Interview: Hesham Mekawi
What is the potential for future large-scale discoveries offshore in the Mediterranean?
HESHAM MEKAWI: Egypt’s offshore Mediterranean has a great future. It has the potential for large-scale discoveries and all the ingredients required to position Egypt as the future hub for the eastern Mediterranean. This country has potentially world-class resources below the ground, and the government is responsive and flexible in its desire to create the right conditions above the ground. That’s a combination that attracts businesses to operate and deliver oil and gas where it is needed, while also building successful partnerships.
How will Egypt’s new gas discoveries play a role in addressing consumption?
MEKAWI: The recent gas discoveries in Egypt are expected to play an important role in the medium and long term in reshaping the energy sector on a variety of different levels. It is expected to have a positive impact on production output, resulting in the country meeting domestic energy needs filling supply gaps, easing government energy expenditures and potentially opening the door for significant gas exports.
What more could Egypt’s government do to promote upstream foreign investment?
MEKAWI: Our relationship with the government is a successful one, which means we look to face challenges together in partnership. We appreciate the government’s willingness to work in partnership with international oil companies (IOCs) on reaching the right balance between securing cheap sources of energy for the country whilst ensuring competitive returns to their investors.
The government has demonstrated flexibility in responding to changing industry outlooks and has shown real pragmatism and adaptability. It is important to be able to work together to agree on a price that is competitive and offers value for suppliers and for investors.
How has the government helped to facilitate opportunities for new production?
MEKAWI: We believe strongly that the Nile Delta is a world-class natural gas basin that deserves substantial investments to unlock its potential. That said, these potential discoveries are located in deep waters, creating challenging conditions that always represent capital-intensive exposure to the IOCs in today’s tough price environment.
At the end of 2015, BP announced that it had signed an agreement with the petroleum minister to accelerate the development of the recent Atoll natural gas discovery. The agreement is expected to shorten the amount of time it takes to reach first production from the field – which has 1.5trn cu feet of gas and 31m barrels of condensate – allowing its resources to begin to reach the domestic market in 2018.
The full field development of Atoll is expected to consist of two phases. The success of the first phase is expected to trigger additional investment and further wells to increase production.
The initial phase of BP’s West Nile Delta project, which is expected to develop 5trn cu feet of gas and 55m barrels of condensate resources, and to add 1-1.2bn cu feet per day, which is equivalent to 25% of Egypt’s current production. Therefore, we are proud to start construction on this strategic national project that will develop significant gas volumes for the domestic market, as all production will be fed into the national gas grid.
Taking these steps will play an important positive role on the energy sector on different levels, above all by meeting anticipated growth in demand for natural gas from the Egyptian market.
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