Interview: Maria Moraeus Hanssen
Where do you see the greatest potential for future oil and gas exploration in Egypt?
MARIA MORAEUS HANSSEN: Egypt has achieved a breakthrough by turning from a net importer to a net exporter of energy, which is of great significance, considering the growing domestic demand for energy. With the economy continuing to improve in 2018, the rapid expansion of the natural gas sector has been a key boost, encouraging and attracting more investments in hydrocarbons exploration within the traditional regions in Egypt, such as up the Nile Delta and Western Desert, as well as frontier exploration in the Red Sea region. At the same time digital technologies are having a significant impact, especially on operating oil and gas fields. The collection and analysis of data from wells, production, drilling cores and seismic measurements can be vastly improved to optimise production processes, increasing the efficiency in all other segments of business, besides leading to a safer working environment.
What role can international oil companies (IOCs) play in furthering energy modernisation?
MORAEUS HANSSEN: IOCs have a special role to play. They invest in Egypt and contribute to safeguarding a stable energy supply for the domestic market. Foreign exploration and production companies tend to invest heavily, and due to their experience and exposure in various countries they adhere to high technical standards. Since management is accountable to a supervisory board and investors, they tend to work as efficiently as possible, and continuously try to improve operations and optimise production.
Oil and gas exploration is a capital-intensive undertaking requiring large investments, enormous experience and a strong business mind, so the continuation of the political and legal stability of the country is key. We take note of efforts to liberalise Egypt’s gas market, an important step to transforming the sector’s efficiency and competitiveness. The deregulation of this sector is a good sign and will initiate more interest by private companies. IOC support in the modernisation and restructuring of joint ventures established for the purpose of developing and operating oil and gas fields will be key in this regard.
How can the existing energy infrastructure support Egypt’s ambition of becoming a regional hub?
MORAEUS HANSSEN: With an increasing number of projects on stream, the current infrastructure of the Egyptian energy system will be expanded. Gas from various onshore and offshore fields will fully satisfy the domestic market demand, and the nation’s two existing gas-liquefaction facilities are large enough to process any available surplus into liquefied natural gas (LNG) for international sale in 2019.
Several offshore projects have come on stream, some of which are helping to increase national output and contribute to the country’s ability to sell surplus gas abroad. Additionally, Egypt has announced contractual arrangements, which allow natural gas imports from neighbouring countries via pipelines for the purpose of re-exporting as LNG to remote markets in Asia and Europe. Egypt has all the preconditions in place to establish itself as a key energy exporter, and there is still more gas to be discovered.
Egypt’s competitive operating costs compared to those in other regions will continue to offer additional incentives to develop gas fields. Agreed price floors for natural gas deliveries to the government provide foreign investors with predictability and some level of protection against the fluctuations in market prices. This should be adopted in all gas delivery contracts to maintain and strengthen Egypt’s competitive advantage. Along with other improvements in the oil and gas investment climate in Egypt, this will ensure that the country’s aspiration to become an energy centre for the East Mediterranean region will succeed.
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