The Egypt Oil & Gas 2nd Upstream Operational Excellence convention, held on its second day, December 3, a strategic panel focusing on the viability of service agreements for mature fields.

The event welcomed industry leaders to discuss their thoughts on Egypt’s current contractual landscape, and invited attendees to pose questions to the panel.

Participants on the panel included Thomas Maher, President and COO of Apex Energy; Kamel El Sawi, President of Kuwait Energy Egypt; Memet Kont, President and CEO of Mediterra; Colby Fuser, VP of Egypt and Libya at Halliburton; and Hussam Abuseif, Director and General Manager of Egypt, Sudan and South Sudan at BHGE.

Kont noted that service contracts remain a new concept in Egypt, and pointed to the ambiguity that can come in-built to the contract. “You need to eliminate the uncertainty in the contract. The language in the contract is often very vague. It defeats the purpose of the contract itself,” he said.

He suggested that rejecting a one-size-fits-all approach to service contract design may rectify the problem. “I don’t think we can assume that service contracts are perfect. They have to be fit for purpose. You can’t have a cookie cutter for every oil field,” he said.

El Sawi, however, compared the Egyptian approach to service contracts with the current situation in Iraq, which he described as “attractive for the contractor”. Egypt’s model provides companies with a much higher margin per barrel and provide them the freedom to integrate any technology they choose, unlike production sharing agreements (PSAs).

The session ended with each panelist giving a recommendation as to how to improve service contracts in Egypt. Panelists suggested the creation of mature field databases, increased initiatives to attract inward investment, and furthering the private sector’s collaboration with the government.

 

By Matthew Hoare