As we start this new year, could you give us a brief overview of how you see the results of 2022 and are you satisfied with the results of 2022?
First, I would like to say that this annual interview is an interview that I am always happy, proud and waiting to have with the Egypt Oil & Gas Newspaper and I would like to start by wishing you and the entire sector all the best wishes for the New Year 2023.
I would like to say also that definitely 2022 was a challenging year and perhaps you know that the entire world is facing geopolitical challenges, especially with the Russia-Ukraine war, and seeing the oil prices and all the commodities getting more expensive and getting tough to receive. Meanwhile, we have seen challenges in the entire supply chain value and then this has reflected, of course, in economies and trade.
When we talk about Egypt, definitely we are part of this international challenge and our oil & gas industry is part of the world energy industry. Therefore, I would like to see it in a different way of how we were able to perhaps withstand and overcome these challenges.
First, I would like to say proudly, that we have been able to ensure that all the needed supplies to the local market are there and that we’ve been able to satisfy the needs of consumers, whether they are individuals, motorists, industries, or households.
Meanwhile, we were able also in these challenging times as well to increase our exports and when we talk about exports here, we talk about gas exports, especially LNG. We are trying to maximize them and we have been able to successfully reach more than 8 million tons of LNG exports, which is a good number compared to the exports in the previous year which was less than 7 million tons. This year we will try to increase this figure hopefully to exceed 8 million.
Of course, when we say that we’ve been able to increase our LNG exports, that means that we’ve been able to increase our revenues and for the first time, we’ve been able to surpass the $7.5 billion of revenue generated from our LNG exports plus some natural gas exports that we are exporting through pipelines to Jordan.
We were also able to maintain being attractive to our partners. We’ve been able to attract more investments in upstream activities and especially of course for exploration and development of natural gas. Offshore activities were very well planned with our strategic partners, and we have a very important and aggressive exploratory drilling campaign, which started mid-2022 and is being extended and expanded till the end of 2023 and 2024, through which we will be able to drill more than 31 wells, important exploratory wells in offshore west and east of our Mediterranean exclusive economic zones. Perhaps one of the important results that we have had is the discovery of a gas field called Narges in association and partnership with Chevron. Yes, we have not yet announced the details of this discovery. However, the Narges discovery, I would say, is the first among several discoveries to come. And we are very optimistic that this will bring and will carry good luck in the coming drilling of wells that are planned in the coming few months.
When we talk about the downstream activities, which are important to satisfy domestic needs. We were able to cover the needs for gasoline and diesel. We were able to continue our ambitious plans to connect more than a million additional households to the natural gas grid. We have now more than 14 million households connected to natural gas. This is, of course, directly reflected in the decrease in subsidies to LPG. The LPG cylinders are heavily subsidized and we are importing more than half of the consumption. We see it decreasing year after year in spite of the increase in population. When we started like 4-5 years ago with this aggressive plan of connecting more than a million households per year, we’ve seen it reflected in the imports and consumption of LPG that decreased from 4.2 million tons per year to now 3.6 million tons per year.
Meanwhile, we are continuing on having our important refinery campaign. Despite challenges by interruptions that we had in supply chain of receiving different parts and important components of some projects, whether in MIDOR Refinery in Alexandria or in the Assiut complex that we are constructing now, both of them are being carried out, so by end of 2023 will have MIDOR fully completed and in operation and this will add 60% of its capacity. It will add more diesel and gasoline refined volumes to the market, the same as for Assiut Refinery ANOPC that will be completed by the end of 2024. In spite of the challenges, we were able to have financial closure for the Assiut refinery, which was an important milestone that we’ve been able to conclude.
In the meantime, most of our retail sites, terminals and depots are being upgraded. We are also using technology to digitalize all facilities, refineries, terminals, and retail sites and they are all connected to EGPC. We are upgrading our refining process through using the linear programing systems and they are all now connected to our SAP, and this is the new phase that we are doing now.
On the international level, we have been able to pursue the growth of the role of Egypt as a gas hub. Under the EMGF, we have been able to sign an important agreement with the EU and Israel. After that, we had an important and very significant breakthrough when succeeding in having one of the thematic days during COP27, which Egypt hosted in Sharm El Sheikh. We were able to have Decarbonization Day for the first time ever, and through Decarbonization Day, we were able to host and to have all the energy companies, especially the oil and gas, and all the international organizations, financial organizations, and other world organizations to attend, witness, and participate during this day. We were able to convince the entire world that we need to be part of the solution since we have been accused of being part of the problem of global warming, and emissions. We were proud to have this important thematic day, and I think this was an important event that I would say internationally was a good closing to the activities that we had. So, in summary, I think the year 2022, in spite of the global challenges, Egypt’s oil and gas industry has been able to have a good and successful year and [was] very well recognized internationally as well.
What would you like to see achieved in 2023?
In 2023, we will be continuing what we have done, to complete and to achieve the projects that we have opened or we started a few years ago and we wish to conclude in 2023. Meanwhile, I would like to see more and more improvement in energy efficiency. Energy efficiency has been an important target for our sector, and an important KPI that I hold all my companies accountable for achieving. Why am I focusing on that? It’s because energy efficiency will allow us to save costs, enable more efficient production, and thirdly, which is more important, help us save more natural gas, which we will be able to export and generate more revenues from.
Secondly, I would like to see and hope to have more discoveries, and I think we have important drilling campaigns that will be run during 2023. For most of them, we are just crossing our fingers and praying to God to send us some resources, and these drilling campaigns would realize good discoveries hopefully God Willing. I think with that I would say that this would be translated then to quick projects in order to bring these discoveries to production as early as we can. Definitely, we feel and are very much aware of our responsibility towards the Egyptian economy and how our oil and gas industry is an important pillar of the Egyptian economy. Therefore, we are really doing our best and our utmost in order to improve the revenues, reduce our costs, and generate more foreign currency for our economy.
Concerning 2023 also, what would be your key message that you would like to deliver to the international companies operating in Egypt?
With the success stories that we had with our strategic partners and our IOCs operating in Egypt, I think that we have gained more and more credibility. I think that they have seen me close to them, being all the time engaged in all the different topics, activities, challenges, and solutions. With that, I will just still reiterate the importance of confirming their commitment, and confirming their engagement, and their growth in Egypt.
I think it’s clear that their growth in Egypt will pay off. With oil and gas high prices, I think that this is the time for them to explore more, discover more, develop more and produce more, so that we will be both in a win-win position.
We, as energy companies and as the energy industry, are all aware and committed to the transition, and we are with less emissions, but we also with more production.
So, this is what I would like to ask my partners: Please stay committed, grow your business, grow your activities, and I am there, the government is there, the leadership of the country is there, we will definitely support you all the time, and I think is our window of opportunity. We have made a good representation during COP27. I think we are up to this responsibility and we can deliver good hydrocarbons with less emissions, and will be able to gain some good revenues for our companies and our people. So, this is my message, wishing them all the best for the year 2023.
Since you took the role as the Minister of Petroleum, there has been a huge success when it comes to corporate social responsibility (CSR). What are your plans for corporate social responsibility with international oil companies as partners within this plan?
Well, I saw over the years that we have through our companies, whether they are state companies, joint ventures, or international companies operating in Egypt, good will, good contributions, and good budgets towards CSR and social responsibility. However, I’ve not seen it reflected positively in society because these amounts and these initiatives and these social corporate responsibility projects that had been made were scattered and fragmented and they have not been sound enough to the level where the community would appreciate.
Therefore, I created last year a committee headed by myself to give it credibility and to give a message of importance, and value to the message that I would like to deliver. This committee witnessed the participation of all companies and we did put together, based on International sustainable development goals (SDGs), the priorities that we can implement in Egypt.
We are prioritizing, of course, education projects. And when we talk about education, sometimes also we talk about girls’ education, and of course about health, and hospitals, specially, when we go to small cities. Therefore, I think that we have been successfully able to launch this committee and launch several projects. So far, we have not yet reached the level that I want because this was the first year but we have a big plan for 2023.
We have already now put into each company a focal point and a department that is responsible for CSR which has not been the case before. This is part of the culture and this is part of raising awareness of the importance of our role as good citizens contributing to society very important and very positive services that would help the community.
I think with this important initiative, we will see more and more positive feedback and see very sound projects that will make a big difference for our community.
In your opinion, what are the most difficult challenges facing the energy sector in Egypt in the coming year and how will you face them?
The energy industry is essentially a global industry, and the complex challenges it faces and the continuous turmoil as a result of global tensions extends to various countries, including Egypt.
The challenges facing the energy industry since the first quarter of 2022 are represented in the continuous price fluctuations in the oil and gas markets, the accompanying increase in operational costs, supply chain crises as a result of global tensions, as well as the difficulty of predicting market directions and prices. It is expected that these price fluctuations and uncertainty in the energy markets will continue during the year 2023, especially with the expected global economic recession.
For our part, we are moving quickly on several axes in parallel to reduce the effects of this global crisis on the energy sector in Egypt, which depends mainly on fossil fuels of oil and gas, and limit the impact of high costs on it. Though Egypt is a natural gas exporter, it still imports part of its needs of crude oil and petroleum products. Therefore, the financial burdens of these imports represent a challenge that is faced by working to intensify the search and exploration for gas and oil in order to increase reserves and production from them and provide additional local production that helps us reduce imports, as we launched an expanded program for exploratory drilling in the Mediterranean to access latent reserves and increase our gas resources.
We are also working on measures to maximize the utilization of energy resources through the rationalization of consumption and rationalizing the use of energy through proper pricing, in addition to benefiting from technology to raise energy efficiency, which preserves our resources, and there is a future strategy launched in November 2022 during the Climate Summit to achieve energy efficiency. We have started implementing it since 2022, and its term extends to 2035. We also continue to work on the completion of petroleum refining and manufacturing projects, foremost of which are the expansions of the MIDOR refinery and the ANOPC complex in Assiut to secure the availability of petroleum products needs locally and thus gradually limit their import. There is no doubt that enhancing the capabilities and development of the refinery system is very important in light of the problems of supply chains and the huge surge of petroleum product prices globally. All of these axes come within the strategy of the sector’s work to face global challenges.
In light of environmental and geopolitical challenges, how can we achieve a sustainable and responsible energy transition?
The process of a complete energy transition towards total reliance on clean energies will not happen overnight, as it requires great efforts, huge investments, and an appropriate period of time to implement, test, and operate clean energy projects. Therefore, the process must be implemented wisely and deliberately to achieve the desired results efficiently, and the global challenges witnessed in recent years, especially the Russian-Ukrainian crisis, have proven that the world still needs traditional energies in light of the growing demand for them and the inability of clean energies yet to provide the fuel necessary for the continuity of life activities of all kinds at reasonable prices. Here is where the importance of natural gas emerges as the best fossil fuel with environmentally friendly characteristics, and it was chosen as the main transitional fuel on the pathway towards a complete energy transition.
This was highlighted during the Climate Change Conference (COP27), which was hosted by Egypt in Sharm El-Sheikh last November, where the Ministry of Petroleum and Mineral Resources, local and international oil and gas companies, and organizations and institutions concerned with industry participated in the activities of the conference for the first time in the history of climate conferences.
The Russian-Ukrainian conflict could be considered both a challenge and an opportunity. How can Egypt confront these challenges and benefit from the opportunities that it could offer?
As we elaborated, we are dealing with these global challenges through an integrated vision, which includes the expansion of discovery and exploration activities, accelerating the development of fields to increase reserves, implementing energy efficiency, modernizing the refinery industry, and maximizing the utilization of infrastructure to export natural gas, which is an important competitive advantage of Egypt in the region.
This is a very important solution that can make opportunities out of challenges. Amid surging regional and international demands to secure natural gas supplies, Egypt is one of the quick solutions which contribute to meeting a part of this demand, considering its key role in being a hub for trading and transporting natural gas as well as the great capacities that it has in its Idku and Damietta liquefied natural gas (LNG) plants. These plants allowed Egypt to receive natural gas from the East Mediterranean fields and re-export it to outside markets, especially the European market.
Also, since Egypt achieved self-sufficiency in natural gas, it is exporting the surplus of its production and it is working continuously on securing a great amount of natural gas from the East Mediterranean to re-export it. The exporting capacity from Idku and Damietta plants reached 12.5 million tons of LNG annually, while we are currently exporting more than 8 million tons.
The Ministry of Petroleum and Mineral Resources has taken a special interest in developing human capacities. What are the plans for developing the talents and capabilities in the sector?
No doubt that the young cadres are the main element in the targeted developments and they represent future hopes to guarantee that the petroleum sector will continue achieving progress in the coming period to support the national economy.
When we launched the Modernization project in 2016, we were keen on dedicating a program to develop human capacities and qualify young and middle management. Last year, the second phase of the program was completed, in which 831 of the applicants underwent the final assessment and 416 were chosen to join the unified training phase. Moreover, 282 training programs on energy efficiency were offered to more than 275 trainees.
In addition, a program for building capacities in operational safety and assets integration teams was offered, in which 150 candidates were selected during the final evaluation phase of the second edition of the program and the training programs are under preparation according to the latest practices in the field of operation safety and assets integration. Furthermore, a set of memoranda of understanding (MoUs) were signed with major international petroleum companies to sponsor different training programs in its coming phases.
For empowering youth cadres, a plan was set aiming to empower distinguished cadres from the best graduates of the capacity-building programs to benefit from them in all oil and gas activities. A group of cadres were chosen to work on new strategic projects in the sector such as Egypt Upstream gateway (EUG), the sector’s restructure project, modernization and digitalization work teams.
Egyptian is a country which has been blessed with rich mineral wealth. How has the Ministry worked to take full advantage of that in 2022?
The ministry continues to implement work plans and programs as part of the mining sector’s development strategy, which aims to attract investments and enable its strong contribution to national production through an integrated system of procedures to modernize the methods of mining work and maximize the value-added of mineral raw materials. This can also be achieved by benefiting from production facilities and distinguished expertise in this field as well as Egypt’s possession of very important mining areas in the Eastern Desert region.
On May 26, 2022, the results of the second round of bidding for gold and its associated minerals, which was launched in March 2020, were announced with English, Egyptian and Canadian companies wining eight sectors in the Eastern Desert.
The result of the bidding associated mineral ores search (iron, phosphate, copper, white sand, feldspar, etc.) was announced in several sections on an area of 16 square kilometers, where nine Egyptian companies won a total of 11 sectors of raw materials (phosphates – white sands – kaolin).
In July 2022, The Egypt Mining Forum was launched in the presence of more than 200 participants from the heads of Egyptian, African and international mining companies.
We have also work to develop human cadres with training program for workers in mineral resources was completed within the comprehensive training program that was designed for the trainees and the employees of the Egyptian General Authority for Mineral Resources to benefit from it in stages of various disciplines, and they were divided into four groups, where the training of all groups, which included 303 employees of the Egyptian Authority, was completed. The General Authority for Mineral Resources aim to raise the contribution of the mining sector to the GDP from 0.5% now to 5% by 2030.
Participation in the International Mining Conference in the Saudi capital, Riyadh, last January, where El Molla presented the Egyptian vision to attract investments to the mining sector and take advantage of mining opportunities and resources in the optimal economic manner.
About 568,000 ounces of gold and silver were sold during 2022, which represents a 17% increase in comparison to 2021, and the total value of their sales amounted to about $878.24 million, and the value of the due royalty (3%) is about $26 million.
About 9.5 million tons of mining products and raw materials were produced during the year, which represents an increase of about 50% compared to 2021.
Thank you so much your excellency. And I would like to end this interview, in a different way. Were you able to watch the World Cup?
Yes. Well, I was able to watch most of the important matches, all of them are important, definitely, I mean semifinals, quarter-final and final of course. I was also lucky that I had the chance to attend some of these matches in Qatar I was there at the quarter-finals. I have been able to watch two of them and to witness the development that has happened in Qatar and how the Qatari government was able to host such a global important event by which we were really very proud that an Arab country was able to manage, host, and facilitate a very successful event, like the World Cup.