Interview with Dirk Warzecha The Chief Operating Officer of RWE Dea

What can you tell me about RWE Dea?
RWE Dea AG is an international exploration and production company for oil and gas with headquarters in Hamburg, Germany. Our company relies on its extensive geoscientific know-how, state-of-the-art drilling and production technology, and the experience gained during more than 110-years of corporate history. In all our operations we attach the highest priority to environmental protection, occupational safety and health. All this is the guarantee of our corporate success.

RWE Dea has stakes in production facilities and concessions or holds exploration licenses in defined core regions worldwide. We are active in Europe, North Africa, the Caspian Region, the Southern Caribbean and the Equatorial Region of South America. RWE Dea is part of the RWE Group, one of Europe’s largest energy utilities.

We are committed to an on-going and significant expansion of our operative activities in the future. The foundations  for  this  were  laid in recent years mostly through our outstanding exploration work and in some cases successful acquisitions. Moreover, RWE Dea has been able to steadily expand its portfolio through successful participation in bid rounds. In order to achieve our growth targets as quickly as possible, we are pushing ahead with an ambitious programme of production enhancements in existing fields and major field development projects of discoveries, like recently with Disouq in Egypt or our growth projects Breagh and Clipper South in the UK Southern North Sea.

Can you tell me a bit about RWE Dea’s existing activities in Egypt?
Including its predecessor company, RWE Dea Egypt has already been engaged in upstream operations in Egypt for almost 40 years and we have produced oil in the Gulf of Suez as operator for three decades now. In recent years, we have made a number of large gas discoveries in Egypt and we were able to extend our portfolio substantially by acquiring additional concessions. Currently, RWE Dea is engaged in 11 onshore and offshore concessions in Egypt with a total area of about 6,500 square kilometers.

The core regions of RWE Dea’s exploration activities are the Gulf of Suez, onshore and offshore in the Nile Delta.

Recently, we have taken up gas production in one of our own operated growth projects, the Disouq concession, located onshore in the Nile Delta. Disouq is the first natural gas project brought into production by RWE Dea as operator in Egypt.

Another important growth project for us is the field development in the North Alexandria and West Mediterranean Deep Water concessions, jointly owned by RWE Dea (40% and 20%, respectively) and BP (operator and owner of the remaining share). In addition, we are partners in the Western Desert for production and are evaluating development concepts of our discoveries in the North El Amriya concessions.

What are RWE Dea’s production rates here in Egypt?
During the financial year 2012, RWE Dea produced around 970,000 cbm of crude oil in Egypt.

The gas discoveries in the Disouq concession, which recently have been put on stream, increase the total hydrocarbon production of RWE Dea in Egypt by around 40%.
RWE Dea Egypt recently began producing natural gas at your Disouq concession.

Can you tell me a bit about this new operation?
The project encompasses the development of seven gas discoveries in the Nile Delta, to produce total reserves of approx. 11.4 billion cubic meters of natural gas. As said, Disouq is the first natural gas project brought into production by RWE Dea as operator in Egypt. Initially in Phase 1 production is expected to ramp-up progressively to a  rate of 1.4 million cubic meters of gas per day. Beyond that, we will continue development and plan to achieve a peak production level of around 4 to 4.5 million cubic meters per day in mid-2014 when additionally a central treatment plant will start producing. The Disouq Central Treatment Plant (DCTP), a dedicated facility set up by RWE Dea, has a processing capacity of 4.25 million standard cubic meters of gas per day. The treated gas and the condensate are pumped by the DCTP into the national grid via two pipelines, each about 40 kilometers in length. All together, we plan to have 16 wells in production by the end of 2014.

Above the initial 11.4 bcm of gas reserves, the Development Lease Area includes additional appraisal and exploration potential, which we intend to drill out with a substantial drilling program until 2015.

The Disouq concession is located in the Kafr El Sheikh Governorate. The concession currently comprises a total area of 3,217 square kilometers and was awarded to RWE Dea in July 2004.

Does RWE Dea have plans for more natural gas projects in Egypt?
RWE Dea is partner in the largest project in the Egyptian oil and gas industry, the West Nile Delta project, together with BP as operator. With reserves of more than 50 billion cubic meters of natural gas (RWE Dea share), the development of the combined concessions of North Alexandria and West Mediterranean Deep Water is a main growth project in RWE Dea’s portfolio.

In addition, we are working on a concept to develop our own discoveries in the North El Amriya concession. Here we have discovered and appraised several gas discoveries.

What other projects is RWE Dea currently working on?
Internationally, RWE Dea is pushing ahead with several major growth projects to increase production in our defined core regions. Just to give a few examples:
Currently, we are bringing the Breagh gas field on stream, one of the largest natural gas discoveries under development in the UK sector of the Southern North Sea and the largest RWE Dea operated field development project in the UK.

Last year, we brought two other UK gas fields in production: the self-operated Clipper South and the Devenick field, where we are partner.

In Norway, where we   began our  40th year in the country, we are about to submit the plan for development and operation (PDO) for the Zidane field, our first self-operated development project offshore Norway. We expect more development activity in Norway with the Tiatan discovery.

What challenges does RWE Dea face with its operations in Egypt?
Experts predict that Egyptian gas production will fall below the level of demand starting from 2013 with a supply gap ranging from 10 Bcm/a to 25 Bcm/a until 2030. With no change in the investment climate and failure to secure large-scale imports, Egypt’s supply gap will widen.

Setting the right incentives for new gas developments and reforming the upstream investment environment are important and necessary tasks for the Egyptian government to improve the future economic performance of the country.

Principal factors determining how attractive Egypt’s upstream environment will become in the international competition will depend on, amongst others, the government’s timing and ability to stabilise the investment environment and improve commercial terms to IOCs will attract more development capital.

Enabling more developments will benefit Egypt by making better use of its own resources and help to solve the growing energy demand of the country.

What are RWE Dea’s goals for the year here in Egypt?
Our upcoming main operational tasks and goals in Egypt are to keep our oil production stable in the Gulf of Suez, to ramp up the gas production from the Disouq concession to progress with the field development project West Nile Delta in order to accelerate the path to first gas and find an environment to bring gas from North El Amriya to the market. Overarching, we want to do our operations in a safe way with regard to environmental protection, occupational safety and health.



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