Redefining Possibilities: El Molla on Overcoming Challenges and Realizing Economic Growth

Redefining Possibilities: El Molla on Overcoming Challenges and Realizing Economic Growth

Under the wise leadership of His Excellency Minister of Petroleum and Mineral Resources Tarek El Molla, Egypt’s oil and gas sector has evolved into a superior economic force that carries significant weight in the East Mediterranean market. We will talk to the mastermind behind Egypt’s energy renaissance as the nation sprints towards its goal of becoming a regional energy trading hub, uncovering the sector’s key accomplishments of 2023.

As we start this new year, with all that is going on around the world, all that is going on in the region, and where we live right now, what are your expectations for the energy sector in 2024?

It has been very clear to everyone that energy in Egypt is part of the global energy scene, and what is happening elsewhere is affecting what is happening in Egypt. It is one world, and energy is the fuel of the economy. So, we have seen several challenges throughout 2023, whether affecting Egypt directly locally, regionally, or internationally, and I think I can proudly tell you that we were able to overcome them all, in spite of their difficulties and how hard they were.

At the end of the day, we were able to supply all the needs of Egyptians for petroleum products, gasoline, diesel, fuel oil, LPG, and natural gas for domestic consumption; as well as for industrial consumption, for aviation, and for all aspects of the economy. I think we were able to also continue our journey ensuring that we are putting Egypt on the global energy map. To summarize, yes, it was a challenging year, but again proudly, I think that we were successful in navigating and reaching the shores safely.

The Ministry of Petroleum and Mineral Resources has used the huge trust that it has from its partners in overcoming lots of challenges as have seen so many times before. What would be your message to these partners in 2024?

I have to acknowledge that our partners are our backbone. Our partners are our business partners and our success stories. Therefore, they are a top priority and as usual, I tell them that you have been, all the time, part of and an important reason for our success, and I am sure they will continue to be so. Together we will continue to capitalize on our success stories over the years. Yes, I acknowledge that there are challenges, and I think that with challenges we develop the opportunities, and we grab it and we capitalize on it. Egypt is a big country and has always been a trustworthy partner and we will continue like that. And therefore, together we will grow and together we will succeed, especially in 2024, where we can see that some of the challenges remain. However, we have plenty of new ideas, we have plenty of new plans to overcome the challenges together. Therefore, I am very optimistic by the way, although the challenges are still persistent and will be still there during 2024. We do not see that they will disappear soon. However, I trust my partners and I bet on them, as well as I ask them to trust us as usual. So, I wish them also a Happy New Year. We will always be a destination for their rewarding investments and growth, where they will always be proud of doing business with us.

Your participation in COP28 was remarkable, and you had so many discussions with different players and governments and we saw the outcome of COP28 was very negotiable in the end. How do you see that outcome and its effect on Egypt’s energy sector in the future?

I think that we have also been very much successful in identifying and acknowledging the role of our industry globally not only locally, since COP26 in Glasgow, where we saw the danger of not having the oil and gas industry invited and present during the COP event. Therefore, taking advantage of hosting COP27, we saw that this would be a good opportunity for us to represent the oil and gas industry and to make sure that we highlight and ensure that the oil and gas industry would be and should be invited and would be part of the solution since it has been all the time accused to be part of the problem of global warming. Therefore, building on, the success that we had during COP27, introducing Decarbonization Day as one of the thematic days for the first time ever, and in continuation of that at COP28 in Dubai, we will be able also to continue the narrative of the story, whereby oil and gas is putting solutions on the table.

I think that what we have been able to demonstrate as well is that Egypt is sticking to its commitment to the Global Methane Pledge as well as our emissions and net-zero commitments. We had already been able to put together the roadmaps and plans for implementation, and we were able to showcase what we had done over the last one and half years since Glasgow and then in Sharm El Shiekh, coming to Dubai.

I think that what we are doing currently is to engage more and more stakeholders. We have been able to be vocal and to get into good communications with international partners, helping us with technology, technical support, and capacity building. This is in order to make sure that we use the opportunity of decarbonizing the oil and gas industry to create new business opportunities as well, creating new jobs and creating new industries that would support and enable the oil and gas industry to grow with less emissions and to comply with all the COPs and all the commitments that we have taken. I am very happy with the outcomes of COP28 and I think it was an important milestone where our friends and brothers in the UAE have been able to also take advantage of being an oil and gas producer but at the same time showing that they are committed to transition.

I think we spoke a lot about decarbonization, green hydrogen, renewables, and energy efficiency. All these parameters and pillars that we have endorsed as well in Egypt have been now very clear and we have also created a department at EGAS to take over this responsibility until we have a complete organization that will carry on the transition responsibility and roles. All that with the support of the Technical Office at the Ministry. I think that we are on the right path now and I see that there are a lot of good opportunities because actually we believe that hydrocarbons will still be needed for some decades to come. Therefore, we need to be very cautious, very prudent, very responsible, and very responsive to climate change, to global warming and to reduce emissions.

As Egypt Petroleum Show is becoming Egypt Energy Show in 2024. What is your message for all the participants this year in Egypt Energy Show 2024?

The Egypt Petroleum Show (now the Egypt Energy Show) was able to demonstrate itself as an attractive venue, I would say a destination and a window to talk about what is happening and what has happened and what will happen in the oil and gas industry in Egypt and how business opportunities would be there and what are the opportunities for new investments and so forth. As time goes and evolves, and as we were talking about energy transition, I think that it was needed to really act accordingly.

Therefore, I see that this year’s edition of EGYPES would reflect the commitment and the seriousness of the Egyptian government towards transition. How would that be? That would be by having under one roof the oil and gas together with the transition parameters.

When we talk about renewable, when we talk about decarbonization, and when we talk about energy efficiency, all these different parameters and elements that are needed to exist under one roof. Therefore, we will see this year more stakeholders, more participants, more industrial companies, more manufacturers, and this would really reflect the commitment of the government. Together with oil and gas, which is the core of the transition, we will see all the supporting industries that will be there to decarbonize, to improve energy efficiency, to complement this transition through renewables, through solar energy, through improving efficiency all that together. Hence, I think this will again show, reflect and showcase the seriousness of Egypt as well as the seriousness of how mature and committed this industry is.

I am looking forward to our February edition and it will be completely different compared to the previous years because we are now attracting different components and different segments that were not there before.

As a communication and collaboration partner for the oil and gas sector here in Egypt, what would you ask from Egypt Oil & Gas to do in 2024?

Egypt Oil & Gas I think would need to reflect what we are currently doing because you are part of our communication arms and communication partners. Therefore, if we are together telling the entire world that we are committed and we are really in transition, so we are changing our show, together with everything. Therefore, I think if I would ask you something I would suggest that perhaps at a certain time you might need to change the name, but that does not mean that we would not take this opportunity to thank you for the support you have been giving us over the last few years which is expected to last for several years to come.

From the bottom of my heart, I’d like to thank Egypt Oil & Gas for being with us through every milestone and significant event over the years. Whether it’s the Egypt Energy Show, roundtables, or conferences like the COPs, your presence as a professional and powerful communication agency has been invaluable.

Your commitment to raising awareness among our audience, employees, customers, and partners, both within and beyond our industry, is truly commendable. Informing those unfamiliar with our work is crucial, and you consistently contribute to that mission.

So, once again, please accept my sincerest gratitude. We wish you continued success and the very best in everything you do.

How is the Egyptian oil and gas sector performing when it comes to meeting the needs of the local market?

The Egyptian petroleum sector has managed to obtain full stability in the local market in 2023, by securing the local needs of citizens and different state sectors for petroleum products and natural gas. The total domestic consumption of these products reached about 80.8 million tons with an increase of 0.3%, compared to the previous year. The time local consumption of petroleum products recorded a decrease of more than 2% to reach a total of 34.5 million tons, and the local consumption of natural gas recorded a rise of 1% to reach 46.4 million tons, 56% of which was consumed by the electricity sector.

Your Excellency, we understand that a good part of achieving stability in the local market and improving position as an exporter involves boosting exploration. How has the Ministry managed to ramp up exploration activities in 2023?

I am proud to say that we have had many notable accomplishments in 2023 due to the tireless efforts of our sector. This includes:

– Signing 29 agreements to search for oil and gas, with a total investment of a minimum of $1.2 billion, signature grant of about $61 million, and drilling 87 new wells.

-Two new bids were offered by the Egyptian General Petroleum Corporation (EGPC) and Ganounb El Wadi Petroleum Holding Company (Ganope) to explore for oil and gas in 23 regions in the Western Desert, the Eastern Desert, the Gulf of Suez, and the Red Sea in September 2023.

– Announcing the results of the international bid rounds for the Egyptian Natural Gas Holding Company (EGAS) to search for natural gas in the Mediterranean Sea and the Nile Delta, through which four new areas to search for natural gas were assigned to international companies with a minimum investment of about $281 million, drilling a minimum of 12 wells, and a signature grant worth $7.5 million.

-The first international bidding was launched for brownfields in eight fields in the Gulf of Suez and the Eastern Desert, which was put forward by EGPC last March. The door for receiving bids was closed and they are being evaluated. All of these bids were submitted digitally through the Egypt Upstream Gateway (EUG).

– Achieving 65 new oil and gas discoveries, 51 oil discoveries and 14 gas discoveries, in areas of the Western Desert, the Gulf of Suez, the Nile Delta, and Sinai.

This is in addition to signing 14 contracts to develop fields in the Western Desert and the Nile Delta.

That is quite impressive, Your Excellency. How had oil and gas production in Egypt performed in 2023?

Total oil and gas production in 2023 was about 74 million tons, including about 28 million tons of crude oil and condensates, about 45 million tons of natural gas, and 1 million tons of butane, in addition to the butane produced by refineries.

The production of crude oil and condensates increased by approximately 2% over the previous year as a result of putting some new wells on production, such as the North Geisum (GNN) Field in the Gulf of Suez.

What are some of the new fields that have been put on the production map in Egypt in 2023?

Five projects for crude oil and natural gas fields have been completed on the production map with the aim of producing about 15,000 barrels per day (bbl/d) of crude and condensates, and about 144 million cubic feet of gas per day (mcf/d). The total investment cost of the projects is about $307 million.  The projects included:

  • Development of the North Idku/North El Amriya field

The field produces quantities of natural gas estimated at approximately 80 to 90 mcf/d, and 1,200 bbl/d of condensate per day by drilling and completing four wells in North Idku and North El Amriya. The investment cost of the project was about $234 million. Production began in March 2023.

  • Development of the Teen field, North of Matrouh

The field produces about 4 mcf/d of gas and 1,500 bbl/d of condensate by drilling two wells. The investment cost of the project is around $12 million. The project was completed in September 2023.

  • Development of the Maliha Field (Phase 1)

It produces quantities of natural gas amounting to about 40 mcf/d by linking the Arcadia and Framed wells complex of Agiba Petroleum Company in integration with the facilities of the Shams Complex to exploit the surplus capacity in the Salam facilities of the Khalda Petroleum Company in the Western Desert. The investment cost of the project was approximately $26 million, and the first phase was completed in September 2023.

  • Development of the East Damanhour Field

It produces 10 mcf/d of gas from the East Damanhour field, and the well was connected to the Desouq facilities at an investment cost of about $12 million. Production began in September 2023.

Phase 1 of the development of the North Geisum Fields (GNN)

The project produces 12,000 bbl/d of crude oil by drilling three wells and constructing a pipeline with a diameter of 10 inches and a length of 5.3 km, at an investment cost of about $23 million. Production began in March 2023.

The Completion of Phase1 of Linking Gases from Raven Field

The opening of full operation of the first phase of linking the gases of the Raven field, one of the fields in the concession area north of Alexandria, which is being developed by bp, to the gas complex in the Western Desert, which is operated by the Egyptian Natural Gas Company (GASCO).

Could you elaborate on Egypt’s first locally manufactured oil rig?

Yes, this is an accomplishment we’re all very proud of. This year marked the completion of the first locally manufactured oil rig (Made in Egypt) at the factory of the Egyptian-Chinese company for drilling rigs in Ain Sokhna with an investment of $6.5 million. It has been delivered to the Egyptian Rig Company (ERC) to operate as part of its fleet in implementing drilling and prospecting programs in onshore areas.

This accomplishment is a new and essential step that enables the oil and gas sector to optimize the exploitation of its potential and accelerate well-drilling plans for increasing the production of petroleum and gas resources, especially at a time when the demand for rigs is growing due to increased petroleum activities with high petroleum prices globally. Rig manufacturing is a new successful step on the way of local manufacturing for the requirements of oil and gas projects, and increases the local compound pursued by the MoPMR in its strategy which helps in reducing imports and saving expenditure in foreign currency. It also promises to work on the manufacturing of rigs to contribute to the needs of the local market and then exports.

Turning our attention to sustainability, Your Excellency, we are impressed by Egypt’s emergence as a global leader in the energy transition. What specific initiatives did the petroleum sector undertake in 2023 to significantly advance decarbonization, energy transition, and climate action?

Egypt’s oil and gas sector strategy has adopted a clear vision and action plan for the energy transition and reducing emissions in all crude oil and natural gas activities through working in several main areas, including production improvement, expanding the use of natural gas as a low-carbon transitional fuel, enhancing energy efficiency and decarbonization, and increasing new energy production and developing petrochemical projects which contribute to environmental preservation and producing low-carbon hydrogen and ammonia.

The oil and gas sector has managed to take several steps and measures in the field of energy transition and reducing emissions, and the following are the most significant achievements in this regard until December 2023:

Achieving an annual reduction of about 900,000 t of carbon dioxide by delivering natural gas to about 14.5 million residential units.

Achieving an annual reduction exceeding 2 mmt of carbon dioxide by converting about 534,000 cars to run on compressed natural gas (CNG) since starting the activity.

Achieving an annual reduction in emissions of about 1.4 mmt of carbon dioxide through flare gases recovery projects and their exploitation in sector companies.

Achieving annual savings in energy consumption amounting to $115 million through implementing energy conservation measures and projects with low investments. The annual reduction resulting from these projects was estimated at 900,000 t of carbon dioxide.

Reducing electricity consumption from the national grid and reducing emissions by about 50,000 t of carbon dioxide through renewable energy projects in administrative buildings in sector companies.

Completing the implementation of the sector’s energy efficiency strategy (2022-2035).

Completing the final stages of the decarbonisation strategy in the sector.

Completing work on the Sharm El-Sheikh Oil and Gas Methane Reduction Roadmap in the oil and gas industry, which was announced during Decarbonisation Day at COP27.

Inaugurating the trial operation of the smart treatment station for industrial wastewater at the Amal Petroleum Company (AMAPETCO) production site, which is the first of its kind in Egypt and the Middle East. It serves oil production operations, preserves the environment in the Gulf of Suez, and achieves the outcomes of the COP27.

Continuing efforts to implement the wooden board production complex project from rice straw by Wood Technology Co. (WOTECH), as an important step to reduce emissions resulting from burning rice straw by using it as an input for manufacturing the Wooden Board.

Signing a joint development agreement between ANRPC and Norwegian Scatec to begin implementing the green methanol production project, to be the first of its kind in Egypt and the Middle East. It is a new move that reflects the progress of the oil and gas sector on the path of implementing green energy projects and low and zero-emission fuels, which would contribute to putting Egypt on the global map of countries producing this green fuel for bunkering.

Signing several agreements with Scatec on the sidelines of COP28 regarding cooperation in implementing bunkering projects and green ammonia and green methanol production projects in the sector.

How has Egypt worked to integrate digital solutions into its energy sector in 2023?

Modern technologies in recent years have succeeded as tools for tightening control as well as providing accurate and real-time nonstop monitoring of the movement, distribution, and circulation of petroleum products from shipping warehouses to stations, commercial facilities and industrial customers. This is in addition to measuring and determining the size of the actual fuel stocks in warehouses and stations. These technologies are represented in activating the GPS Automated Tracking System, the Automatic Tank Gauging (ATG) system at the stations, and the Radar Tank Gauge (RTG) system. This is in addition to activating the mobile application “Mop Stations” to identify the locations and vehicle fuel stations with various fuel types, and the application allows its users to locate the nearest stations that offer the same service they need.

The fourth quarter (Q4) of 2023 witnessed the inauguration of the main room for the petroleum products trading system in the Ministry’s building in the government district in the New Administrative Capital and linking it to the system’s main rooms in the Egyptian General Petroleum Corporation (EGPC), the Cooperation Petroleum Company (Copetrole), Misr Petroleum Company, and Nile Petroleum.

. Actions take place to complete connecting the rooms of the petroleum geographic areas to the system and the main rooms of marketing companies, the EGPC, and the Ministry. Accurate real-time monitoring of the system and stocks in warehouses and stations provides detailed data on consumption patterns of petroleum products and helps ensure the provision of the required needs in each geographical area according to the actual needs therein and at the appropriate times, especially during seasonal consumption periods in some petroleum geographical areas.

This is besides inaugurating the first electronic system to manage and follow up on the operations of trading and distributing butane locally in all stages to control the system and preserve the product. This is within the framework of implementing management and follow-up digital transformation projects of the butane trading system. As well as inaugurating the room of control and automatic follow-up of refinery operations, which involves several advanced digital systems, such as linear programming systems that help in reaching the highest return from operation, and systems specialized in close following-up on operations and following-up on warehouses and laboratories of refineries.

The Ministry follows a strategy to continuously implement projects to develop and modernize the information technology infrastructure and data centres through:

-Establishing an ERP resource planning and management system that is based on collecting and analysing data and developing information systems in sector companies and taking into account integration among existing industrial control systems for the various activities of the oil and gas industry.

-Developing and improving procedures and exchanging data and information electronically to improve the efficiency of operations performance and support decision-making.

-Implementing an ERP in EGPC and all holding companies affiliated with the Ministry, and their subsidiaries are being linked.

-Completing the implementation of a planning and development system project of the refineries and marketing companies affiliated with the EGPC, and starting implementing it in the distribution companies affiliated with EGPC.

-Start implementing a control and monitor project of crude oil and petroleum products by establishing a main control centre (SCADA) for the pipelines of the Egyptian Petroleum Pipeline Company (PPC) to control and monitor the movement of circulation and transportation of crude oil and petroleum products.

-Completing the unified platform project for geographic information systems (GIS).

-Using software in the sector’s activities to control the industrial system and analyse production data to raise performance efficiency and provide services for dealing with citizens and investor databases electronically.

-The Egyptian oil and gas sector is capable of continuing the journey of digital transformation, achieving sustainability, and preserving the main principles of the sector, which are safety, innovation, transparency, efficiency, and achieving added value from the data collected from the sector, in a way that maximizes achievements in the ongoing work journey.

How has the oil and gas sector contributed to promoting and implementing new petrochemical projects?

Within the persistent role of the oil and gas sector to promote and implement a large package of new petrochemical projects, the year witnessed commencing projects to increase value-added products and support local production of various raw materials and products. These products will be used in different fields, contributing to reducing imports and providing quantities for export to raise the dollar surplus.

For instance, projects’ procedures to maximize added value in the New Alamein and Damietta regions were initiated. The projects included metal silicon and sodium carbonate (soda ash) production complexes in New Alamein, and the green ammonia and green methanol projects in Damietta, with a total investment of more than $2 billion. This is in addition to continuing various implementation stages of Medium Density Fiberboard (MDF) production projects from rice straw, the production of methanol derivatives, and the production of bioethanol from molasses, with a total investment of about $630 million.

What specific strategies or frameworks is the oil and gas sector using to identify and implement innovative CSR approaches in Egypt?

In cooperation with its partners, the oil and gas sector seeks to achieve sustainable development within the framework of Egypt’s Vision 2030, including its economic, environmental, and social aspects. This will be achieved through implementing a new strategy for CSR which aims to enhance the living conditions of the neediest communities.

The strategy pillars include education, training, economic development, health, gender equality, and environmental protection projects. In addition to participating in presidential initiatives such as the Haya Karima (“Decent Life”) initiative.

Under the leadership of the Minister of Petroleum and Mineral Resources, a higher committee for CSR was formed. With this regard, working groups of the MoPMR, the EGPC, and the holding companies were formed to follow up on the implementation of CSR plans and projects. In each oil and gas sector company, a department has also been allocated to the role of CSR.

The oil and gas sector has valuable and effective contributions in various work areas in collaboration between the sector’s companies and its partners.

In addition to its profuse energy resources, Egypt also enjoys rich mineral resources and precious metals. How has digitalization played a role in attracting investments in those valuable assets?

During 2023, work was done to establish the first-of-its-kind digital gateway for investment in the mining sector, as a paradigm shift forward to attract investments to this sector and implement digital transformation. This gateway aims at marketing investment opportunities in the field of mining exploration and exploitation flexibly and rapidly. It will inform investors from all over the world digitally about investment opportunities and submit investment offers in Egyptian mining areas through the special bids put on the digital gateway after its launch to facilitate and speed up the decision-making process, following similar models that have been used by global mining leaders, such as Australia and Canada.

To what extent has the development and modernization program contributed to the increased production of mining products and raw materials in 2023?

In 2023, the development and modernization program for the Egyptian mining sector has taken remarkable steps to achieve its objectives by creating an attractive environment for mining investments, supporting the digitalization of the sector and investing in human cadres. All efforts aim at releasing the capabilities of the mining sector and making the best use of Egypt’s mining resources. Thanks to these efforts, milestone results were achieved.  About 13 mmt of mining products and raw materials were produced during the year, and the exports of mining raw materials reached about 2.3 mmt.  The total revenues generated from production-sharing contracts were about EGP 336 million, compared to about EGP 114 million in 2022.



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