Qarun’s third train ready to commence the route of production boost!

Qarun Petroleum Company (QPC) is back on track and is ramping up activity as oil prices recover from the economic crisis, said the company’s General Manager/Managing Director John L. Hendrix, highlighting that Qarun is targeting the production above 2009 levels during 2010

Operating since 1995, how do you evaluate the developments of QPC in the Egyptian petroleum industry?
Over the last three years, we won two petroleum shields, which reflect our reputation as one of the best production companies in the country. QPC maintained its production rate at 30,000 barrels of oil per day (bpd) until October 2008. Then, the production volume broke over 40,000 bpd and reached the 50,000 bpd during last year. With the beginning of 2010, we aim at further increasing the production to become over 2009 levels. We look for opportunities, develop them efficiently, and minimizing any bottlenecks.
In 1998, during the early production of Qarun the record stood at 44,000 bpd. Currently, we have over 280 wells; some are performing better than others and it is our responsibility to reach the efficient utilization of those wells and conduct operations utilizing the best techniques.  We must also understand the importance of “integrity management” to understand and avoid any failure possibilities and react proactively to ensure the success of our operations.

How many concessions are you operating now? How promising are they?
We have eight concessions and they are all showing a lot of promise. Included in this the East Ras Badran on the Sinai.

What were QPC major achievements in 2009?
The high points were oil production breaking over 50,000 barrels a day, and water injection surpassing 90,000 barrels a day.  This was really an achievement considering that we had just two drilling rigs in operation through most of the year.  We installed two temporary processing units to help us handle production. Our seismic program East and West of the Nile and in the Qarun concession was done seamlessly.

How far did the current economic crisis affect this company’s production and investments in 2009?
As I mentioned earlier, when world oil prices dropped in late 2008 and early 2009, the company continued its policy of maintaining its capital spending within its internally generated cash flow. As a result the company curtailed our capital spending program by almost 50% affecting all regions. In Qarun we downsized the number of our rigs from seven to two. We continued to invest in projects like Karama Power, Pipelines, Waterflood, and a third processing train that will help us improve production efficiencies and operating costs.

What were QPC precautions to avoid the crisis effects?
We decided to reduce the number of wells drilled, prioritizing the best wells first focusing on getting the basics right in operations and cost control.

In your opinion, will the petroleum industry recover and revive once again during 2010?
We are cautiously optimistic that the industry appears to be regaining some stability once again. Qarun has always been a very aggressive player in drilling wells and stable prices make us eager to seize more opportunities. Like the Karama Power Project we are initiating that will be of a great value to our company, and the country. This $50-million project includes the installation of six gas fired turbines to generate power for field operations.  The project will lower costs and emissions by reducing diesel consumption.

Are you planning to increase your investments in 2010?
We are still formalizing our budget for 2010, but we are optimistic that increasing prices will lead to increased spending. We went from seven rigs down to two in 2009 and currently we seek to build back to five.

Is it true there is a delay paying the shares of foreign partners by the Egyptian Ministry of Petroleum?
I believe that the most important thing is that Qarun has enough money to make its payments and that it receives its money from its partners to continue its projects. None of our projects has been delayed because of delays of payments.

What are the main obstacles hindering the foreign investments in the Egyptian Petroleum sector in your opinion?
Awarding contracts should be based on two factors: quality of service and price. Companies who can deliver more production and reserves should be favored.

Is the company considering any kind of expansion in the field of natural gas in Egypt?
We are currently an oil producing company. However, we are always searching for gas to power our operations and hopefully sell it.  We buy gas from the Egyptian General Petroleum Coporation (EGPC) and other sister companies.  We need gas for our Karama Project rather than diesel to provide cost savings and reduce emissions.

Are there any news about QPC in 2010?
Our new chairman, Mohamed Mounes Shahat, and I are studying the New Year plans – how to build a company that will work smoothly, take the bureaucracy out of the business, and note that we are a joint venture, not a government company. The QPC team has always believed that QPC can be a more profitable company and more beneficial to the country of Egypt if we are able to maximize production in the most efficient manner.

What are your expectations for 2010?
Right now, we hope to get up to five rigs in operation. If oil prices remain strong and services costs become competitive, we may ramp up our activity level. In 2008, service costs increased to levels that were not sustainable.

Do you have any other exclusive news to Egypt Oil & Gas readers?
We are going to finish the third processing train, which will increase our production capacity from 52,000 to 75,000 bpd, reduce costs and permit QPC to continue to bring new wells on production.  We hope that Karama Power Plant will be coming on in February which will lower our operating costs, improve our efficiencies and free diesel up for other users. Also we are going from two drilling rigs to five rigs.

By Christine Nabil
Ahmed Morsy


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