Oil & Gas Modernization Project. - AmCham Egypt Inc

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Ministry of Petroleum and Mineral Resources

Z

SPEECH BY: H.E ENG. TAREK EL MOLLA Minister Of Petroleum And Mineral Resources

May, 2017

Content

Ministry of Petroleum and Mineral Resources

 Oil & Gas Sector from 2011 till 2017.  Oil & Gas Modernization Project.

 Oil and Gas Sector Strategic Pillars and Action Areas  Boost Oil & Gas Reserves & Production.  Secure local demand of Natural Gas & Petroleum Products.  Expanding Gas connection to Households.  Petrochemical Development.

 Structural Reform.  EGYPT as an ENERGY HUB. 2

Oil & Gas Sector (2011 till 2017)



• • • • • •

Ministry of Petroleum and Mineral Resources

2011-2012

2013-2014

2015-2016

Instability

Reset

Re-Energizing

Lack of political stability and security No new petroleum agreements. Natural decline of production. Accumulation of international partners arrears until reached 6.3 billion $. Decreased investments in exploration. Gap between gas supply and demand. Continual power supply Outage.

• • • • •

Restore political and security stability. Implementing some reform policies. Announcing number of bid rounds and signing a number of agreements. Reducing partners arrears by half. Started the first step of energy subsidies reform in 2014.



importing liquefied gas to bridge the gap between supply and demand.



Acceleration of gas development projects.



Discovery of Zohr and started development in a record time.



First steps of liberalization of the gas market.

Over the past phase, we have succeeded in overcoming a number of challenges, but we were compiled to develop an integrated vision to achieve sustainability and the aspirations of our country towards a better future, therefore we launched

The Oil and Gas Sector Modernization Project

3

3

Ministry of Petroleum and Mineral Resources

EGYPT’S OIL AND GAS SECTOR

MODERNIZATION STRATEGY AND ROADMAP

4

THE OIL & GAS SECTOR MODERNIZATION

Ministry of Petroleum and Mineral Resources

Objective Of Modernization Project Design and implement an integrated transformative program for Egypt’s Oil & Gas sector to enhance its contribution as an engine of economic growth & to reinforce its role as a model for other sectors

Modernization consists of 2 phases: Phase 1: Diagnostic and goal setting Phase 2: Detailed plans & Implementation

5

DIAGNOSTIC PHASE Ministry of Petroleum and Mineral Resources

Analysis and diagnosis of the oil & gas sector

The Top 50 Leaders In The Oil & Gas Sector Were Invited

Clear Vision For The Sector Was Developed Collectively

follow-up workshop arranged with mid-level management to cascade the message

Data collection and interviews with different stakeholders to identify the main challenges & leverage points

Leaders from across the sector gathered for a day-long workshop to chart the path forward for the sector

61 improvements synthesized into 11 actionable initiatives and consolidated into 6 programs to modernize the sector

Progress of the modernization program shared with future leaders from across the sector for awareness and buy-in

6

Vision

Ministry of Petroleum and Mineral Resources

A vision shared collectively was a direct result of the efforts of sector leadership during the visioning workshop By 2021, continuously unlock the sector’s full value chain potential as a growth and a sustainable development engine for Egypt o Achieve financial sustainability. o Become a leading regional Oil and Gas hub. o Role model for the future of modernized Egypt .

7

THE OIL AND GAS SECTOR MODERNIZATION Ministry of Petroleum and Mineral Resources

1 2

3

Investment Attraction

Downstream Performance

4

Sector Structure Reform

Upstream Performance

5

Hub Strategy

People

7

Decision Support and data flow

REALIZATION OFFICE

6

Modernization Project and the Sector Sustainable Strategy

9

Modernization Project and the Sector Sustainable Strategy

Ministry of Petroleum and Mineral Resources

The modernization project has become an essential part of Oil & Gas strategy and its work plans, aligned

with the framework of integrated vision of energy until 2035, according to the following policy

Measures: 10

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

1 6

Boost Oil & Gas Supply

2 EGYPT as an ENERGY HUB

Secure Local Demand of Natural Gas & Petroleum Products

Petroleum Sector

5

3

Expansion of Gas Connection to Households

Structural Reform

4

Petrochemical Industry 11

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

1

Boost Oil & Gas Supply

2

6

EGYPT as an ENERGY HUB

Secure Local Demand of Natural Gas & Petroleum Products

Petroleum Sector

5

3

Expansion of Gas Connection to Households

Structural Reform

4

Petrochemical Industry 12

1st Policy Measure: Boost Oil and Gas Supply Ministry of Petroleum and Mineral Resources

Intensive Exploration Activities to Boost Oil & Gas Production 1

2 Acceleration of Gas Development Projects 13

1st Policy Measure: Boost Oil and Gas Supply CONCESSION AGREEMENTS

Ministry of Petroleum and Mineral Resources

76 New Upstream Exploration agreements signed, $15.3 billion minimum commitment. New blocks are always offered by EGPC, EGAS & GANOPE.

14

1st Policy Measure: Boost Oil and Gas Supply 2- Acceleration of Gas Development Projects

During last Three Years

On going

Ministry of Petroleum and Mineral Resources

Planned

21 gas projects

9 Gas development Projects

11 Gas development Projects

With Investments

With Investment around

With Investment around

$ 7.4 Billion

$ 30.2 billion

$ 17.5 billion

With production rates

With production rates

4,7 BCF/day gas.

1.9 BCF/day gas.

26.8 thousand bbl/day Condensates

50 thousand bbl/day condensates

With production rates 3.1BCF/day gas 21.1 thousand bbl/day condensate

By end of 2019 15

1st Policy Measure: Boost Oil and Gas Supply 2- Acceleration of Gas Development Projects

Ministry of Petroleum and Mineral Resources

3 Major gas development projects

Total Investments : $27.3 bn.

Peak Production rates from 3 Projects 5.1 bcfd. • Increasing the NG Production by 50% in 2018 Comparing to 2016 • Achieve Zero Gas Imports by 2018 .

• Increasing NG production by 100% by 2020.

16

1st Policy Measure: Boost Oil and Gas Supply

Sector Sustainability Through the Modernization Project Ministry of Petroleum and Mineral Resources

In Consistency with the Modernization Project and previous achievements (Zohr Project), the work will be completed on the 1st Pillar of the sector strategy through: Program One Investment Attraction

Program Five Upstream Performance

 Increase production rate from existing fields through: -Existing wells -New activities -wells & facilities  Improve efficiency and adopt new technologies 17

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

Boost Oil & Gas Supply Secure Local Demand of Natural Gas & Petroleum Products

EGYPT as an ENERGY HUB

Petroleum Sector Expansion of Gas Connection to Households

Structural Reform

Petrochemical Industry 18

2nd Policy Measure: Secure Local Demand of Natural Gas & Petroleum Products

Ministry of Petroleum and Mineral Resources

Manage Demand and Gas Imports to satisfy local Needs.

Upgrading Refining Industry

‫إلســــــــــــــــ ـباشــــــــــ ــبــــــــــــ ــ ـةـاـــــ ــــاـات ــــــــــ ــ ـ ــ‬ .‫ال ــبـلاا‬ Development of Transportation, Distribution and Storage Infrastructure.

Diversification of oil and gas Sources of Supply. 19

2nd Policy Measure: Secure Local Demand 1- Manage Demand and Gas Imports to satisfy local Needs.

Ministry of Petroleum and Mineral Resources

Monthly Consumption from the Petroleum Products & NG Import 2.1

30% 70% Local Production 4.7

Monthly Average Consumption )6.8 Million Tons( 20

UPGRADING REFINERY INDUSTRY

Ministry of Petroleum and Mineral Resources

Increasing refining capacity and maximizing economic returns to meet local market needs

 Expansions increasing refining capacity to 41 million tons, 10% increase.  9 Projects (ongoing, Planned) with investments $ 8.1 billion for the next 4 years.  Adding new units, to convert fuel oil to higher-value middle distillates.  Optimization of the excess refining capacities.  Existing and new projects will satisfy 90% of the current local demand. 21

2nd Policy Measure: Secure Local Demand 3- Development of Transportation, Distribution and Storage Infrastructure.

Ministry of Petroleum and Mineral Resources

Implementing and developing pipelines for transporting crude oil, petroleum products and gas, increasing storage capacities and developing ports to cope with growth in domestic demand with investments of LE 19.4 billion, as follows:

• Pipelines implemented during the previous two years : Investments cost

Length of lines

990 million EGP

346 Km

Crude oil and petroleum products

2 billion EGP

300 Km

Natural gas

• Pipelines in progress(being implemented) : Investments cost

Length of lines

1.9 billion EGP

527 Km

Crude oil and petroleum products

3.7 billion EGP

310 Km

Natural gas

• Storage tanks for crude and petroleum products and development of ports under implementation: Investments cost: 10.8 billionEGP *(according to the current exchange rates)

22

2nd Policy Measure: Secure Local Demand of Petroleum Products

4- Diversification of oil and gas Sources of Supply. .

Natural Gas & Ministry of Petroleum and Mineral Resources

Shares in Production Projects outside Egypt. 1- Sector 9 in Iraq: • EGPC participates in 10% in Sector 9 north of Basra in Iraq and the current production average is about 18 thousand barrels / day.

2 - Siba field in Iraq: • EGPC is participating in 15% of the Siba field south-east of Basra in Iraq and production is expected to start mid-2017.

23

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

1 6

Boost Oil & Gas Supply

2 Secure Local Demand of

Natural Gas & Petroleum Products

EGYPT as an ENERGY HUB

Petroleum Sector

5

3

Expansion of Gas Connection to Households

Structural Reform

4

Petrochemical Industry 24

3rd Policy Measure: Expansion of Gas connection to Households

Ministry of Petroleum and Mineral Resources

Total number of households until end of March 2017 was approximately 8 million

Thousand Residential unit

1200 1000 800 600

20 10 years 2.8 years Million 1 million units units

3 years 2.1 million units

3 years 1.7 million units

666 555

576

588

2010/2011

2011/2012

2012/2013

710

715

715

2014/2015

2015/2016

2016/2017

400 275

200 50

0 1980-1999

2000-2009

Average Rate

2013/2014

Annual Rate

1.

Total number of connected households till now are around 7.9 million.

2.

Connecting households for the first time in Marsa Matrouh governorate.

Planned

30

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

1 6

Enhance Oil & Gas Production& Reserves

2 EGYPT as an ENERGY HUB

Secure Egypt’s needs from Natural Gas & Petroleum Products

Petroleum Sector

5

3 Boost Natural Gas

Structural Reform

Residential & Industrial Supply

4 Petrochemical Complex 26

4th Policy Measure: Petrochemical Industry MAJOR PETROCHEMICAL COMPLEXES

MOPCO EXPANSION

Total Investment : $ 1.96 billion. Total Annual Production: 2 million tons.

Ministry of Petroleum and Mineral Resources

ETHYDCO

Total Investment : $1.9 billion. Total Annual Production: 480 000 tons. 27

Sector Sustainability Through the Modernization Project Ministry of Petroleum and Mineral Resources

Sector Strategy 2nd

Policy

Modernization Project

Measure:

Secure Local Demand of Natural Gas & Petroleum Products

Program 4: Downstream Performance & Energy Efficiency • Enhance performance through securing

3rd Policy Measure :

efficient

Expansion of Gas Connection to Households

Performance & revenues

4th

Policy

Measure

mass

balancing

to

maximize

• Improve Energy Efficiency for the whole :

value chain.

Petrochemical Development

28

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

1 6

Boost Oil & Gas Supply

2 EGYPT as an ENERGY HUB

Secure Local Demand of Natural Gas & Petroleum Products

Petroleum Sector

5

3

Expansion of Gas Connection to Households

Structural Reform

4

Petrochemical Industry 29

5th Policy Measure: Structural Reform

SECTOR GOVERNANCE

Ministry of Petroleum and Mineral Resources

The Egyptian Government has approved a new Gas Law. 

The new Gas Law, paves the way for a substantial reform of the gas sector.



The law mandates the creation of a new independent gas regulator.



Offering an opportunity to the private sector to enter and compete in wholesale downstream market segments, the existing shadow regulator finalized the gas transmission codes, gas transmission tariff, which will be published soon.

30

5th Policy Measure: Structural Reform Sector Sustainability Through the Modernization Project

Ministry of Petroleum and Mineral Resources

Sustainability through the modernization project Second program

Restructuring

Third program

People agenda

• to create a well-governed sector to help increase national wealth and achieve sustainable development.

• Maximizing the benefit of the human element in the sector, which acts as a fundamental pillar of development.

• Demarcating Sector roles between policy-making, operations and regulations.

• Working on development and raising the efficiency of employees and optimizing the available competencies.

• Enhance sector work flow to create an attractive investment environment.

• Developing modern human resource management systems and efficiencybased promotions. 31

Oil & Gas Sector Strategic policy Measures Ministry of Petroleum and Mineral Resources

1 6

Boost Oil & Gas Supply

2 Secure Local Demand of

Natural Gas & Petroleum Products

EGYPT as an ENERGY HUB

Petroleum Sector

5

3

Expansion of Gas Connection to Households

Structural Reform

4

Petrochemical Industry 32

6th Policy Measure: EGYPT AS AN ENERGY HUB Ministry of Petroleum and Mineral Resources

• Suez Canal & SUMED • Oil & Gas infrastructure (LNG Facilities, Pipelines)

• In the middle of resource-rich countries & major energy consumers • International Maritime Trade • Suez and Alexandria World class refining centers and linking the Delta Region to Upper Egypt

Egypt an Energy Hub International Trade Line SUMED Pipeline Arab Gas Pipeline LNG Facilities

Formation of a Governmental Committee from different entitles/ ministries in November 2016 33

THANK YOU

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Oil & Gas Modernization Project. - AmCham Egypt Inc

Ministry of Petroleum and Mineral Resources Z SPEECH BY: H.E ENG. TAREK EL MOLLA Minister Of Petroleum And Mineral Resources May, 2017 Content M...

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