year compared to 2009 that was a bit misleading. We were finalizing the acquisition of the Abu Qir Concession, however, we had an investment commitment of more than $1.4 billion, so we think that in 2009, we had a level of investment very difficult to achieve over the coming years.
What did the historic deal between Edison-Ministry of Petroleum for Abu Qir add to your company?
Actually, this deal has brought us back to Egypt, as we were here from late 1990s and known by our active operations in the upstream sector. So, the Abu Qir deal reflected our strong commitment to the country and the long-term targets we have.
Was not it a challenge for Edison to have such a huge $1.4-billion investment commitment in the middle of the economic crisis?
As a matter of fact, the negotiations and preparations for this historic deal were conducted long time before the year of 2009. The overall prospect of the market was completely different when we first showed our interest in the Abu Qir Concession. The high potentials we see in this concession pushed us to speed up the acquisition process and to allocate more investments for it. Moreover, we received a kind of support from our assets in Europe and from our powerful stand as the second largest power producer in Italy. This is a long-term investment that would bring positive and prosperous outcomes, so we cannot postpone such an opportunity because of some years of financial crisis. This is a very strategic deal for our company.
Have the EGPC payment delays affected your company?
Of course, most of contractors are impacted by these delays and this could be a reason why they have reduced the level of their commitments in the country. In the case of Edison, we are continuously and closely monitoring our level of exposure, and for the time being, it is absolutely in line with our expectations. Nevertheless, we have a unique level of cautions while investing during this crisis. However, since we want to develop our assets and wells to make an efficient use of the reserves, of course we need to be paid to carry on with our investment plan.
What is your daily production rate?
From Abu Qir, the daily production rate averages 150 million standard cubic feet of gas.
What is your expected 2010 production rate?
We expect to exceed the 200 million cubic feet in 2010.
What is the timeline of your development phase?
Our program for the fiscal year of 2010-2011 is targeting the 200 million cubic feet production level, so throughout this fiscal year, we will be implementing the plan I mentioned earlier and based on it, we will set another new program to start in 2012.
We will have other developmental projects by 2012 as in the Abu Qir Concession, we will foresee some exploration activities in what is called shallow horizon and then, there is another exploration phase for the deep horizon that is targeting oil at very critical depths.
Do you any expansion plans in Egypt?
With this level of investment, Egypt has become a very strategic country. We have another concessions, which are in the exploration phase so far. Results have shown high potentials for production increases. We have in the Western Desert a concession that is mainly targeting oil and in which we are really successful and already put it on the production phase. This is considerably a small reservoir with a daily production of nearly 1000 barrels a day.
Do you consider the Western Desert a future potential for oil production?
I think that Western Desert is absolutely promising area in terms of exploration, and we have the sample of Apache, which is very successful nowadays.
Edison is preparing for drilling another exploratory well in next May, now that we have a good knowledge of the area. Also, we may move into some Jurassic deep targets in the Western Desert, which are difficult to deal with.
What were the major accomplishments of Edison in 2009 in Egypt?
Definitely, the acquisition of Abu Qir Concession was our major achievement last year. Moreover, we succeeded in the challenge following the acquisition, which is to run an entire organization to implement our plans for this project and conduct our operations.
How would you position yourself between other operators in Egypt?
In Egypt, we have operators like BG, ENI…etc have been operating in the country for 40-50 years, and so their position is much more consolidated compared to Edison. It is very difficult to compare our positions, yet we are consolidating our stand in the country with our large investments and strong technical skills that would reduce the difference. I think we are gaining more experience and knowledge of the country and doing pretty well in our attempts to understand the systems with our counterparts the EGPC and EGAS.