Interview with BRUNO LESCOEUR

Edison International S.p.A to celebrate its 130 years anniversary.

Edison’s CEO Mr. Bruno Lescoeur sheds light on the company’s history, motivations and its vision in Egypt during the company’s event to celebrate 130 years of existence. The anniversary was attended by key figures from the Egyptian authorities and international energy companies as the attendees gathered to celebrate Edison’s 130th birthday.

Can you brief us a little bit about your career?
I have been the Administratore Delegato (CEO) of Edison since 2011 and I spent my entire career to-date with Electricité de France (EDF), a leading energy player. EDF has been a shareholder in Edison for the past 12 years and acquired the majority of Edison’s shares in 2012. Edison was created 130 years ago and we are celebrating this anniversary. Edison is Europe’s oldest electricity company and it has developed during the last century but Edison has had an interest in gas for very long time; the first gas well was drilled in Italy by Edison back in 1952. You know, since then, the evolution of the energy market has been quite important in Europe. Edison activities are chiefly in three main areas. Firstly, Edison generates and sells electricity in Italy. Secondly, Edison imports gas to Italy. Edison is the second largest importer of gas for Italy and imports almost one-fifth of gas consumed by Italy. Italy is a rather important gas market for Europe; the second biggest gas market in Europe after Germany. And thirdly, Edison is an exploration and production company with activities in Italy, especially offshore, as well as in Egypt, and now we are developing a third region in Norway. As far as Egypt is concerned, Edison has been in Egypt for almost 20 years. After an intense exploration phase, we made important discoveries of gas in the late 90’s but for various reasons, Edison sold part of its interest in Egypt in 2003-2004, then Edison decided to grow back in Egypt and invested quite a lot of money in the joint venture with EGPC back in 2008. Since then we have of course developed the production and we have almost doubled the level of production that we had at the beginning of our joint-venture in Abu Qir. To achieve this, we have continuously invested; mainly in Abu Qir but also in existing and newly acquired concessions.

Where are your potential operations in Egypt?
We have activities in the Nile delta onshore and offshore and we consider the East Mediterranean as a new focus area. Of course we keep looking at new opportunities in these areas as well as the Western Desert.

So how do you compare your experience in Egypt to other countries you have operations in?
Egypt is very important for us, as we have almost the same size activity [here] as in Italy, but of course Egypt has much more potential as Italy’s resources are less important. Now, how does it compare? During the last few years, the situation has been complicated but we are quite happy that we have found a good dialogue with EGPC to continue to operate, develop and maintain the level of production; especially for gas because we understand it is extremely important for the country. We have had intense discussions. For example, when – according to the contract we have – was the time to amend the price of gas. We have also found very satisfactory solutions every time we had a difficulty and, like some other investors in Egypt, we share the difficulties of getting enough hard currency to make possible for us to continue to invest and to maintain our activities. But really the experience over the last five years has been that, with a lot of work, it is always possible to find solutions, step by step, and this is exactly why I am here to celebrate the 130th anniversary of Edison in Cairo to really tell that we are a long-term company. We know that this kind of business is a long-term type of business. We are here for the long term; we want to stay here, we want to work hard in order to continue to stay here, and I am particularly happy with this kind of robust and interesting cooperative relationship we have with our partners, especially EGPC, EGAS and some other Egyptian companies in this sector.

How much are you producing in Egypt?
We are producing in the range of 300 mmscf/d and 6,000 b/d.

Can you tell me about the difficulties Egypt is facing that prevent it from producing enough natural gas and caused Egypt to become a net importer?
Well, there was the period of the revolution and the financial difficulties faced by EGPC and EGAS which led to a slowdown in investments from most companies. To replace reserves and increase or even maintain production, companies need to explore and make new discoveries and that requires large investments, so it’s a kind of chain and I believe that in the past 3-4 years the companies have slowed down the level of exploration in the country.

So it’s a matter of investing money and time to do it?
Exactly. And in order to do that, as investors, you have to have reasonable returns and this is the reason why I was mentioning price-level equations; we need to have a reasonable price for gas. We know that for some countries it’s difficult to have a reasonable level of price for the end user but you need also to have a reasonable confidence in the overall environment of investment. But at Edison we have continued to invest and, although it was not always easy, we have increased our production level, at least for Abu Qir.

Is the government willing to apply international prices to the local gas prices?
You know, the upcoming exploration and development activities in Egypt are getting into much deeper waters offshore and these require much larger investment and thus will require higher prices than the currently offered. It is our understanding that this message is understood by the Egyptian authorities and we have been witnessing an easing up on this matter.

During the last three years the government, or EGPC, hasn’t been paying its international partners their money on time. How is this affecting you as a company? And how is this affecting your investments in Egypt?
This is definitely a difficulty. We have made an agreement that is called a Deferral agreement, which was agreed two years ago now, and it has worked up to date. Of course there have been some late payments but basically we were able to accommodate that. It requires a lot of effort from both parties and we have found some innovative solutions to overcome those difficulties. For example, we have been able to receive some oil cargos instead of receiving cash and we are exploring some other innovative ways to try to accommodate the contract EGPC has and their obligations to us.

What is Edison’s biggest achievement in Egypt?
It’s our work in Abu Qir as the production there was running for 30 years and with our investments, and our technical expertise, we brought back to life a very mature field doubling the production, so it’s a very good achievement.

What are Edison’s expectations in Egypt?
I really believe that Egypt has large potential of economic development but it’s probably not viable that Egypt will become an exporter of gas anytime soon. Egypt will need to either import more gas to fuel the demand or more importantly avoid restricting the rate of growth necessary to develop Egypt. I know that the electricity situation is quite difficult and the lack of electricity has been a problem for the development of the entire economy. It is important to continue to develop the exploration and production sector to meet domestic demand and support the growth of the Egyptian economy.

Do you think there is an international will to invest more money in Egypt now?
I am here to demonstrate that we consider Egypt an interesting country to invest in and I hope we will be followed by others.

By Sherif Elhelwa


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