The Oil & Gas Year

THE OIL & GAS YEAR The Who’s Who of the Global Energy Industry

EGYPT 2015

In search of investment Sherif ISMAIL Minister of Petroleum and Mineral Resources Roadmap to stability Amr MOUSSA Head of Constitutional Review Committee Primed for growth

ISBN 978-1-78302-088-1 Basil EL BAZ

9 781783 020881 Chairman and CEO CARBON HOLDINGS www.theoilandgasyear.com

THE OIL & GAS YEAR EGYPT 2015 The Who’s Who of the Global Energy Industry

In partnership with:

Content partners: 14 26 Diplomacy & Politics Gas Year

Economic and political instability in recent Gas production has been declining in Egypt, CONTENTS years has left Egypt with hurdles to overcome leaving the government to rely on imports in 1 in attracting foreign investment and reviving order to meet domestic demand. Unconven- its energy industry. Many see a positive sign tional and offshore gas plays still show poten- in the government’s embrace of energy re- tial, and the country’s administration is working form and changes to the subsidy regime. But to attract international companies to exploit the global slump in oil prices has added a these reserves. Low prices make this venture complicating factor to the scene in which all the more difficult, but the government aims

Egypt’s oil and gas industry is re-emerging. to keep the gas flowing until its energy industry EGYPT 2015 reforms are able to rejuvenate production.

6 THE YEAR IN REVIEW 31 COMPANY PROFILE: BG Egypt 32 VIEWPOINT: How to overcome shortages. Maurizio 7 INTERVIEW: Sherif Ismail, Minister of Petroleum and Coratella, Edison Mineral Resources 33 INTERVIEW: Sabry El Sharkawy, PhPC 8 IN PRODUCTION: African oil production, 2003-2013 34 RESOURCE: 2013 EGAS Bidding Round Results 9 THE YEAR’S AWARDS 35 COMPANY PROFILE: Mansoura Petroleum 10 EGYPT AT A GLANCE 36 COMMENT: Seismic shift. Changes in the acquisition 11 THE INVESTORS INDEX field 12 THE YEAR IN ENERGY 36 INVESTOR SPOTLIGHTS: Egyptian Natural Gas Company, SEGAS LNG 14 DIPLOMACY & POLITICS 37 PROJECT HIGHLIGHT: North Alexandria Gas Development 15 ARTICLE: The route ahead. The government implements reforms to improve investment conditions as 38 EXPLORATION & PRODUCTION: MAJORS Egypt returns to stability 16 IN THE BALANCE: Egypt’s current account balance 39 ARTICLE: Find new ground. Development of 17 INTERVIEW: Tarek El Molla, EGPC exploration and production activity towards natural gas 18 INTERVIEW: Mohamed Saafan, ECHEM resources 19 FORUM: Off to a good start. State measures to boost 39 IN RESERVES: Proven oil and gas reserves as of investment December 2013 20 ARTICLE: El Sisi’s march. The new president’s plans 41 PULLOUT MAP: Onshore and offshore blocks 21 INTERVIEW: Amr Moussa, Head of Constitutional 42 GEOLOGY REPORT: Lay of the land Review Committee 43 INTERVIEW: Thomas Maher, Apache Egypt 22 COMMENT: A little help from its friends. Assistance 43 IN PRODUCTION: Egypt’s September production to overcome instability figures, 2012-2014 22 RESOURCE: Aid pledged to Egypt 44 VIEWPOINT: A fresh perspective. Abu Bakr Ibrahim 23 MARKET ANALYSIS: Necessary reform. Osman, Ganoub El Wadi Petroleum Holding Company Abdalla Ghorab, Former Minister of Petroleum and 44 IN AWARDS: Blocks offered and awarded by Ganope Mineral Resources 45 MAP: Ganope Bidding Round 2014 24 VIEWPOINT: A different landscape. Omar Mohanna, 46 COMPANY PROFILE: GDF Suez Exploration Egypt Egyptian Center for Economic Studies 47 MARKET ANALYSIS: Critical component, Mohamed 25 INTERVIEW: Hisham Fahmy, Amin Abdullah, Petronas American Chamber of Commerce in Egypt 48 VIEWPOINT: Tangible gains Jean-Pascal Clémençon, Total 26 GAS YEAR 49 MAP: Nile Delta oil and gasfields 50 INTERVIEW: Mark Fenton, Dana Gas Egypt 27 ARTICLE: Egypt buys gas to buy time. Stemming the 51 COMPANY PROFILE: Khalda Petroleum Company gas crisis 52 EXPLORATION & PRODUCTION: JUNIORS 28 IN COMPARISON: Annual natural gas production and consumption, 1990-2014 29 VIEWPOINT: A need for diversification. Raafat El 53 ARTICLE: Big role for smaller companies. Improving Beltagy, Tharwa Petroleum investment conditions for junior players 30 COMPANY PROFILE: Egyptian LNG 53 IN PRICES: Brent oil prices

The Who’s Who of the Global Energy Industry www.theoilandgasyear.com THE OIL & GAS YEAR | EGYPT 2015

EGYPT 2015

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64 82 102 xx The Year’s Focus: Investment Downstream & Industry Oilﬁeld Services and Economy

As Egypt’s expanding population of energy Innovation in Egypt’s oilfield services sector has CONTENTS The Egyptian economy gained strength in consumers faces shortages due to rising de- become more important as the country’s fields 3 2014, a positive sign that political change and mand and a scaled-back subsidy regime, in- mature and the oil price remains low. Operators structural reforms are moving the country to- creasing the capacity of the country’s down- are targeting ultra-deep offshore high-pressure wards a recovery from the years of economic stream sector has gained in importance. and high-temperature plays, along with deep uncertainty that saw recessions in 2008 and While imports are stopping the gap in supply onshore and long-distance horizontal drilling 2011-2013. Among foreign investors, the spec- for the short term, sustainable, long-term projects to tap the country’s remaining poten- tre of political risk is fading, and reviving the improvements such as refinery upgrades and tial. Meanwhile, services providers have ex-

oil and gas industry holds added promise. new petrochemicals projects will be critical celled through becoming niche suppliers. EGYPT 2015 to meeting the growing domestic demand.

54 COMPANY PROFILE: IPR Group of Companies 83 IN PRICES: Effect of subsidy cuts on fuel prices 55 COMMENT: EOR under-utilised. Enhanced oil recovery 84 IN DISTRIBUTION: Gasco’s transmission capacity as a solution to Egypt’s declining production 85 INTERVIEW: Basil El Baz, Carbon Holdings 56 INTERVIEW: Hassan Hataba, Circle Oil 86 VIEWPOINT: Embrace a free market. Khaled Abubakr, 57 COMMENT: Going once, going twice. Series of bidding Taqa Arabia rounds in Egypt to attract foreign investors 87 MAP: Domestic gas infrastructure 58 INTERVIEW: Samir Abdel Moaty, Beach Energy 88 COMPANY PROFILE: ExxonMobil Egypt 59 INVESTOR SPOTLIGHTS: Rally Energy, TransGlobe 89 PROJECT HIGHLIGHT: Tahrir Petrochemical Complex Energy, Petroceltic International 90 INVESTOR SPOTLIGHTS: Saad Eldin Group, Total 60 INTERVIEW: Shamel Hamdy, Trident Petroleum Egypt, Egyptian Methanex Methanol Company, Middle 61 VIEWPOINT: Seize the opportunity. Ahmed Farid East Oil Refinery Moaaz, Sea Dragon Energy 91 COMPANY PROFILE: Petronas Lubricants 62 COMPANY PROFILE: Dragon Oil International 63 ARTICLE: Supply chain blues. Obstacles to getting new 91 IN DEMAND: Demand for lubricants in North Africa equipment 92 PROJECT HIGHLIGHT: Egyptian Refining Company 63 IN SUMMARY: Egypt’s place as a hydrocarbons producer Mostorod refinery 93 MARKET ANALYSIS: Economies of scale. 64 THE YEAR’S FOCUS: Investment & Economy Ismail Rizk, Air Liquide 93 IN TRADE: Egypt's exports and imports of chemicals FOLDOUT RESOURCE: Egypt’s risk profile and fertilisers 65 ARTICLE: The charm initiative. Market improvements 65 IN INVESTMENT: Net FDI and GDP growth 94 BANKING & FINANCE 66 IN CASH: Egypt’s foreign currency reserves 67 INTERVIEW: Christopher J. Jarvis, IMF 95 ARTICLE: Egypt banks on a brighter future. Diminishing 68 MARKET ANALYSIS: State of transition. Wafik Hanna, the debt Deloitte 95 IN GROWTH: Egypt’s real GDP growth 69 INTERVIEW: Hanan El Borollossy and Heba Abdel Latif, 96 IN DEBT: Egypt’s debt, 2012-2015 Commercial International Bank 97 COMPANY PROFILE: Banque Misr 70 MARKET ANALYSIS: Reforms to revitalise. 98 INTERVIEW: Mohamed Shoeib, Qalaa Holdings Tarek Mansour, PwC 99 INTERVIEW: Mahmoud Bassiouny, Matouk Bassiouny 71 INTERVIEW: Riccardo Puliti, European Bank for 100INVESTOR SPOTLIGHTS: Crédit Agricole Egypt, EFG Reconstruction and Development Hermes 101VIEWPOINT: Market shift, Sharif A. El Akhdar, Beltone 72 THE STRATEGIC ROUNDTABLE Private Equity 73 STRATEGIC ROUNDTABLE PARTICIPANTS 102OILFIELD SERVICES 74 FIRST SESSION: REFINING 79 SECOND SESSION: PETROCHEMICALS 103ARTICLE: A breath of fresh air. Hope persists in the Egyptian oilfield services industry 82 DOWNSTREAM & INDUSTRY 103IN NUMBERS: Number of oil and gas rigs in Egypt in December, 2009-2014 83 ARTICLE: More deficits, fewer subsidies. Measures to 105VIEWPOINT: Expansion in a tough market. Mohamed counteract shortages Farouk, Advanced Energy Systems

The Who’s Who of the Global Energy Industry www.theoilandgasyear.com THE OIL & GAS YEAR | EGYPT 2015 EGYPT 2015 THE OIL & GAS YEAR The Who’s Who of the Global Energy Industry

105IN RIGS: Number of offshore and onshore rigs in Egypt 135INVESTOR SPOTLIGHTS: Maire Tecnimont, Technip, in December Drake & Scull International 107VIEWPOINT: Unsustainably low prices. Sune Stilling, 137INTERVIEW: Omar Hamza, Enjaz Project Management Egyptian Drilling Company 139COMPANY PROFILE: Kharafi National 108COMMENT: Waste not, want not. Higher environmental 140COMPANY PROFILE: Engineering Consultants Group standards to mitigate pollution in territorial waters 141INVESTOR SPOTLIGHTS: Enppi, Petrojet, Saipem 109COMPANY PROFILE: Green Valley Oil Services 110INTERVIEW: Islam Kourtam, Sahara Petroleum 142MARINE SERVICES & LOGISTICS Services Company 111COMPANY PROFILE: SinoTharwa Drilling Company 143ARTICLE: Fight the tide. The recovery of the offshore 111IN COUNT: Number of rigs belonging to sector is hampered by structural restrictions and SinoTharwa Drilling Company government involvement 112INTERVIEW: Waleed Geassa, Integrated Petroleum 143IN THROUGHPUT: Maritime cargo throughput Services 144IN FLOWS: Suez Canal oil, refined products and LNG CONTENTS 113MARKET ANALYSIS: Rig construction goes local. flows, 2008-2013 Mohamed El Sayed El Badawi and Ruby Liu, EPPH 145INTERVIEW: Maged Nadim, Maridive 114INTERVIEW: Ahmed Mohsen, International Oil 146INTERVIEW: Haridy El Haridy, Pan Marine Services 147MAP: Maritime infrastructure 114IN TOTAL: Number of active rigs in Egypt 148PROJECT HIGHLIGHT: Suez Canal development 115COMPANY PROFILE: PetroServices project 116INTERVIEW: Ahmed Shoukry, Weatherford 149INTERVIEW: Hisham El Grawany, DNV GL 4 117MARKET ANALYSIS: The services scene. Amr El 150COMPANY PROFILE: Bourbon Offshore Triangle Manhawy, Seaharvest 151RESOURCE: Suez Canal traffic EGYPT 2015 152VIEWPOINT: Age dynamics. Mohamed Asmail, Misr 118POWER GENERATION & TECHNOLOGY Gulf Shipping & Offshore 153VIEWPOINT: Find your niche. Zane Ahmadein, 119 ARTICLE: Power through tough times. Egypt works to Marinetech Egypt upgrade its electricity network to combat the blackouts that plague the country 154SERVICES & SUPPLIES 120 IN ELECTRICITY: Electricity pricing increases through 2017/18 for energy-intensive industries 155ARTICLE: Tighten the belt. Government action will help 121INTERVIEW: Hafez El Salmawy, EGYPTERA the hydrocarbons industry grow 122INTERVIEW: Naji Jreijiri, ABB 156IN TRADE: Egyptian trade balance 123VIEWPOINT: New times, new opportunities. Sofiane 157VIEWPOINT: Observe and learn. Mohamed Al Alamy, Ben Tounes, GE Ingaz 124ARTICLE: Find a better way. The government responds 158COMPANY PROFILE: Tharwa-Breda to the exponentially rising electricity demand through a 159INTERVIEW: Hossam El Fouly, Gapesco public awareness campaign and by decreasing subsidies 160COMPANY PROFILE: SGS Egypt 125VIEWPOINT: Think local. Said Elleithy and Hazem 161INTERVIEW: Hany Abd El Halim, Petrographics Elleithy, Petroconsult Services & Petroleum 162MARKET ANALYSIS: Model for success. Mohamed Supplies Freezone Said, StratoChem 125IN DEMAND: Egypt’s electricity demand 163INTERVIEW: Richard Byrnes, IEMS 126COMPANY PROFILE: Dow Chemical Company Egypt 164MARKET ANALYSIS: In good hands. Moustafa El Masry, R&F Oil Services 128ENGINEERING & CONSTRUCTION 165INTERVIEW: Said Riad, Sahara Technical Institute 165IN LABOUR: Egyptian labour force participation rate 129ARTICLE: Recovery mode. Refineries, the Suez Canal for ages 15-24 expansion and power stations contribute to the 166INVESTOR SPOTLIGHTS: Egyptian Consulting Office, engineering, procurement and construction sector Magic Line Petroleum Services & Agencies, APS-MEA, 130IN PROJECTS: Top six Egyptian engineering, Oil Safe Petroleum Services procurement and construction projects by value 168INTERVIEW: Osama Abdalla, Polytech 131INTERVIEW: Osama Bishai, Orascom Construction Industries 170EXECUTIVE GUIDE 132COMPANY PROFILE: Hassan Allam Construction 133INTERVIEW: Tarek El Hadidy, Middle East Oil 171ACCOMMODATION Tankage & Pipelines 173CALENDAR 134VIEWPOINT: Scalable contribution. Khaled Esam El 175ACKNOWLEDGMENTS | ADVERTISERS INDEX Kholy, Baldwin Engineering 176IN BRIEF

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THE OIL & GAS YEAR | EGYPT 2015 www.theoilandgasyear.com The Who’s Who of the Global Energy Industry

THE YEAR IN REVIEW

7 In search of investment Sherif ISMAIL Minister of Petroleum and Mineral Resources 9 The Year’s Awards 12 The Year in Energy INTERVIEW

In search of investment As the entity responsible for co-ordinating and approving the development of Egypt’s oil and gas reserves, the Ministry of Petroleum has taken an active approach to incentivising foreign investment. Minister of Petroleum and Mineral Resources Sherif Ismail speaks with TOGY about these efforts, upgrades to Sherif ISMAIL Egypt’s refining capacity and the country’s plan to tackle its natural gas shortage. Minister of Petroleum and Mineral Resources THE YEAR IN REVIEWYEAR THE What is the ministry’s plan for paying arrears announced, including 10 blocks for Ganoub El 7 to upstream companies? Wadi Petroleum Holding Company in the south- The Ministry of Petroleum is eager to pay back ern Gulf of Suez and Nile Delta regions. the rest of its arrears to international oil com- In light of the high cost and risk of recent panies to encourage foreign partners to continue discoveries in Mediterranean deep water, new investing in exploration and development ac- models for production-sharing agreements tivities, which contributes to increasing domestic were created to achieve appropriate revenues INTERVIEW production. We have taken concrete measures, and encourage foreign investors to invest and including successfully paying back $1.5 billion accelerate the process of putting the discoveries in December 2013, $1.4 billion in October 2014 on the production map. This will be a win-win and $2.1 billion in December 2014. situation for the exploration and production We are in negotiations with international companies and the local market’s gas needs. oil companies operating in Egypt to schedule the rest of the debt and bring it to a minimum What measures need to be taken to expand refining capacity in Egypt? The Ministry of Petroleum is implementing a The Ministry package of ambitious projects to develop infrastructure, which includes refineries and of Petroleum is pipelines for petroleum products. We are updating existing refineries, im- implementing a proving their safety systems and raising their capacity. We are also setting up new units for package of ambitious the production of petrol, gas oil, LPG and asphalt to meet the needs of the domestic market. We projects to develop have started the implementation of these projects in Alexandria, Suez, Assiut and Mostorod, infrastructure. with total investments of roughly $5.7 billion. For example, the Middle East Oil Refinery Company (MIDOR) refinery in Alexandria is level to restore foreign investors’ confidence in being expanded to increase its capacity by 60 the Egyptian economy. This will also accelerate percent, with investments of about $1.3 billion. development of discovered fields and boost Other projects are being planned to add new exploration and development investments, units to the refineries, at a cost of roughly $3.7 thereby increasing production. billion for the next phase of development.

How can the Egyptian oil and gas industry What efforts are being made to bridge the About the Ministry of Petroleum attract more investment? gap between supply and demand for gas? The Ministry of Petroleum is responsible The ministry is eager for more bids and tenders, The government is working hard to bridge the for the management and supervision as these are the cornerstone of discoveries. gap between natural gas production and do- of all exploration, production, marketing After a three-year stoppage, new agreements mestic consumption, which represents a major and distribution of oil, gas and other have been signed with international exploration challenge, through a multi-faceted programme. natural hydrocarbons in Egypt. There and production companies. The first step is offering oil and gas exploration are six primary entities through which Between October 2013 and January 2015, blocks for international bidding and signing it accomplishes this: the Egyptian General 53 agreements were signed, with minimum in- new agreements with major oil companies. Petroleum Corporation, the Egyptian vestments of roughly $2.9 billion and a total of The main emphasis of this programme is Natural Gas Holding Company, the $432 million in signing bonuses for the drilling the acceleration of natural gas production proj- Egyptian Petrochemicals Holding Com- of 228 wells. In early 2015, procedures are un- ects in the Mediterranean, the Western Desert pany, the Ganoub El Wadi Petroleum derway to ink three new agreements, with in- and the onshore Nile Delta. The Ministry of Pe- Holding Company and the Egyptian vestments totaling $9.2 billion. At the end of troleum is acting in co-operation with foreign General Authority for Mineral Resources. 2014, a new international bidding round was partners to speed up the process of putting

The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | EGYPT 2015 The Who’s Industry Who of the Global Energy Tunisia Sudan Other Africa The bids on the Egyptian Natural Gas The Ministry to boost investment is working of Petroleum total of 750,000 cubic metres (26.5 mcf) of 750,000 cubic metres total per The 2015. April September 2015 to from day and the first floating storage final contract for in November unit was signed regasification 2014, between the Egyptian Natural Gas Holding and the Norwegian Höegh company Company The unit is scheduled a period years. of five for startto 2015. operations in March LNG shipments, for tender Holding Company’s which closed at the end of October 2014, have has agreed Gazprom Russia’s been evaluated. in principle shipments of LNG. supply to Gabon Nigeria Congo-Brazzaville Egypt Equatorial Guinea Many gasfield projects have been put into projects have gasfield Many A preliminary has been reached agreement gasfield development projects on the production projects gasfield development natural decline in offset 2015 to map over yield. production and increase existing fields’ the most importantproduction, are of which Delta West of the phase 9a of the development Deep Marine concession, the Denis-Karawan Des-project on the Mediterranean, the onshore ouk gasfield on the Nile Delta the Karam and Desert.Western gasfields in the and Assil the made rebooting been progress Has any North gas project? Alexandria deepwater The North Alexandria in No- project was halted 2011 and has had a veryvember negative impact as on the Egyptian oil and gas industry, production gone into have it was scheduled to 900 mcf (25.5 up to by mid-2014, producing In 2011, the local inhabitants mcm) per day. con- misplaced environmental objected due to the project. stop BP to cerns and forced the project, including a complete with BP to It $10-billion investment. will go on proposed a production rate line in 2017-2018 and reach per day. 1.25 bcf (35.4 mcm) of roughly meet being taken to are What other measures natural gas? domestic demand for Importing towards step natural gas is the third the gap between production and confronting The Ministry is step- consumption. of Petroleum importping forward to natural gas to liquefied stations meet part of power of the requirements six LNG ship-in 2015. A contract for was signed a Algeria Egypt, amounting to to ments from Algeria Angola Libya Chad EGYPT 2015 | 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0 500 The NorthThe 3,000 2,500 2,000 1,500 1,000

INTERVIEW PRODUCTION IN Source: BP Statistical Review 2014 Source: African oil production, 2003-2013 (thousands of barrels per day) oil production, of barrels 2003-2013 (thousands African IN FIGURES $10 billion 2017-2018 project for investment Proposed North Alexandria deepwater be completed project to THE OIL & GAS YEAR GAS & OIL THE gas industry. the Egyptian oil and the Egyptian negative impactnegative on has had a very November 2011 and November was halted in was halted Alexandria project Alexandria

THE YEAR IN REVIEW 8 INTERVIEW The Who’s Who oftheGlobalEnergy Who Industry The Who’s deep gas, settlement andthepartial ofdebtstointernationaloperators. ongoing negotiationsofgaspricesfornewupstream activity targeting troleum products. enactedwithhisoversightinclude Otherefforts existing refineries andbuildingamore sophisticatedvaluechainforpe- the modernisationandexpansionofdownstream sectorbyupgrading from October2013toJanuary 2015. It alsoincludessetting anagendafor production, whichhehasdonethrough thesigningof53concessions industry. This involves stimulatingforeign interest inexploration and ofEgypt’soversees thedevelopmentandco-ordination oilandgas As theMinisterofPetroleum andMineral Resources, SherifIsmail Sherif ISMAIL MAN Algeria’s Sonatrach. EgyptisinnegotiationswithRussia’s Gazprom shipments. forfurther vessel isscheduledtogoonlineinMarch 2015and thefirstLNGshipmentswillcomefrom ofnatural gasperday,mcf) mostofwhichwillbeusedasfeedstockfornationalpower plants. The terminal.This about14.2 LNGimport willallowEgypttoimport to actasatemporary mcm(500 has signedafive-year dealwithNorway’s Höegh LNG for afloatingstorage andregasification unit In tokeep upwithdomesticgasconsumption,theEgyptianNatural aneffort GasHolding Company pilot project, settobegininmid-2015, millionforthree wells. includesacommitmentof$30-40 horizontal drillingandmulti-stagefracture stimulationwillyieldeconomicproduction rates. The to operate thepilotproject modellinghassuggestedthat andfullfielddevelopment.Reservoir Khalda Petroleum, ajointventure between Apache andtheEgyptianGeneral Petroleum Corporation, Appolonia Basin.The EgyptianGeneral Petroleum Corporation andShellhaveagreed toallow Apache EgyptandShellare jointlyinvesting todevelop OF THE YEAR to $13.5 billion,whilevesseltraffic willdoublefrom 49to98shipsperday. access. The Suez Canal Authority estimatesthecanal’s revenues willincrease from $5billion capital of$8.5 billionhasbeenraised fortheadditionofacanalandtunnelstofacilitateroad infrastructuralto beoneofthemostimportant projects fortheglobalenergy industry. Initial Forces EngineeringAuthority andBeirut-based consultancyDar Al Handasah, hasthepotential The connected totheAl BorlosTreatment Plant,whichcanprocess perday. 56.6 mcm(2bcf) ofgasperdayby2018. The project’sroughly 28.3 mcm(1bcf) gasstreams are plannedtobe BP holdsa62-percent stake andRWE Deaholdstheremaining 38percent, isaimedatproducing gas project beingdevelopedintheWest Nile Delta.The North Alexandria gasproject, inwhich supply ofnatural gastothelocalmarket. Nearly $10billionofthefunds will bespentonamajor BP hasannouncedplanstoinvest more than$12 billion ethylene plantandDow, whichwillprovide process technologyforpolyethylene production. including project managementconsultantAmec Foster Wheeler, Linde, whichwillbuildthe polyethylene and450,000 polyethylene. tpyofhigh-density Many companieshavebeencontracted, 600,000 tpyofpropylene, 210,000 tpyofbutadiene, 420,000 tpyofbenzene, 1.35milliontpyof dollar venture tousenaphthafeedstockproduce 1.3milliontonnesperyear(tpy)ofethylene, The UPSTREAM INVESTMENT DOWNSTREAM PROJECT INFRASTRUCTURAL DEVELOPMENTINFRASTRUCTURAL Tahrir Petrochemical Complex , tobeoperated byEgypt’s Carbon Holdings, isa$7-billion Suez Canal expansion,beingexecuted involving byaconsortium theEgyptianArmed UNCONVENTIONAL DEVELOPMENT THE AWARDSYEAR’S –EGYPT2015 GAS SUPPLY DEAL OF THE OF THE unconventional inthe gasreserves YEAR YEAR OF THE YEAR OF THE OF THE in Egypt in an effort todoubleits in Egyptaneffort YEAR YEAR THE OIL & GAS YEAR | EGYPT 2015 EGYPT

THE YEAR’S AWARDS – EGYPT 2015 9 THE YEAR IN REVIEW Kilometres Foul Foul Bay 0 100 200 SAUDI ARABIA SAUDI ARABIA JORDAN JORDAN The Who’s Industry Who of the Global Energy Red Sea West Bank

Gulf Aqaba per day of oil equivalent 700,000 barrels Wadi Wadi Jararah ISRAELISRAEL Aqaba $272 billion (2013) Hurghada Gaza Strip Sinai

Gebeil

Wadi Al ‘ Al Wadi Allaqi (2014) 2.2 percent 12.9 percent (early 2015) (early 12.9 percent

Eastern Desert Natural gas, oil, gold and iron ore, phosphates ore, gold and iron oil, gas, Natural Arish

Aswan Wadi Wadi Al ’Aqabah

Al Masid Wadi Wadi Zaydun Qena Wadi Wadi Qina of Gulf Suez

Suez Ismailia Lake

Luxor Nasser Port Said Sohag

Wadi Wadi Al Asyuti EGYPT EGYPT Currency: E Currency: Mineral resources: Mineral resources: (63.6 tcf)Gas 1.8 tcm reserves: 2013) (end Oil 3.9 billion barrels reserves: production: Oil and condensate rate): exchange GDP (official LE($1:LE7.15) gyptian pound, rate: Real GDP growth 47.2 percent GDP: of oil and gas in real Share rate: Unemployment CAIRO

Wadi Wadi at-Tarfah Beni Suef ECONOMY EIA, CIA World Factbook 2014, BP 2014 Statistical Review 2014, BP 2014 Statistical Factbook World Sources: EIA, CIA Damietta El Kharga Giza Assiut

Kharga Oasis Minya Faiyum Nile Alexandria Al Qasr

Khalij Al ‘Arab

Farafra Oasis Mediterranean Sea Mediterranean Dakhla Oasis SUDAN SUDAN Marsa Matruh Western Desert Qattara Depression Sidi Barrani e kilometres e kilometres

ab Republic of Egypt Egyptian (99.6 percent), other (0.4 percent) other (0.4 percent) (99.6 percent), Egyptian Abdel Fattah El Sisi El Abdel Fattah Siwah Oasis EGYPT 2015 Libyan Desert | Cairo Maritime boundary National boundary Disputed boundary Dual highway Main road Secondary road Railway National capital Governorate capital Major airport Libyan Plateau EGYPT AT A GLANCE AT EGYPT Official name: Ar Area: 1,001,450 squar Area: Ethnic groups: Ethnic groups: Capital city: Official language: Arabic Population: 86.9 million Population: Head of state: Head of state: Mahlab Ibrahim Prime minister: Parliamentary democracy Parliamentary system: Political LIBYA LIBYA THE OIL & GAS YEAR GAS & OIL THE POLITICS GEOGRAPHY

EGYPT AT A GLANCE

THE YEAR IN REVIEW 10 The Who’s Who oftheGlobalEnergy Who Industry The Who’s The survey was conducted by wasconducted Source: The survey The OilandGas Year inEgypt between July2014andFebruary 2015 8.2% Anti-business Anti-business, butaccommodating Pro-business, butrestrictive Pro-business vis theoilandgasindustry? policies ofthisgovernment vis-à- How would you describethe remain positiveinthenext12months. believe thatconditionswillcontinueto aspositive,gas industry andnearly86percent rate businessconditionsinEgypt’s oiland 85.2 demonstrates strong investor confidence. the Egypt2015Investors Index rating of marked byincreasing GDPgrowth Egypt iswitnessinganeconomicrevival Extremely difficult Extremely Difficult Easy Very easy in thismarket? anoiland gasbusiness starting How would you rate theeaseof 12-month investment horizondemonstrates rounds andchanginginvestment laws. The flection ofongoinginternationalbidding to invest inEgypt.This appearstobeare- suggestingthatitwas agoodtime surveyed in themarket, with86.3 percent ofthose RIDE THE WAVE: IN The Egypt 2015Investors Index RESPONSE More than90percent ofrespondents Optimism is running high Optimism isrunning 85.2 19.2 % 79.4 % 17.8% 1.4 % 74 % and 0 % 0% Extremely difficult Extremely Difficult Easy Very easy doing businessinthiscountry? How would you rate theeaseof agreeing thatitisadifficulttask. proposition, with79.4 percent ofrespondents isnoeasy the Egyptianoilandgasindustry government assimplypro business. This compares to17.8 percent whoseethe butrestrictive.government aspro-business a majority –74 percent –saidtheysawthe authorisation couldbebehindthis, although the relevant lawsandsecuringgovernment isdifficult. business inthecountry percent ofrespondents sayingthatdoing of hurdles tooperating inEgypt,with87.7 crease inEgyptoverthenext12months. they expecttheircompany revenues toin- that only68.5 percent ofrespondents said from thedateofsurvey. vestment destinationoverthenext12months wouldremain agoodin- that thecountry with 84.9 percent ofrespondents agreeing that thisoptimismextendsintothefuture, the country couldbedescribedasstable.the country said thepoliticalandeconomicclimateof elections, 71.2percent oftherespondents El Sisiin2014andupcomingparliamentary With theelectionofPresident Abdel Fattah Egypt afterfouryearsofsocialupheaval. fident thatpoliticalstability isreturning to RELIABILITY: THE RIGHT BALANCE: Establishing astrong businessentity in Processes forinsuringcompliancewith This optimismistempered bythefact Extremely difficult 12.3% Investors are increasingly con- Difficult 87.7% There are stillplenty 12.3 % 87.7 % THE INVESTORS INDEX 0 % 0 % Highly unstable Unstable Stable Highly stable in thisoilandgasmarket? political andeconomic stability How would you rate thelevel of Corrupt Not transparent Transparent Very transparent market? inthisoilandgas transparency How would you rate thelevel of work in fields relevant to the energy industry. totheenergy work infieldsrelevant and nineacademicspolicymakerswho on theresponses of64oilandgasexecutives an overall pessimisticoutlook. vestors, whileareading below50inindicates a positiveperception amongoilandgasin- positive ornegativeresponses. tions inwhichparticipantsare askedtogive major oilandgasexecutives inthismarket. index isvaluedbasedontheresponses of ofspendinginanygivenmarket.level The oil andgasinvestorsasexpressed intheir Index isdesignedtomeasure confidenceamong ABOUT THE INDEX:ABOUT THE BY MARKET 05 06 07 08 09 100 95 90 85 80 75 70 65 60 55 50 The Egypt 2015Investors Index isbased The Egypt A reading above50ontheindex represents consistsoffiveattitudinalques- The survey aa 88.4 85.2 Egypt 88.5 Qatar 90.2 Saudi Arabia 95 Iraq 93 Kuwait Abu Dhabi THE OIL & GAS YEAR The TOGYInvestors | EGYPT 2015 EGYPT 19.2 % 75.3 % 71.2 % 24.7 % 2.8 % 6.8 % 0 % 0 %

THE INVESTORS INDEX 11 THE YEAR IN REVIEW THE YEAR IN ENERGY

13 Edison, Petroceltic and Dana Gas sign exploration deals worth $265 million for a total of eight new wells in northern Sinai, the 8 Abdel Fattah El Sisi is oﬀshore Mediterranean sworn into oﬃce as and the Nile Delta. president of Egypt after

THE YEAR IN REVIEW 12 US Secretary of State securing 93.3 percent of 24The World Bank John Kerry announces votes cast during polls approves a $500-million that the resumption of held between May 26- project to expand aid, both economic and 28. household gas military, to Egypt is connections in Egypt. likely. The return of the aid programme is later approved. 13 Drake & Scull 27 Minister of International signs a Petroleum and Mineral $4.2-billion contract to Resources Sherif Ismail join the international says BP’s $10-billion 12 consortium of North Alexandria gas THE YEAR IN ENERGY 6 companies developing project, which had Carbon Holdings, the Tahrir Petrochemical stalled for three years, Maire Tecnimont and Complex. has restarted and that Archirodon sign a $1.7- production will begin billion contract for the in 2017. construction of the Tahrir Petrochemical Complex.

2014

FEB MAR APR MAY JUN JUL

23The Egyptian Natural Gas Holding Company (EGAS) cuts 10.8 mcm (380 mcf) of gas per day for fertiliser and cement factories in the face of an ongoing 11 Saudi Arabia gas shortage. announces it will provide $1.3-billion 31The European Bank worth of petroleum for Reconstruction and products in May and Development gives a June, in the form of fuel $190-million loan to oil, diesel and LPG Egypt to finance shipments, to Egypt. upgrades for the Shabab and 4 Following subsidy Damietta power plants. cuts, fuel prices increase overnight, rising 40 percent for 92-octane petrol, 78 percent for 80-octane petrol, 63 percent for diesel and 175 percent for gas. 21The Arabian Cement Company launches the 26 Militants bomb a gas first initial public pipeline in north Sinai, offering in Egypt since marking the 21st attack the removal of Mubarak, since the ousting of raising confidence former President Hosni among local and Mubarak in 2011. international investors.

THE OIL & GAS YEAR | EGYPT 2015 The Who’s Who of the Global Energy Industry THE YEAR IN ENERGY

19 Consultancy Dar Al 9 BP announces a plan 28The Ministry of Handasah wins the to invest more than $12 Petroleum announces bid for the Suez billion in Egypt over the that it finalised an Canal project. next five years and agreement to dock a double its supply of gas floating natural gas to the local market over import terminal at the the next decade. Ein Sokhna port.

13The government 7The price of Brent launches plan to crude oil drops under complete second and $50, threatening third phases of its investment incentives petroleum products but decreasing Egypt’s 5 smart card system as subsidy costs, and thus The Suez Canal part of efforts to its budget deficit. expansion project to add restructure subsidies. a 72-kilometre extra lane to the canal in order 25 Eni is awarded the 22 EGAS announces it 31The Ministry of to increase traffic and North Leil block and a will open bids for Petroleum announces industrial activity in the

50-percent operating research and exploration the payment of $2.1 IN REVIEWYEAR THE area is inaugurated. share in the Karawan of shale gas in four areas billion of its debt to block in the 2013 EGAS in the Western Desert. energy companies, 13 Bidding Round. bringing its total overdue payments down to $3.1 billion.

1The UAE begins providing Egypt with approximately $9-billion worth of petroleum products it will loan the country over the next year. THE YEAR IN ENERGY THE 2015

AUG SEP OCT NOV DEC JAN

30The Egyptian General 12 Egypt signs six new Petroleum Corporation agreements for oil and secures $1.5-billion gas exploration in the syndicated loan from Western Desert and the domestic and Gulf of Suez, worth international banks to $400 million. pay part of its arrears to 5 foreign oil and gas TransGlobe is awarded companies. the North West Sitra concession, being the ﬁrst company to release the results for the 2013 Egyptian General Petroleum Corporation Bidding Round. 23The government decides to stop 18 BG Group announces distribution of gas to 2The Ministry of it has postponed phase several fertiliser and Petroleum announces 9B of the West Delta cement plants to the payment of $1.5 Deep Marine provide more gas for billion of its debt to development because of electricity generation. foreign energy the government’s companies, bringing its outstanding dues. total overdue payments 30The Ganoub El Wadi 6William Henderson, a down to $4.9 billion. Petroleum Holding US employee of Apache Company launches an Egypt, is killed by an international bidding Islamic State-linked round for 10 exploration group during an blocks in the south Gulf apparent carjacking in of Suez and west and the Western Desert. east Nile regions.

The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | EGYPT 2015 DIPLOMACY & POLITICS

15 The route ahead 17 EGPC moves into the future Tarek EL MOLLA CEO EGYPTIAN GENERAL PETROLEUM CORPORATION 21 Roadmap to stability Amr MOUSSA Head of Constitutional Review Committee operators duringtimesofcivilunrest. provideddebt foroilproducts by the state haspaidbackitsoutstanding of foreign companies to invest until A majorhurdle inEgypt istherefusal Still, there are formidableobstaclestoovercome. bolster investment inexploration andproduction. supply, thestateisseekingtoexecute reforms to month.To every regain controlmcf) ofitsenergy to facedeclinesatarate ofabout2.83 mcm(100 perdayin2014,137 mcm(4.84 butcontinues bcf) andcausingfrequentdustry blackouts. having adamagingeffectonthemanufacturingin- Meanwhile,shortfall. is thenationalgasshortage $1.3 billionpermonth,tomake upforadomestic oilproducts,on importing totallingasmuch year, whileforeign debthasgrown considerably. broke outin2011,theformerhasfallenyear-on- fiscal year2014/15(July-June). Sinceunrest inEgypt debt isprojected at18.5 percent ofGDPforthe billion stoodat$15.4 Egypt’s foreign exchange reserves confronts fallingoilprices economic andanunpredictable climate. gasshortages, government mustestablishanewnormasitrecovers from aseriesofrevolutions and reforms to improve theinvestment conditions underlyingEgypt’s oilandgasindustry. The Political andeconomic recessions instability intheyears leadingto 2015have resulted in The route ahead Egyptian General Petroleum Corporation hadalso $1.4 billioninOctober2014. The state-owned instalments of$1.5billioninDecember 2013and pay offtherest ofthisdebt bymid-2015. of Petroleum saidthatthegovernmenthopes to In November 2014, asenior officialintheMinistry Cairo managedtomake apaymentof$2.1 billion. amounted to$3.1 billionbyDecember2014, after lowed fordelaysontheirgasproduction projects. civil unrest. Those nowoperating inEgypthaveal- by upstream operators duringthethree yearsof back itsoutstandingdebtforoilproducts provided to invest inEgyptuntilthegovernmenthaspaid the refusal of several foreign oilandgas companies FOREIGN OBLIGATIONS: The Who’s oftheGlobal Energy Who Industry Natural gasproduction inEgyptaveraged around hasbecomeincreasinglyThe dependent country The paymentinDecemberfollowstwo previous The totalamount ofdomesticarrears owed as ofearlyFebruary 2015, whileforeign The firstmajorhurdle is through consistentdevelopment. country’s inability tomonetiseitsoilandgasreserves large duetosubsidyexpenses, part alongsidethe a paymenttoforeign companies. 2014 from offourlocalbanks tomake aconsortium secured aloanofaround $1.4 billioninSeptember reforms, such asthoseforsubsidyreductions, and its 10-percent budgetdeficittarget. Otherbudget the stimuluspackagewouldnot bedetrimentalto student tuitionfees. ofFinance The Ministry claimed industrial zones, subsidiseinfantformulaand cover gas to800,000 residential areas, aswellto equip ofnatural included $868millionforthe delivery aroundplan thatyearworth $4.28 billion,which which stoodat12percent ofGDP. ofthenationalbudget, counted foraboutone-third deficit waslargely owedtosuchsubsidies. They ac- wholesale energy prices. In 2013, Egypt’s budget Sisi wasswornintooffice, leadingtoarisein only afewweeksafterPresident Abdel Fattah El onJulysidies were cutbyalmostone-third 5, 2014, LNGat$9-12importing permillionBtu. gasification unit.Accordingly, Egyptcouldendup Höegh forthesupplyofafloating, storage andre- signing ofacontract withNorwegian company isting domesticdevelopments. in theprocess ofnegotiatingfairer gaspricesinex- Company hassaidonnumerous occasionsthat itis EgyptianNatural GasHolding as thestate-owned gas prices. There ismomentumforchange, however, to garneringmore investments issubsidiseddomestic SUBSIDIES AMID SHORTAGE: Egypt fellbehindscheduleonitspaymentsin The governmentalsoimplemented a stimulus There are signsofmarked progress. Energy sub- The inEgypthasseenthe ongoinggasshortage $4-6 permillionBtu,dependingontheplay.$4-6 would necessitategaspricesintherange of break-even pricesvary, adequatecompensation working conditionsandtheircorresponding for increasing domesticproduction lie. While opments, where themostnovelopportunities offshore andunconventional onshore devel- temperatures andpressures. and production activitiesathigherreservoir to recuperate costsassociated withexploration British thermalunit(Btu)isnothighenough This thecasefordeep isparticularly The baselinepriceof$2.65 permillion The secondhurdle THE OIL & GAS YEAR $3.1 billion percent 18.5 2015 billion $15.4 STOOD AT RESERVES EXCHANGE FOREIGN EGYPT’S OPERATORS IS FOREIGN ARREARS TO EGYPT’S TOTAL 2014/15 FOR ATPROJECTED DEBT IS FOREIGN FEBRUARY AS OF IN ARTICLE FIGURES | EGYPT 2015 EGYPT

ARTICLE 15 DIPLOMACY & POLITICS