Energean is a major exploration and production (E&P) company in the Mediterranean, could you elaborate on the company’s activities?

Energean is a company that I started back in 2007 when we bought the only oil-producing asset in Greece. Back then it was and still is an asset that is producing oil, it was the only production in Greece with a small production of 2,000 barrels a day. Since then, we started the growth of making Energean what it is today, the leading independent E&P company in the Mediterranean. So, from the start in 2007 to where we are today, we started with 2 million barrels oil equivalent of 2p reserves and today, we have ended up 2020 with 974 million barrels of oil equivalent of 2p reserves.

We started with a couple of employees and now we are more than 600 and if you add the Abu Qir Petroleum joint venture (JV), that makes more than 1,300 employees. We ended 2020 with more than 50,000 barrels of oil equivalent (boe) and a presence in nine countries. With the acquisition of Edison, Energean is present in Italy, Egypt, UK, Croatia and Malta, of course in Israel, with a major investment of $1.7 billion in the development of Karish and Tanin, as well as in Greece and Cyprus. A truly multinational company totally focused in the E&P sector and totally focused in the East Mediterranean.

I originally come from Greece and I think one of the key benefits for me is; knowing and loving the Mediterranean and understanding the culture of the people in the region, [which] has been a major reason that we were successful in building this business. I have to say that doing business in Greece is no different than doing business in Egypt, or Italy or Israel. I will give you a small example, in Greece, in the last 12 years I have worked with nine prime ministers and 14 ministers of Energy. In Italy, there have been continuous changes in the scene. In Egypt, in the last 12 days we have witnessed all the political changes from the previous regimes to where we are today. In Israel, the fourth election in a two-year period was announced at the end of 2020. So, you have to understand change, you have to understand how Mediterranean people work and live.

What are the recent updates on the Edison E&P acquisition?

The acquisition of Edison closed at the end of 2020 and it is a major milestone for us because it gave us access not only to assets and production but also to a fantastic team that was built by Edison. The team is still managing the assets based in Milan and Cairo primarily, but also in the other countries; Croatia and the UK.

The key asset in the Edison portfolio was and still is the Abu Qir gas production and this was one of the key reasons for the acquisition. Egypt for Energean is a core country for operation; it is a very important country for us where we have been operating for a long period of time. We were before operators of East Magawish and West Kom Ombo, where we drilled exploration wells without the success we wanted, but that is the nature of our business; exploration has its risks. So, for us, it was very important to build an important and significant presence in Egypt. So, one of the key reasons why we bought Edison and closed after approval from the various governments was to increase our presence in Egypt.

It was not an easy process and doing any deal in 2020 has been extremely challenging; 2020 has been probably the most difficult year that I have lived in my professional career. Not only we had COVID-19, the restrictions, the difficulties in operating, the difficulties in moving to see countries and people, but we also had a big crash of the oil price. We had big funds and banks pulling out of the industry making funding for acquisition or deals very difficult. So, 2020 was a very tough year for everyone, but we managed to close successfully in very close cooperation with Edison..

I want to extend a big “thank you” to H.E. Tarek El Molla who supported us together with the Egyptian General Petroleum Corporation (EGPC) and the Egyptian Gas Holding Company (EGAS) to obtain all the necessary approvals that were required in the country. Egypt has been very supportive and as I said before, we consider Egypt a key country for operations for us.

What impact will Energean’s acquisition of Edison E&P have on the company in the short-term and long-term?

The impact is huge because Energean before the acquisition of Edison was a company that had a small oil production in Greece and a huge project that we are running in Israel that will be delivering gas at the end of 2021. Energean today, with the acquisition of Edison E&P, is a company that has multiple countries of operation and different areas of production. So, the production of Edison E&P’s assets, primarily Abu Qir and Italy, filled the gap between where we were before and the start of production from Israel.

Karish production will bring our total numbers to app.  200,000 boe per day and we will totally be focusing on gas. More than 70% of the reserves and resources that we have in the portfolio are gas; we want to focus on gas. The Edison E&P portfolio was focused on gas, so it was a very nice fit for us.

The second big change is that it added a significant strength in our technical capabilities from the people based in Milan, Cairo, the UK, and other countries of operation. So, it complements very nicely our team from a technical capability’s perspective. So, all in all, I think it is one of those cases where 1+1=3! There is no overlap in any of the countries of operation, there is a lot of complementarity in terms of the people and there are assets that are in line with our strategy to be gas-focused in the Mediterranean.

The deal with Edison will create one of the largest E&P companies listed on the London Stock Exchange (LSE). Please tell us more about the opportunities that will be unleashed due to this huge financial step?

Energean today is the largest independent E&P company listed on the LSE market cap with $1.7 billion. I remind you we started 13 years ago from nothing to be the leader on LSE. We were listed in March 2018 and this was the only initial public offering (IPO) that was done on the LSE in the sector for more than four years and there has not been an IPO done since then. In fact, a lot of the big companies, the leaders in the sector have had significant financial difficulties and have reduced in size dramatically over the last four or five years.

It is not easy to be an operator in the sector today; we are open to risk due to oil price fluctuation, we are open to and exposed to a sentiment that is away from oil and gas. A lot of institutions around the world are choosing to go greener, and a lot of governments are also choosing to move away from oil and gas. So, to be successful in this sector, be able to raise the amount of money we have been able to raise in the last three years, is a unique achievement in my view. Energean has raised more than $3 billion over the last three years to fund the IPO, the Karish-Tanin project, and other activities of the group in Greece and other places, including the acquisition of Edison E&P.

So, the market trusts Energean, the investors trust Energean, the banks trust Energean because we always deliver on our promises. We delivered the acquisition of Edison E&P as we promised by year end. We will deliver the project in Israel that we will start to produce gas by next year. That is what investors want, they want to see a company that delivers on its promises; a company that is focused and committed. They want to see a company where management has a material interest in the shareholding – and we hold a big stake in the shares of the company. We care about shareholder value.

What I said before about the division in this industry and what people are thinking is very important to Egypt. Egypt has made a choice to produce oil and gas, to be self-sufficient, and to export oil and gas. Other countries, like Italy, have chosen not to produce or export oil and gas, but they are still using oil and gas. So, the countries that choose not to invest in oil and gas end up importing all their hydrocarbons. To remind you, the world is moving towards renewables, but still, the world needs oil and gas. People still need to drive their cars, need to use electricity, get heating, and petrochemicals. So, there is a huge need for the products that we produce.

In a nutshell, the way I see the world developing right now is that companies like us work closely with governments like the Egyptian government to promote oil and gas investments in ta sector that  has not only financial impact but also geo-political impact. It is extremely important for countries, in my view, not to rely on others for their energy needs and this is something some countries understand while some others for the sake of populism and votes, choose to talk only about renewables and forget the fact that oil and gas are still important.

Would you agree that the positioning of Egypt in the Mediterranean, with all the available infrastructure for exporting to these countries that have a renewable strategy that would require the gas, is an important factor in this coming decade?

Undoubtedly! Egypt in the Mediterranean is the country that has the longest history of oil and gas production, the more mature market, the most experienced government officials that regulate this industry, the largest presence of oil and gas operators of any country of the ones we operate in. Plus the existing infrastructure, the gas networks, the ports, the LNG terminals, the power stations, the petrochemical plants, the refineries; all that puts Egypt in a unique position to be the energy hub of the Mediterranean.

One of the biggest challenges people face in the East Mediterranean is how to get access to big markets. We operate and have signed contracts to sell 7.4 billion cubic meters per year (bcm/y) to the Israeli market, a market that consumes about 11 bcm/y and is growing further. So, we are going to become one of the major producers of gas tin Israel, in a market that has become self-sufficient and has started to export gas. But in order to attract more investments and justify drilling more wells, you need access to a much larger market. Those larger markets are the European market and Egypt. So pipelines that connect everyone are very important. The liquefied natural gas (LNG) terminals in Idku and Damietta will play a major role in becoming an export hub of gas in the region. So, we see Egypt as a key country for exporting gas not only to Europe but to the rest of the world. So, yes, Egypt can play an important role of becoming a hub for the region.

The EMGF that has been launched and is based in Cairo has a very important role to play, and we were one of the initial members of this forum being the only company that is present in almost all the countries that participate in it, while we are also looking to expand in the rest of the countries in the Mediterranean. EMGF is a very important organization. It has to improve in certain elements, but definitely the forum can play a major role in this energy transition sera  and Egypt can definitely become a major hub of exports of hydrocarbons.

How does the deal with Edison affect Energean’s commercial and business development in Egypt?

Energean is a major gas player in the country and Abu Qir is a very important asset in the gas production of Egypt. So, from a commercial standpoint, all the gas is sold to government entities, and EGAS and EGPC are the companies that buy all the hydrocarbons that we produce. So, for us, it is the start and foundation to build a bigger presence in Egypt. Abu Qir is an asset that has been in production since the late ‘70s, it is an asset that needs significant investments and we are absolutely ready to make these investments. In fact, the future of Abu Qir goes through a new investment program in North East Al-Amriya and North East Idku, a $240 million investment that we are ready to sanction. That will happen in the next 18-24 months and bring the production levels of Abu Qir back up or even more than what they were in the last couple of years. So, we are ready to invest in Abu Qir and Abu Qir satellite fields, but we are also ready to invest in more assets in Egypt. For me, being present with Abu Qir in Egypt today, as I said before, it is the foundation, the platform base on which we want to grow the presence of Energean in Egypt.

What is your plan for operations in Abu Qir?

Abu Qir is a very well-run operation from Abu Qir Petroleum, the relationship with our JV partner is excellent, and I think we will continue operating the same way. Obviously, we will bring in the enthusiasm, the energy that comes from a committed E&P investor, because EDF – the owner of Edison E&P until recently- was not interested in E&P and that was naturally reflected in the lack of investments in the assets over the last two years. Today, Abu Qir is owned by a company that is only investing in the E&P sector, a company that has gas and Egypt as priorities So, I think the employees of Edison and employees of Abu Qir Petroleum will see a big positive change from a shareholder that is willing to invest, that wants employees’ productivity , wants to become more efficient, wants to keep costs low because we need to be able to return money to our shareholders but is totally committed to the sector, and that is a huge change.

Speaking to my new colleagues at the Edison E&P team, I sense a very positive momentum because they feel that a new era has started. So, they are moving from a shareholder that did not want to invest, that did not believe in the E&P sector into one that is totally committed to the E&P sector. I think that is a big change in what is going to happen also in Egypt. So not only we will be dedicated and not only we will focus on Abu Qir, but we will continue and invest in North East El-Amriya and North Idku project which has taken a very long time to sanction but it is ready to go now.

Are there any plans for other acquisitions in the coming period?

You cannot obviously pre-announce acquisitions, but as I said we are going to be totally focused in the Mediterranean, so that is our key area of focus. I have said it many times, we will only do business with countries that I can fly within three hours from Athens. That is a very simple rule we follow to stay focused. Companies like us need to understand the subsurface, the rocks, but they also need to understand and be able to operate in the above surface issues. I think Energean understands the above surface issues better than anyone else in the region. It is proven by the fact that we operate in all these countries, so this is something that we need to take advantage of.

Will we buy more companies or more assets? For the time being, the priority is to integrate the Edison E&P assets portfolio and people into our business, to deliver gas from Karish next year, to invest in North East Al-Amriya, North East Idku, to invest in other projects we have in the portfolio. There is a big investment in Italy; Cassiopea, there is a big investment in Greece called Epsilon, and another big investment in Israel called Karish North. So, we have a very active investment program in our existing portfolio before we go out and look for new acquisitions.

We will look at anything. We obviously look to add value to shareholders. But you have to remember, you have to have solid foundations; you have to have your feet on solid ground before you continue the growth. The growth Energean has seen over the last decade has been phenomenal but every time it is built on a solid foundation. So, we do not rush growing for the sake of growing; being big is not what this game is all about. The sustainability and the business is what counts. For me, it is important to continue to grow and see Energean being a leader.

According to the company’s results for H1 2020, Energean’s Abu Qir exceeded 2020 guidance. How did the company achieve this success?

The success of 2020 is not attributed to us, it is attributed to the Abu Qir Petroleum team and Edison E&P because we were not managing the asset. We were supervising obviously what is going on, but I have to give credit to the Egyptian team, to Nicholas Katcharov, who is running the business in Egypt as a general manager, to Aldo Costantini who is a general manager in Abu Qir Petroleum, and the rest of the team – because I cannot name all of them.

As said earlier Abu Qir is an asset that needs investment, It is an asset we need to put money into to drill wells, go to new horizons; the facilities had a lot more capacity to produce. It is a very similar story with our Greek assets; huge facilities that are redesigned to take a lot more production than what we have today and we need to fill them with more gas, more condensate, and more products that will be going through them. Without new investments, Abu Qir will follow the natural decline of any gas field around the world.

So yes, 2020 was a successful year, but I think everybody needs to understand that Abu Qir needs money, needs investments, needs proper active management. Without that, Abu Qir will not exist in a few years’ time. Together with that, we need to take into consideration the jobs, the social impact, plus the impact that this field has on production. So, I repeat, Abu Qir needs investment; it cannot continue without more money going in.

Based on your experience, how does the Egyptian government support foreign investors especially in the oil and gas industry?

Egypt is a country that Energean has been operating in for over 11 years; it is my second home and I believe that this is reflected also in the relationship we have with the Egyptian government.

The Egyptian government, including the leadership of the E&P sector under H.E. Tarek El Molla, is a government that promotes investments, that understands the need of investors, and makes us very comfourtable to make the decision to invest in North Idku in North East Al-Amriya. Throughout the process of the acquisition of Edison E&P, we have seen a supportive government. Not all countries were the same, I can give you an example; Algeria was very different. Algeria sent a very negative message for us and they did not allow us to go and do the same thing we were going to do in Egypt. So, they lost the opportunity by not promoting this type of investment and the acquisition of the Edison E&P assets in Algeria.

Egypt was very different. Egypt was very supportive, Egypt welcomed Energean as a bigger player and that gives us the confidence to continue to grow. Obviously, the country is going through difficulties like every other country in 2020 because of COVID-19; that has affected the country financially. That is reflected in the situation with receivables that everyone is experiencing and that needs to be improved. There is no doubt that this is a key message that will even further promote investments in Egypt.

We closed the acquisition of Edison E&P that was funded by a number of international banks, and we closed with our Reserves Based Lending (RBL) facility that was primarily focused in Egypt’s Abu Qir asset. So even the financial market and the banks gave a vote of confidence to Egypt. That means that the right company with the right assets can actually not only raise money but deliver big acquisitions in the country. It has been the case for everyone, and there has been a number of attempts in Egypt for acquisitions of companies and assets that did not materialize.

I believe governments and companies have to be very careful to choose the right companies they want to do business with because not everyone can deliver an acquisition in 2020 of that size. The countries that recognize that and sellers that recognize that end up with deals such as the acquisition of Edison E&P. EDF managed to achieve their objective which was to exit the E&P sector. Egypt ended up with a committed operator as opposed to an operator that wants to do different things. The choice of a committed company and an operator is extremely important for me when deals like that happen.

Could you elaborate on Energean’s strategy to be a net zero emitter by 2050?

In December 2019, we made a big commitment as the first E&P company in the world to commit to becoming a net-zero emitter. What does a net-zero emitter mean? We have Scope One and Scope Two emissions. Scope One are emissions that we generate through our operations, where we burn gas or oil for our operations, we use our compressors, power stations, etc. Scope Two are the emissions that are generated from the use of energy that we buy from third parties. So, we committed that the total Scope One and Two emissions in Energean will end up in a net-zero position by 2050 and some people may say “by 2050, you will be 85 years old, you probably will not be around. So, you are making a commitment for a day you will not be around.”

It is absolutely not the case; these are major statements and moves we make that take time and are followed by immediate actions. The first plan is to reduce our carbon (CO2) intensity by 70% in the first three years of our commitment. We will continue to reduce the CO2 intensity until we reach our target to become a net-zero emitter. That is a message that is not easy to make. Some people may say “you are an oil and gas company; how can you get there?”

The answer is very simple. First, by focusing on gas. Second, by buying electricity from renewable sources. In Greece 2020, we signed an agreement to buy only the electricity we need for our platforms and installations in Prinos from renewable sources that reduced our carbon footprint by 45%. We are becoming more efficient; we will be looking at Abu Qir operations and trying to improve efficiency as much as we can. Then once we have reached the limit the next step will be to focus on carbon capture and storage (CCS) projects where we actually reverse instead of emitting CO2. That is the role oil and gas companies can play in the future and oil and gas companies have unique know-how, not only to drill wells, to manage reservoirs, put projects together, but also to manage CO2 emissions.

So, turning old assets into CO2 storage areas is going to become a top priority for Energean and this is something we will also be discussing with the Egyptian government because I think that is a key topic that should be discussed. I would invite the next [EGYPS show to have that as a topic of discussion. It is becoming a major theme in Europe; there are at least 25 projects of CCS being developed at the moment in the European Union (EU). I think that needs to be a trend that is followed also by countries like Egypt and other places where there is still hydrocarbons as a key area of production.

Moving into CCS, enhanced oil recovery (EOR) projects and reversing the emissions of CO2 is going to be a top priority for us. So, the net-zero big commitment that we made shows that Energean is going to be a leader in the sustainability side of the business. We are not afraid to talk about these issues and we are not trying to hide the fact that we produce oil and gas; that is a fact of life. The question is: Are you producing it efficiently? Are you doing everything you can to be sustainable? Are you doing everything you can to get to that target of net-zero? And what is the cost of getting there?

We are committed to get there and that is something that our investors in London and in the world recognize because we have a sustainability report that is very open and transparent in our emissions, in our environmental footprints, and I think that is what the E&P companies’ future should look like. So, I see Energean playing a crucial role in the transition strategy through gas.

Unfortunately, especially the younger generation who is more active and vocal, believes that the solution to the planet’s problem is driving electric vehicles. Yes, the situation will become better in the big cities if we drive electric vehicles, but somebody has produced the battery, somebody has been digging around in another country for raw material for this battery, somebody has moved this with ships around the world that burned fossil fuels, somebody has created paints and other plastics for the cars, and somebody needs to recycle all of this after the end of its life. So, let’s look at the total carbon footprint of every solution and make sure that when we make decisions, they are a solution to the planet’s problem.

Let’s be realistic and understand that gas is the transition fuel to the future and make sure that compressed natural gas (CNG) cars, electric cars, or any other solution that is promoted is in line with what the world and the countries need. Oil and gas companies will play a role in the solution but we need to work closely with governments.

Energean focuses on developing resources in the East Mediterranean. How will Energean benefit from EMGF especially after the signing of the charter?

EMGF is a very important organization, but I have to say it has to be very careful not to become a huge bureaucracy with countless hours being wasted in long conference calls with people that have nothing to do with gas. I am sending a very clear message here: the organizers and the committees have to understand that this is a real vehicle that will promote solutions for the gas business in the East Mediterranean. These solutions begin with interconnectivity, if you do not become interconnected and we just keep talking in endless conference talks and big events, there will be no progress.

What the East Mediterranean needs is very simple; connections between the countries that participate, so that gas becomes a product that can move freely around the market. What the global oil industry needs to do is to make a commodity that has a global price that can’t be stuck on a ship and be moved anywhere in the world. Gas, in the East Mediterranean, for the time being, is very domestic. So in Israel today, if we produce gas, we can only sell to the Israeli market. In Cyprus, there are discoveries that have not been developed for over a decade because they are not connected to anyone. Egypt must get connected to more countries apart from the LNG terminals.

The East-Med pipeline that is being discussed is an important one, so the number one priority, in my opinion, for the EMGF is how to make the gas business in the East Mediterranean interconnected. To bring gas from Egypt, Israel, Cyprus, and other countries to the big market of Europe.

How did Energean adjust its workflow during the pandemic? And how did the company support its employees during these extraordinary circumstances?

Our team did an amazing job to continue operations in all countries without losing a single day of operations because of COVID-19 related problems. From an operational perspective production in Abu Qir, Greece, Italy, Karish, and the UK did not stop for a single day. We faced huge problems moving people around into the projects we are working on because of travel restrictions, but we managed to overcome those with the support and cooperation of local governments and technology . We are building a big new Floating Production, Storage and Offloading (FSPO) that costs $1.3 billion in Singapore in the Admiralty Yard, which was closed for three months because of COVID-19 restrictions. So, we did suffer a delay in our project that is totally outside our control.

On the human resource side, it has been extremely difficult to keep together an organization that had to adapt from the normal operation of going to the office every day to moving to smart working and working from home. Having people working from different locations is sometimes very challenging because they have children or families around them; that is not easy to make them focus on business. But we managed to stay very close to our employees and to organize social events through Zoom that has allowed us to do wonderful things. I have been exercising online with a lot of my colleagues and even cooking.

It is very difficult especially for the young generation, the 20-30 year- old, that want to start their careers, that want to be mentored and get the experience from working closely with more experienced people in the organization and had to live behind a screen. It is very difficult to live in a small place, alone, with no access to your colleagues, with no access to mentoring and guidance from senior people and that is what I am most concerned about. I really hope that with the vaccine that is starting to get rolled out into various countries–and that will be behind us very soon.

I want 2020 to be forgotten because of l the challenges, but I think it built a lot of different organizational issues for us; it gave us the opportunity to think of how we live and how we work. Is it necessary to travel as much? Is it necessary to spend much time at airports and unnecessary travel? No, it is not. Can you replace human contact with Zoom? Absolutely not. The right answer, I think, is somewhere in between.

We need to become more efficient in the way we manage our time, we definitely need to travel less, but there is no way we can replace human contact and human relationships with Zoom or other platforms. So, I think we have learned to become better in the way we manage our lives and I think that is a key takeaway in 2020. Obviously, a key priority for us was to make sure all our work environment was safe, we installed special equipment to clean the air, we implemented all the necessary measures to make sure we have a safe working environment. But the risk is not the office place, the risk is getting to the office place.

The takeaway for me from COVID-19 is that organizations like Energean and governments have become more aware, that will also help the environmental footprint of all of us. One of the bad things of COVID-19 is that what had started as the elimination of single-use of plastic has gone through the door. The amount of plastic I see today being used; plastic bags, masks, is unbelievable. We need to fix that. We need to become better citizens and better employers going forward.

What does the energy outlook for the East Mediterranean look like and for Energean in particular in 2021?

Although I come from Greece, and Greece used to have oracles that could predict the future, I try to stay away from predicting the future! What I can tell you very clearly is that Energean in 2021 is going to be totally committed to the integration of the Edison E&P business. It will be committed to making investments in the areas discussed. It is going to be committed to delivering first gas from Israel and becoming a company that will produce in the next few years 200,000 bbloe/d mostly in gas. We will continuously reduce our environmental footprint and be a leader in the sustainability side of our business.

We have seen a big reduction in the oil and gas investments, but we have not seen an equal reduction in the demand for these products. So as the economy goes back out of the 2020 misery and people start to move and travel again, my concern and hope is that we will see an imbalance of the supply and demand side. The world does not understand that investing in oil and gas is not something you can switch on and suddenly you produce more gas. An investment in a field like Karish takes three years, maybe four, and needs almost $2 billion in investments to start producing gas. So, we need to explore, appraise, develop and all that takes time. The big gap that I am seeing is that major companies are cutting down investments in the E&P sector and we will see the impact of that undoubtedly in a couple of years’ time.

I also see that, with a lot of major companies moving out of the E&P sector and focusing on renewables, there will be a lot of opportunities like the one we took advantage of from EDF, so I think we will see more of that. We will see major companies leaving assets or even countries that are not considered core and for the E&P players like us that will create huge opportunities and that is what we will be focused on.

So, could we see $70-80 a barrel coming back again sometime in the next three or five years?

I do not predict oil prices, I will never do that because if I can predict oil prices, I will be doing a different job and I would be in a different position. What I am saying is that I see this lack of investment will undoubtedly lead to a supply gap. Whether that will be reflected in oil or gas price imbalance, I think that will depend a lot on demand and other factors. My view is that if you have an opinion and you believe in something, you invest money in it. We are investing today more than $2 billion in the E&P sector because if we did not believe there is a future, we would not be putting money in projects like North East Al-Amriya, North Idku, Karish, and Cassiopea, and Epsilon and the other big investments we will make in the next few years. In a very pessimistic environment, I am being very optimistic because I do believe that there is a great future for a sustainable E&P company and that is what Energean is all about.