Oil & Gas Modernization Project. - Flanders Investment & Trade

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Ministry of Petroleum and Mineral Resources

Z

June, 2017

Content

Ministry of Petroleum and Mineral Resources

Oil & Gas Sector from 2011 till 2017. Oil & Gas Modernization Project.  Highlights on Egypt as Oil and Gas Hub.

 Potential cooperation with EU.

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. Accumulation of international partners arrears until reached 6.3 billion $. Decreased investments in exploration. Natural decline of Oil and Gas production. 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.

Although Several Success achieved through the last several years, yet still we face several challenges …… Require a comprehensive reform, 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

People

Hub Strategy

6

7

Decision Support and data flow

REALIZATION OFFICE Action plan for 2 years till Dec. 2018 with identified Millstones and Quick wins

Implementation Structure Ministry of Petroleum and Mineral Resources

Steering committee

Realization office

Program teams

▪ Decides on priorities, help support and allocate resources ▪ Approve key decisions related to the various programs ▪ Approve policies and plans of the modernization ▪ Acts as main interface and leads inter-ministerial discussions

Integrator & Implementation Engine ▪ End to End ownership of programs (Detailed next)

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

Program One Investment Attraction

Second program

Restructuring

10

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

Third program

Human Capital Development

Fourth Program Downstream Performance & Energy Efficiency

11

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

Program Five Upstream Performance

12

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

People

Hub Strategy

6

7

Decision Support and data flow

REALIZATION OFFICE

Where We Are Ministry of Petroleum and Mineral Resources

Single Buyer Model (SBM) • Natural Monopoly • Exclusive Access Right to the public supplier ( EGAS/EGPC) –No access for oil & gas markets • Discriminatory end-user prices independently determined (Administrate prices). Financial burdens on government • Subsidy for gas & oil products : ongoing plan for subsidy reform. • Out standings for upstream partners: ongoing recovery plan. Lack of fuel diversity in primary energy mix • Full dependency on fossil fuels (90+%). • Future plans for introduction of renewables & nuclear energy. -

Short Term gas supply deficiency expected to be backfilled by future new discoveries. Available liquefaction capacity & potential regasification capacity. Proven steps in regulating the gas market. 6/4/2017

14

Egypt’s opportunities as a potential hub Ministry of Petroleum and Mineral Resources

Ser.

International practice for hub development

Presence in Egypt

1

Strategic Geographical Position

✓✓✓

2

High demand / mature industry

✓✓✓

3

Multiple buyers and sellers



Infrastructure (storage, refineries, pipelines, ports) Open third-party access to infrastructure

✓✓

6

Export points

✓✓

7

Import points

✓✓

8

Trading

X

9

Low level of political involvement in energy sector

X

4

5

X

International Trade Line SUMED Pipeline Arab Gas Pipeline LNG Facilities

Regional Integration Opportunities Ministry of Petroleum and Mineral Resources

Requested Immediate Actions Ministry of Petroleum and Mineral Resources

 Preparatory work for regulation of liquid products.  Underground Gas Storage for balancing the gas transmission Network  Verify need of LNG Storage for balancing the gas transmission Network ( onshore , offshore)  Price & Subsidy reform.

 Defining the eligibility criteria inline with phases.

market opening

Potential Cooperation with EU Ministry of Petroleum and Mineral Resources

Investment Opportunities

 

Attract European Investments for both Upstream and Downstream Oil & Gas activities. To assist in the development of the future pipeline from Cyprus /Israel EEZ to Egyptian LNG facilities as a project of common interest.

Technical Assistance



Sharing the European Experience in Energy Efficiency, starting from Refineries, Upstream activities until the final user.



Technical Assistance for Upgrading and Expanding the Oil & Gas Infrastructure in Egypt.



Incentivize reforms in economic & regulatory framework for energy matters



Institutional support in creating the new market and developing an oil & gas hub



Technical support in specific areas (e.g. logistics, pricing indexation, ...)

THANK YOU

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Oil & Gas Modernization Project. - Flanders Investment & Trade

Ministry of Petroleum and Mineral Resources Z June, 2017 Content Ministry of Petroleum and Mineral Resources Oil & Gas Sector from 2011 till 20...

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