Which areas have the greatest potential for new discoveries?
After all the discoveries in the Mediterranean, we are moving to the Red Sea. This area is a virgin area after many years of being ignored. Aramco has made many discoveries on the Saudi Arabia side, and we are hoping for the same on the Egyptian side. The last bid round announced by Ganoub El Wadi Petroleum Holding Company (Ganope) is marketing this area. We believe the next era of oil and gas will be in the Red Sea.
We know for a fact that Egypt is moving into another era of success in oil and gas in the next few years.
How is the private sector responding to recent framework changes?
Egypt has pushed through different reforms to attract key players, and it is paying off. We have faced many obstacles during the last few years, until this revolution in the oilfield business started in 2016. The political and social revolutions Egypt went through, the fall in oil prices and the tough competition forced many companies to think about leaving. At the same time, we were suffering from increased expenses in our operations.
There has been a revolution of challenging old ideas, thanks to the Minister of Petroleum and Mineral Resources Tarek El Molla, who came in with a new mindset. He pushed through this revolution in oil and gas and managed to make the idea of Egypt as an energy hub attractive. This is not only for oil and gas, but also for electricity and petrochemicals. At the end of 2016, we started to see new developments that brought hope. What happened in the last few years we call the golden era for the oil and gas business in Egypt.
Why is Egypt so well positioned to become a regional energy hub?
Egypt is in a privileged geographical position. And, thanks to the discoveries in the Mediterranean, such as Zohr, the Raven and West Nile Delta fields, we now know for a fact that Egypt has enough reserves to be an energy hub, not only for Africa but in the global arena. The ministry has a five-year plan – from 2016 to 2021 – to transform the Egyptian market into an energy hub.
We have a very aggressive plan for petrochemicals. There is a talk of investments of $7 billion in petrochemical facilities in Port Said, Sokhna, and Alexandria. This would not happen without the recent discoveries.
In 2011, our petrochemical factories were running at a 50% capacity because we did not have enough gas or energy to run them. Now, after all that has happened in recent years, we have almost reached an 80% capacity.
What was your engagement in Zohr’s development?
We have a division called SAPESCO Industrial Services (SIS), which is responsible for the commissioning and pre-commissioning of new projects. This service line was almost shut down before the Zohr project; but Zohr literally saved this business. This was a mega-project for us. We got around 50% of the pre-commissioning for the gas facilities, which was from three major companies – Petrobel, Eni and even Schlumberger.
After Zohr’s success, we are moving to the West Nile Delta, working on a BP project that is very similar to what we did in Zohr. We are also engaged in another gas field with Agiba Petroleum Company. Our reputation in commissioning, pre-commissioning, shutdowns, new structures and gas facilities is well known. Whatever the requirements are, SAPESCO can handle them.
What room is left for local players in Egypt’s “golden era”?
As an example, something amazing happened in 2016. Egypt was suffering from lack of gas, and Shell’s Obaiyed field in the Western Desert had a very bad situation in their gas facility. This gas facility was full of scales and they did not know how to manage it. This was an almost $1-billion-facility. The manufacturer advised them to shut it down and build another facility, which would take five years and another $1 billion.
Badr El Din Petroleum Company (BAPETCO), Shell’s operating joint venture, sent us some of these scales.
We worked with Shell’s labs in the Netherlands and with a team that came to visit us and they confirmed our in-house research and development (R&D) found the right solution. We have now a patent on this chemical solution. We had many setbacks, but we managed to overcome all this and we managed to remove the scales and restore the facility to its original condition.
Shell deemed this project one of 2016’s most five important operational projects worldwide. We even received appreciation from the previous petroleum minister, Sherif Ismail, as a local company that managed to deliver this solution to one of the most important companies worldwide.
How have you been building on BAPETCO’s success?
We really got this business lined up after this mega-project. We started to concentrate on promoting this business to invest more in R&D, and now we have seven types of chemicals for different types of scales. We have managed to save many wells because we have a solution for every scale. Texas A&M approved our chemicals and gave us a patent under our name.
How competitive is the chemical solutions segment in Egypt?
For the scale removal business, we do not have any competitors worldwide. We are unique in this business. The last five years proved that we have something that nobody else has.
What is your outlook for the coming years?
On Sapesco’s level, we are focusing on introducing new services and technology to the Petroleum industry. Capitalizing on the Egyptian strategic vision of developing the oil production in the Red Sea and optimizing production cost in general, a “New Technology Leader” alliance has been established between Shawcor and Sapesco.
Our activities will revolve around replacing defected carbon steel pipe lines by Spoolable
Composite pipes, as well as laying the SCP products transfer lines for the new oil and gas facilities.
SCP saves 30 – 40% of installation cost and 20% of the time needed to first oil.
West Bakr Petroleum Company is the first project in Egypt, where a 26 km, 4 inches CS pipeline will be replaced by SCP.
On the country level, I see amazing potential. We are moving ahead more than we expected. This will be reflected in many aspects. The market will be expanding, and all the companies will have more market share. Egypt will see huge investments in many areas, and huge investments will mean business for everyone.