EDITOR’S LETTER War without Winners The nature of war has changed since the end of the Cold War. The traditional characters do not exist anymore. The results changed as well. All parties are losing something and no one is winning everything. The current RussianUkrainian conflict is deeply affecting the global energy map. It is forcing many countries to reshape their energy security strategies. Therefore, EOG’s June issue discusses the impact of the war on the global, regional and local oil and gas markets. The overview section represents a timeline for the oil and gas decisions and actions that have been taken since the start of the invasion on Ukraine in February 2022. While, the Research and Analysis section tracks the impact of the war on the prices, production, inventories, and exports, both locally and globally. While our politics section discusses how the war changes the energy transition plans all over the world. The energy economics section sheds
EGYPT’S LEADING OIL & GAS MONTHLY PUBLICATION
light on the Russian attempts to strengthen the rouble, through forcing the European countries to pay for their natural gas imports using the Russian currency. EOG’s June issue also includes a full coverage for the third edition of the Egyptian Petroleum Energy Efficiency Conference and Exhibition (EPEEC), which kicked off to a vibrant start in the presence of the industry’s most important notables on both the corporate and government levels. The conference was held on 17-18 May at Triumph hotel - 5th settlement. Wishing you an informative read!
General Manager AYMAN RADY Research & Analysis Manager MAHINAZ EL BAZ Managing Editor IHAB SHAARAWY Senior Editors RANA AL KADY NADER RAMADAN Senior Writer SARAH SAMIR Staff Writers FATMA AHMED ISRAA NOUR ELDEEN Senior Research Analyst REHAM GAMAL
MAHINAZ EL BAZ Editor-In-Chief Research & Analysis Manager
Research Analysts YOUSTINA MOUNIR JOLLY MONSEF MARIAM AHMED Statistician NADA ABBAS Chief Reporter WAEL EL-SERAG Business Development Manager TAMARA EWISS
PROUDLY THE OFFICIAL PUBLICATION
Creative Art Director OMAR GHAZAL Art Director MAGED KHATTAB Graphic Designers MERNA WILLAIM KHOLOUD OMAR
CONTENTS
3D Visualizer TAMER GAMAL Photographer HADY NABIL
Russian - Ukrainian War Turns the Oil Markets Scales
Financial Consultant. ABDALLAH ELGOHARY
14
THE RUSSIA-UKRAINE WAR’S IMPACT ON THE OIL & GAS MARKET
16
RUSSIA-UKRAINE CONFLICT BRINGS LNG TO SPOTLIGHT
18
THE ROUBLE GAS ULTIMATUM: A GAME OF ECONOMIC CHESS
20
DRONES EMPOWERING MORE EFFICIENT OIL, GAS INDUSTRY
22
ECONOMIC DOWNTURN CASTS SHADOW ON GLOBAL ENERGY INDUSTRY’S FUTURE
23
EPEEC 2022: UNITING THE SECTOR’S BEST MINDS UNDER ONE ROOF
Administration TAGHREED MOUNIR
Tower No.12 - Bavaria Compound, Ring Round in front of sama Tower - Egypt
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UNDER THE PATRONAGE OF H.E. TAREK EL MOLLA MINISTER OF PETROLEUM & MINERAL RESOURCES - ARAB REPUBLIC OF EGYPT
PART OF THE EGYPTIAN OIL AND GAS SECTOR MODERNIZ ATION PROGR AM
8TH EGYPT OIL & GAS CONVENTION October 2022 Featuring case studies from E&Ps, JVs, and technology service providers this year’s Convention will cover:
TECHNICAL WORKSHOP SESSIONS ABSTRACT CONTENT: KEY TRENDS IN DECARBONIZATION TECHNOLOGIES: • Blue Hydrogen and Injection of CO2 for tertiary recovery • Reducing fugitive emissions • Improvement of maintenance routines to reduce intermittent flaring and vapor-recovery units to reduce methane leaks • Proven technologies and practices in reducing CO2 emissions
• Description of the proposed paper summarizing the scope of business upon which the paper will be based.
ABSTRACT CONDITIONS: EFFICIENCY IN OPERATIONS • What is the impact of digitalization for efficiency in the operations? • How can Oil & Gas companies reduce energy consumption • Increased use in composite line pipe
• Must be technically factual and includes lessons learned • Should avoid commercialization • Must be written in English • Should be submitted in electronic format and be maximum of 500 words
ASSET INTEGRITY CHALLENGES & OPPORTUNITIES • Importance of Asset Integrity (safety and environmental impact) • Well Integrity Management System
IMPROVING PRODUCTION • Unlocking unseen development potential in a brownfield area • How to estimate the production rate of ESP wells from major electrical parameters • The most effective techniques for Tertiary Recovery, case studies
ABSTRACTS DEADLINES • July 3, 2022 - Abstract Submission • July 17, 2022 - Notification of Acceptance • August 18, 2022 - Presentation Submission
PLEASE SEND YOUR ABSTRACTS TO: abstracts@egyptoil-gas.com
ORGANIZED BY
TECHNICALLY PREPARED BY
OFFICIAL RESEARCH PARTNER
JUNE 2022 - ISSUE 186 | 3
EGYPT UPDATES
TOP 5 EGYPT’S PETROLEUM SUBSIDIES STAND AT EGP 28B IN 2022/23 BUDGET
are en route to Argentina’s Escobar port after loading LNG from the Egyptian ports of Damietta and Idku.
The state’s draft general budget for fiscal year (FY) 2022/23 allocated an estimated EGP 28.094 billion for petroleum subsidies, 52.6% more than petroleum subsidies in the 2021/22 budget which amounted to EGP 18.411 billion.
According to a Reuters report, Argentina is targeting an LNG price of $30-32 per million British thermal units (MBtu) in a new tender to buy 12 cargoes as they race to secure winter gas supplies.
This difference of EGP 9.683 billion was a result of soaring Brent prices and fluctuations in the value of the dollar against the Egyptian pound.
EL MOLLA: NO INTENTION TO INCREASE GAS PRICE FOR INDUSTRIAL SECTOR
The general budget further allocated EGP 3.5 billion in its budget for 2022/23 to deliver natural gas to the nation’s households. This is the same amount allocated in the 2021/22 budget. This comes as the country plans to connect 1.2 million households to the national gas grid in 2022/23, which will eventually decrease the amounts allocated for subsiding butane. Moreover, estimated vehicle conversion subsidies are allocated at EGP 494 million to continue converting 15,500 vehicles to be fueled with natural gas instead of diesel and benzene.
ARGENTINA TO RECEIVE LNG CARGOES FROM EGYPT Argentina is set to receive two rare cargoes of LNG from Egypt, the first since 2013, a reflection of how a tight global market is pushing shifts in supply routes. According to Refinitiv Eikon trade data, the two vessels, the BW Brussels and the Stena Clear Sky
There is no intention to move the prices of natural gas for the local industry at present, in light of the current international changes, Minister of Petroleum and Mineral Resources, Tarek El Molla, said. The minister’s comments came in an interview with Al-Sharq, on the sidelines of the “Green Trade Mission Conference” organized by the American Chamber of Commerce in Cairo. In October 2021, the Egyptian government raised the prices of natural gas for iron and steel plants, as well as factories manufacturing cement, petrochemicals and fertilizers by $1.25 to become $5.75 per million thermal units. It also increased by $0.25 for other industries to become $4.75.
EGYPT ALLOCATES EGP 3.5B TO DELIVER NATURAL GAS IN FY 2022/23 BUDGET The Egyptian Finance Ministry announced that the country has allocated EGP3.5 billion in its budget for fiscal year (FY) 2022/23 to deliver natural gas to the nation’s households.
A BLAST
FROM THE PAST In June 2020, a commercial gold discovery was made in the Iqat area in the eastern desert of Egypt, with a reserve estimated at the time at more than one million ounces of gold at a minimum and an extraction rate of 95%, one of the highest extraction rates. Total investments over the next ten years on the project were estimated at more than one billion dollars at the time. This discovery took place in the concession area of the Shalateen Mineral Resources Company, where the Wealth and Resources Mining Company was responsible for the exploration services work in the area according to its contract with the Shalateen Company. This commercial gold discovery was the result of a purely Egyptian investment in the field of gold exploration and exploitation through the Egyptian Shalateen Company. In November 2021, Minister of Petroleum and Mineral Resources Tarek El Molla announced that in light of the high prospects for the extraction rate of gold, which reaches a concentration of 1.5 grams per ton, an ambitious plan was launched to start early production from commercial gold detection in the Iqat area in the eastern desert of Egypt during the coming period.
4 | EGYPT OIL & GAS NEWSPAPER
According to the ministry’s press release, Egypt targets total revenues in the budget worth EGP 1.52 trillion while it targets expenditures worth EGP 2.071 trillion. Also, the state targets an initial surplus of EGP 132 billion and to decrease the total deficit in the gross domestic product (GDP) to 6.1% compared to 12.5% at the end of June 2016. Besides that, Egypt aims to decrease the general debt in the GDP to 84% in addition to allocating EGP 376 billion for general investments with annual growth of 9.6%.
EGYPT TO IMPLEMENT PROJECTS WORTH EGP 6B TO RAISE NATURAL GAS GRID EFFICIENCY The Minister of Petroleum and Mineral Resources Tarek El Molla announced that Egypt is currently implementing several projects in order to raise the natural gas grid efficiency with investments exceeding EGP 6 billion. One of these projects is the El-Tina/MitNema gas pipeline, which costs EGP 4.5 billion in investments, which will take East Mediterranean’s fields gas to Cairo and South Valley at suitable pressure and amounts. Additionally, the Dahshour pressure station expansion project will add two new units using the latest technologies to increase the capacity from 27.5 million cubic meters (mmcm) to 46 million mmcm. The project costs EGP 3 billion.
NUMBER
OF THE MONTH Two New Warehouses
Crude Oil Capacity
Added to MIDOR Refinery
400,000 bbl
The Minister of Petroleum and Mineral Resources, Tarek El Molla, announced the launch of the second phase of the MIDOR expansion project. The phase includes four new warehouses, two of which are for intermediate petroleum products, with a capacity of 290,000 bbl. In addition to establishing a new nitrogen production unit with double capacity, there is a power distribution station with a capacity of 49 megawatts, and natural gas pressure reducing station with a capacity of 1.4 mmcm/d. Thus, this expansion project will boost the refinery's current production capacity by 60% to reach 160,000 bbl/d with an investment cost of $2.4 billion.
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JUNE 2022 - ISSUE 186 | 5
EGYPT UPDATES
PRODUCTION
MIDSTREAM
EGYPT TAKES MEASURES TO RAMP UP PRODUCTION AMID GLOBAL OIL PRICE HIKES In the nation’s effort to reduce the economic fallout of skyrocketing oil prices, Minister of Petroleum and Mineral Resources Tarek El Molla stressed the importance of increasing crude oil and natural gas production in a meeting to follow up on the sector’s activities in this regard.
Qalaa Holdings announced strong revenue growth of 27% year-on-year (YoY), recording EGP 45.8 billion in 2021, through the strong performance of its subsidiaries, especially the Egyptian Refining Company (ERC) and TAQA Arabia.
His latest meeting discussed the implementation of plans and efforts to increase production, intensify drilling activities and field development, and expedite placing them on the output map. During the meeting, El Molla reviewed measures taken by the petroleum sector to expedite field projects and place the country’s hydrocarbon assets on the production map. Pointing to the availability of the required infrastructure and enhanced production facilities, the Minister urged that plans for early production from fields in a number of regions should be promptly executed to increase crude oil production.
The group further reported a 178% year-on-year increase in recurring EBITDA to EGP 4.1 billion.
El Molla stressed the importance of full cooperation with foreign partners to speed up the progress of developing fields as well as close coordination with the industry’s major companies in the research and exploration field to face the latest global challenges.
AGREEMENTS
PETROMAINT SIGNS COOPERATION MOU WITH SCA FOR MARINE ENGINEERING, CONSTRUCTION A memorandum of understanding (MoU) was signed for joint cooperation between the Alexandria Petroleum Maintenance Company (Petromaint) and the Port Said Company for Marine Engineering and Construction, which is affiliated to the Suez Canal Authority (SCA).
Minister of Petroleum and Mineral Resources Tarek El Molla, and Governor of South Sinai Khaled Fouda signed a cooperation protocol to convert cars in Sharm El-Sheikh to work with natural gas as fuel, in the context of supporting the city’s hosting of the UN Climate Change Conference 2022 (COP 27) next November.
6 | EGYPT OIL & GAS NEWSPAPER
TAQA Arabia’s revenues witnessed a 15% growth to EGP 9.1 billion, which reflects the improved market conditions. This comes with the increase of TAQA Power distribution volumes in 2021, CNG stations expansions, and soaring TAQA Gas and fuel and lubes revenues at TAQA Marketing.
MIDOR LAUNCHES THE SECOND PHASE OF REFINERY EXPANSION PROJECT
Also, this phase includes a new nitrogen production unit, an electricity distribution station with a capacity of 49 megawatts in addition to a station for declining natural gas depression at a capacity of 1.4 million cubic meters per day (mmcm/d). The expansion project costs $2.4 billion to raise the productivity by 60% to reach 160,000 barrels per day (bbl/d), El Molla said.
EL MOLLA INAUGURATES TRIAL OPERATIONS OF DEVELOPMENTS IN EPC’S ALEXANDRIA FACTORIES
cars to be converted and provide all aspects of cooperation through facilitating the transfer of equipment and labor necessary for the car conversion. Gastec and Cargas will carry out the necessary technical inspection of cars and determine their conversion systems, and the conversion will take place at the Gastec center in Ruwaisat, as well as in the appropriate places that the governorate will provide.
ECHEM, REGA GREEN ENERGY SIGN ALGAE OIL AGREEMENT T h e E g y pt i a n P et ro c h e m i c a l H o l d i n g Company (ECHEM) and the UAE’s Rega Green Energy Company signed a memorandum of understanding (MoU) to produce algae oil, which is used in the production of bio-jet fuel and green naphtha for use in the production of environmentally friendly petrochemical products.
Apart from ERC’s revenues, the group grew by 20% YoY to reach EGP 17.3 billion in 2021. This growth was primarily driven by TAQA Arabia and National Printing’s improved performances.
The new expansions will include four new warehouses with a total capacity of 400,000 barrels of crude and 290,000 barrels of petroleum products.
EL MOLLA, FOUDA SIGN CAR FUEL CONVERSION PROTOCOL IN PREPARATION FOR COP 27 SHARM EL-SHEIKH
Meanwhile, Fouda indicated that within the framework of the protocol, the Egyptian Natural Gas Holding Company (EGAS), through its two companies, Gastec and Cargas, is converting cars in the city to work with both natural gas and gasoline. He added that the governorate will provide the companies with the data of the
Qalaa Holdings’ consolidated performance was greatly affected by ERC’s refining margins’ improvement as well as the turnaround in market conditions and commodity prices’ global surge. ERC alone contributed 62% to Qalaa’s total revenues.
Minister of Petroleum and Mineral Resources Tarek El Molla announced the launch of the second phase of the MIDOR refinery expansion project during an inspection tour of the facility.
The MoU aims to open new opportunities for cooperation between the two sides in the petroleum tanks industry and the implementation of all marine works, in addition to strengthening collaboration in studying marketing opportunities for national projects in the petroleum and metal construction sectors.
The oil and gas sector has completed the establishment of five natural gas refueling stations, the minister pointed out, adding that three other gas refueling stations are being implemented to be ready to supply cars and buses during the conference period.
QALAA HOLDINGS REVENUES GROW BY 27% YOY DRIVEN BY ENERGY SUBSIDIARIES
The MoU was signed by Saad Helal, ECHEM’s Chairman, and Ramy Bassiouni, Rega Green Energy Company’s President. The signing took place on the sidelines of the Energy Efficiency Conference and Exhibition in the Petroleum Sector (EPEEC 2022), in the presence of the Minister of Petroleum and Mineral Resources, Tarek El Molla.
Minister of Petroleum and Mineral Resources Tarek El Molla inaugurated the trial operations of the comprehensive development projects in the Egyptian Petrochemicals Company (EPC) factories in Alexandria. The new developments included the chlorine production plant which was developed at an investment cost of about EGP 500 million. The Minister of Petroleum also laid the foundation stone for the project to increase the production capacity of the caustic soda concentration unit in the company, which increases the production capacity of caustic soda by 150% with an estimated cost of EGP 250 million. The minister further witnessed the signing of a contract between EPC and Petrojet to design, supply, and operate the new unit in order to maintain the continuity of operation with full production capacity and provision of storage capacity. El Molla also inaugurated the trial operation of the new thermal cracking unit for the vinyl chloride monomer production plant and inspected the PVC polyvinyl chloride production plant.
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DOWNSTREAM
EGYPT EXTENDS NATIONAL GAS GRID BY 7,224 KM IN 9 MONTHS As a part of the Hayah Karima (‘Decent Life’) presidential initiative, Egypt has worked at lightning speed to successfully connect 86 villages to the natural gas grid. Additionally, the main gas networks are currently being extended to serve about 476,000 customers in 180 villages. Moreover, about 7,224 km of new networks were extended during the past 9 months of the current fiscal year (FY) 2021/22. There are also 1,185 villages included in the governmental sewage plan, to which gas networks will be extended after the full completion of the sewage services works.
These updates came during the meeting attended by Minister of Petroleum and Mineral Resources Tarek El Molla to discuss the executive situation of the national project to deliver natural gas to households. The meeting reviewed what has been achieved in the project in terms of delivery rates and the Hayah Karima initiative and the installation of prepaid gas meters, which have exceeded one million meters so far.
NATURAL GAS SALES AVERAGE JUMPS TO 87 MILLION CUBIC METERS IN Q1 2022 During a regular meeting to discuss the national car fuel conversion program, Minister Tarek El Molla stated that the number of cars running on natural gas has reached 440,000 and praised the project for bringing many economic and environmental benefits to all Egyptians. He elaborated that this national project program is within the framework of the presidential initiative to increase the number of converted cars and gas supply stations such that Egyptian people can benefit from their natural resources.
This came in light of the developments that took place in the availability of gas stations which increased to 852 stations at present, in addition to 148 other stations that will soon enter into service. It is worth noting that natural gas sales averaged 87 million cubic meters in the first quarter of 2022, compared to an average of 73 million cubic meters in 2021. In addition, it is expected that 82,000 new cars will be converted to work with natural gas as fuel during the current fiscal year. This is an increase of 48% over last year, and the conversion centers have also been increased to reach 120 centers so far.
FOUR NEW VILLAGES CONNECTED TO NATURAL GAS GRID Minister of Petroleum and Mineral Resources Tarek El Molla praised the landmark success of the presidential initiative Haya Karima (‘Decent Life’) which has recently witnessed the connection of four new villages to the national natural gas grid.
Accordingly, the number of Haya Karima villages to which gas has been pumped so far reached 90 villages, with a total number of units converted to use natural gas instead of butane cylinders, amounting to 300,000 households, of which around 1,300 households were recently converted.
The new villages are Tahanoub, Nazlat Arab Juhayna, and Arab Al-Sawalha in Qalyubia Governorate, as well as Sabk in Menoufia Governorate.
The projects to deliver natural gas to the villages of the initiative are continuing to achieve its goals of providing this civilized service to the people in a total of 1,451 villages as a first stage, El Molla noted.
JUNE 2022 - ISSUE 186 | 7
CORPORATE NEWS
SDX SDX INITIATES SPUDDING OF THE FOURTH WELL IN MESEDA FIELD SDX Energy announced that it has started spudding MSD-24 infill development well located in the Meseda field. This well is the fourth in its development drilling campaign comprising 13 wells on the Meseda
and Rabul oil fields in West Gharib concession in the Egyptian Eastern Desert. When it is on-line, it is expected to produce around 300 barrels per day (bbl/d)
SDX said that MSD-24 drilling is targeting the ASL formation reservoir and it is expected to take around six weeks to complete and tie-in to the existing infrastructure. It added that the drilling and tie-in works could cost $0.9 – $1 million.
SHELL SHELL ACQUIRES EGYPT’S NORTHEAST AMREYA CONCESSION AREA BG Ltd., wholly owned by Shell plc, has signed an agreement with ExxonMobil Egypt (Upstream) Ltd. under which Shell will fully acquire and manage
the Northeast Amriya Offshore Concession in the Nile Delta in the Mediterranean Sea, known as Block 3, which is managed by ExxonMobil.
With the completion of the transfer of ownership, the management of the concession area will be transferred to Shell.
APEX APEX INTERNATIONAL TESTS EGYPT’S FAJR-8 OIL WELL AT 2,440 BBL/D Apex International Energy (Apex) announced testing the Fajr-8 development well, located in Egypt’s Western Desert in the South East Meleiha (SEM), at a daily rate of 2,440 barrels of oil and negligible water.
The Fajr-8 well encountered 98 feet of high-quality oil pay in sandstone of the Bahariya Formation. The well was connected to production facilities and opened for the first production on May 8, less than four days from rig release.
The new Fajr-8 well is the fifth producing well in the Fajr field, located in SEM, which is operated by Farah Petroleum Company (PetroFarah), the joint venture operating company which was established by Apex and the Egyptian General Petroleum Company (EGPC) in April 2021.
EXXONMOBIL EXXONMOBIL ACHIEVES THREE NEW DISCOVERIES IN GUYANA ExxonMobil has made three additional discoveries offshore Guyana, bringing its total recoverable resource estimate for the Stabroek Block to roughly 11 billion oil-equivalent barrels. Located southeast of the Liza and Payara developments, these three discoveries have
brought the total number of ExxonMobil’s discoveries in Guyana to five in 2022. The Barreleye-1 well was drilled in 3,840 feet (1,170 meters) of water and encountered roughly 230 feet (70 meters) of hydrocarbon-bearing sandstone. Patwa-1 was drilled in 6,315 feet (1,925
meters) of water and encountered 108 feet (33 meters) of hydrocarbon-bearing sandstone. The Lukanani-1 well was sunk in a water depth of 4,068 feet and encountered 115 feet (35 meters) of hydrocarbon-bearing sandstone (1,240 meters). Barreleye-1 and Lukanani-1 are still operational.
BAKER HUGHES EL MOLLA CONFERS BOOSTING COOPERATION WITH BAKER HUGHES IN LOW-CARBON PROJECTS, ENERGY EFFICIENCY Minister of Petroleum and Mineral Resources Tarek El Molla has met with a delegation from Baker Hughes to discuss how to boost cooperation especially in establishing low-carbon projects and enhancing energy efficiency utilization.
The delegation comprised Tameer Nasser, the Director and General Manager of Baker Hughes in Egypt & Sudan and Matt Amrstrong, the Vice President, Global Government Affairs at Baker Hughes
During the meeting, the parties also reviewed the progress of implementing the two agreements they signed in EGYPS 2022. One of them was for cooperation in flare gas recovery and carbon emissions reduction, while the other was for cooperation in building projects aiming to reduce emissions at oil and gas sites.
TAQA TAQA ARABIA ACQUIRES ROSETTA ENERGY LNG ARM TAQA Arabia Group, the leading power distribution and integrated services company in Egypt, announced its acquisition of the liquefied natural gas (LNG) arm of Rosetta Energy, to expand its business in Egypt, Africa, and the Middle East.
Rosetta’s business scope includes building and operating small and medium-sized gas liquefaction facilities, developing innovative solutions for marine and land transportation, and deploying regasification units on land and at sea.
Rosetta Energy is an energy developer and operator and one of the companies specialized in developing LNG projects to supply industrial customers as well as commercial and residential units outside the scope of the national gas network with clean energy at competitive prices.
NEPTUNE
Through this acquisition, Rosetta Energy will be the operating arm of TAQA Arabia to develop various projects.
8 | EGYPT OIL & GAS NEWSPAPER
Neptune Energy Makes New Discovery at Hamlet Exploration Wells Neptune Energy announced that it has discovered oil and gas at the Hamlet exploration wells (PL153) in the Norwegian sector of the North Sea. Estimates of the discovered volumes in place at Hamlet indicate that it is in the range of 5-11 million
standard cubic meters (mmscm) or 30-70 million barrels of oil equivalent (mmboe). The company said that it is resuming work to identify the potential recoverable resources, while Neptune’s preliminary estimate is 8-24 mmboe. Hamlet is located in the Gjøa area, where Neptune already operates two fields. The Wintershall Deaoperated fields Vega and Nova which are also tied back to the Gjøa platform.
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TC ENERGY TC ENERGY TO BUILD A LOW-CARBON HYDROGEN PRODUCTION HUB TC Energy Corporation is reviewing its concept for a hydrogen production hub on 140 acres in Crossfield, Alberta, where the company runs a
natural gas storage facility, with the help and input of their partner Nikola Corporation.
During the first-ever Canadian Hydrogen Convention in Edmonton, Alberta, the plan will be highlighted. TC Energy anticipates making a final investment decision by the end of 2023.
TECHNIP ENERGIES TECHNIP ENERGIES EYES EGYPT’S GROWING GREEN ENERGY INDUSTRY Technip Energies has expressed interest in getting involved in Egypt’s ambitious green energy projects. This came during a meeting held by Minister of Petroleum and Mineral Resources Tarek El Molla and a delegation of officials from Technip Energies
International, headed by the company’s CEO Arnaud Pieton, which reviewed the efforts exerted by the oil and gas sector to activate initiatives aiming to execute green energy projects, reduce emissions and remove carbon.
The meeting was held to follow up on the executive position of the new petroleum refining and processing projects in Alexandria and Assiut, which the company is implementing as a general contractor with the participation of the Egyptian companies Enppi and Petrojet.
TOTALENERGIES TOTALENERGIES LAUNCHES WORLDWIDE DRONE-BASED EMISSIONS DETECTION CAMPAIGN As part of its commitment to identify, quantify and reduce methane emissions associated with its operations, TotalEnergies has launched a worldwide drone-based emissions detection and
quantification campaign across all its upstream Oil & Gas operated sites. The campaign is being implemented by using Airborne Ultralight Spectrometer For
Environmental Applications (AUSEA) technology developed by TotalEnergies, the French National Research Center for Scientific Research (CNRS) and University of Reims Champagne Ardenne.
ADNOC ADNOC TO BUILD NEW LNG PLANT TO EXPAND EXPORTS Abu Dhabi National Oil Co. (ADNOC) announced that it plans to build a new liquefied natural gas plant to raise its exports amid surging demand.
The plant will be built at Fujairah on the United Arab Emirates’ (UAE) coast outside the Arabian Gulf at production capacity of 9.6 million tons a year.
It will be operated using new technologies and “clean power” to reduce the carbon intensity of the LNG it produces.
PETROFAC PETROFAC AWARDED DECOMMISSIONING CONTRACT WITH TULLOW OIL, EXPANDS ITS ROLE IN AFRICA Having been selected to provide well decommissioning services by Tullow Oil in Mauritania, Petrofac, a global energy services provider, has successfully expanded its presence in Africa. Potentially worth more than $60 million, the scope of the contract will include project management,
engineering, planning, plugging and abandoning of seven subsea wells on Tullow Oil’s Banda and Tiof fields. Petrofac takes over from Maersk Decom, the group responsible for the subsea well decommissioning contracts, which has been prepared since 2020. By mutual agreement, Petrofac has been
awarded the contract, and it will take immediate responsibility for the project, which is slated to start in Q4 2022 and run through Q1 2023. A Petrofac team will manage the Island Innovator drilling unit and offshore support vessels, as well as provide all personnel, assets, and equipment for the project.
PETRONAS PETRONAS, PERTAMINA, PTT STRENGTHEN METHANE EMISSIONS COLLABORATION At the ASEAN Energy Sector Methane Roundtable 2022, PETRONAS and other key energy players are stepping up collaboration on methane emissions management in the region, leveraging collective capabilities, global best practices, and actionable
insights to help the region achieve its shared goal of a lower-carbon future. PETRONAS sponsored the second virtual Roundtable in the series on May 19, 2022, with support from Thailand’s PTT Public Company
Limited (PTT) and Indonesia’s PERTAMINA. The program is part of a larger push by energy businesses to promote awareness, elevate debate, and champion the region’s climate change agenda, notably on effective methane emissions control.
ENI ENI OPENS TWO ACCOUNTS AT GAZPROM BANK In response to deadlines for the payment of gas supplies, Eni announced the start of the process
of opening two K current accounts at Gazprom
Bank, on a precautionary basis (one in euros and the second in rubles).
JUNE 2022 - ISSUE 186 | 9
RESEARCH & ANALYSIS
The Russia-Ukraine War’s IMPACT ON THE OIL & GAS MARKET BY JOLLY MONSEF, MARIAM AHMED & YOUSTINA MOUNIR
In February 2022, Russia invaded Ukraine causing the largest food and fuel crisis since World War II. The war significantly affected most economic sectors nationally and worldwide, the most roiled one is the oil and gas sector as Russia is the world’s largest oil exporter to global markets.
GLOBAL IMPACT 1. CRUDE OIL & NATURAL GAS AVERAGE PRICES CRUDE OIL ($/bbl)
NATURAL GAS ($/mmbtu) 108.29
71.52
83.04
74.45
85.57
91.60
112.28 101.51
106.08
94.12
6.71 3.87
Dec
Jan
Feb
2021
Mar
Apr
2022
Dec
4.26
4.46
Jan
Feb
2021
4.98
Mar
Apr
2022
2. CRUDE OIL & NATURAL GAS INVENTORIES WITHDRAWAL CRUDE OIL* (mmbbl)
NATURAL GAS (bcf)
4
Jan
Jan
Feb
-32
Feb
Mar
-32
Mar
11
Apr
*US & OECD Commercial Inventory
10 | EGYPT OIL & GAS NEWSPAPER
2022
-994 -653 -156 190
Apr
2022
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3. PETROLEUM & NATURAL GAS SUPPLY & DEMAND PETROLEUM & OTHER LIQUIDS (mmbbl) Supply
US NATURAL GAS (bcf/d) Supply
Demand
115.86
100.78
98.10 98.22
97.41
Dec
Jan
2021
99.33
98.66
99.09
98.19
97.37
Feb
Mar
Apr
2022
108.57
116.85
96.12
102.47
Demand
107.45
89.80 79.85
95.77 87.66
77.07 Dec
Jan
Feb
2021
Mar
Apr
2022
4. OPEC+ ACTIONS VS. NOPEC BILL OPEC+ ACTIONS Meetings in 2022
NOPEC BILL US Congress Passes NOPEC bill to Curb OPEC’s Monopoly
Adjust Upward the Monthly Overall Production By:
Feb, 02 Mar, 02
A Foreign State Is Prohibited from Collective Actions:
0.4 mmbbl/ d (For March & April)
Mar, 31 May, 5
Decisions
0.432 mmbbl/ d (For May & June)
- Limits the production or distribution of oil or natural gas products - Sets or maintains the price of oil or natural gas products - Restrains trade of oil or natural gas products
5. RUSSIAN OIL & GAS SUPPLY, EXPORTS Russia is the main supplier of crude oil and natural gas globally. As a result of its war on Ukraine, the European Union, being one of the largest importers, proposed a ban on Russian crude oil exports and planned to shift its liquefied natural gas (LNG) imports
RUSSIAN CRUDE OIL AND CONDENSATE IN 2021
Production
Exports
RUSSIAN NATURAL GAS IN 2021
10.5 million bbl/d 14% of the world’s total supply
762 bcm
+ 45% of its production
+ 27% of its production
MAJOR IMPORTING DESTINATIONS FROM RUSSIA IN 2021
Natural Gas
Crude Oil and Condensate
74%
OECD Europe
49% 13%
Asia and Oceania
38% 13%
Rest of the World
13%
6. INTERNATIONAL OIL COMPANIES' OPERATORS IN RUSSIA After Russia invaded Ukraine, several major companies abandoned the Russian market.
Companies
Energy
Oil Field Services
bp Equinor Shell ExxonMobil TotalEnergies
Schlumberger Baker Hughes Halliburton
JUNE 2022 - ISSUE 186 | 11
RESEARCH & ANALYSIS
Impact on Egypt A. Economically The increase in oil prices is going to affect the Egyptian economy in several ways including the state's budget, fuel prices, commodities prices and inflation rate…. etc. Some of these effects were immediate while others may arise in the short term.
FY
1. OIL & GAS SECTOR WITHIN STATE'S BUDGET PETROLEUM SUBSIDIES (EGP billion)
2021/22
18.4
Growth Rate (YoY)
2022/23
52.6%
28.1
(Targeted) FY
AVERAGE BRENT CRUDE OIL PRICE
Brent price increased by $20 bbl in the FY 2022/23 budget compared to that of FY 2021/22. BRENT PRICE ($/bbl)
FY 2021/22
FY 2022/23
60
80
In FY 2022/23 budget, every $1 increase in the global oil price over the estimated price in Egypt’s budget will result in budget deficit by more than EGP 1 billion.
2. OIL TRADE BALANCE Thanks to refining & petrochemicals expansion projects, the oil trade balance managed to achieve a surplus in the beginning of 2022. Yet, after the Russian invasion and the global increase in oil prices, the oil imports bill could be elevated. OIL TRADE OVER (JAN-FEB) 2022 Exports ($ billion)
Crude Oil
OIL IMPORTS BILL Imports ($ billion)
0.591
Expected Oil Imports Bill in 2022
0.406
$ 12 billion
Value Petroleum Products
1.61 1.107
3. FUEL PRICES In line with the global increase in oil prices, the fuel Automatic Pricing Committee in Egypt has increased the fuel prices.
IN Q2 2022
Increased by
Product
The 5th Increase in Fuel Prices
EGP 0.25 per liter
Price (EGP/L)
Octane 80
Octane 92
Octane 95
7.50
8.75
9.75
Diesel Fuel
6.75 12 | EGYPT OIL & GAS NEWSPAPER
Industrial-use Mazut
EGP 4,600 per ton
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4. INFLATION & EXCHANGE RATE CORRECTION (%) The increase in fuel prices hit all sectors and boosted the prices of all commodities. Accordingly, the inflation rate in Egypt witnessed an upward trend. To reduce the negative effects on the Egyptian economy, the Central Bank of Egypt decided to raise interest rates by 1% in March and then by 2% in May. INFLATION RATE (%)
EXCHANGE RATE CORRECTION AGAINST THE DOLLAR 13.1 10.5
8.8
7.3
EGP 15.6 - 18.2
Average of 17%
2022 Jan
Feb
Mar
Apr
B. Natural Gas & LNG Market 1. SUEZ CANAL LNG CARRIERS TARIFFS
SCA canceled the 15% rebate granted to LNG carriers.
In mid-March 2022,
* This is a step taken by Egypt to significantly increase Suez Canal transit tolls in order to boost revenues.
EXPORTING MARKETS
2. NATURAL GAS & LNG EXPORTS
N
Egypt is one of the world’s leading natural gas and LNG exporters. In 2022, it was ranked 14th of global natural gas
- Egyptian LNG Export to Europe
producers, the fifth regionally, and the second in Africa,
- Around 10-15 %
producing 58.5 bcm. Egypt has the potential to be a regional energy center, especially for Europe. EXPORTING MARKETS
NEW AGREEMENT TO INCREASE EGYPTIAN LNG EXPORT TO EUROPE
EGYPT'S LNG EXPORTS
NATURAL GAS EXPORTS VOLUME IN 2021 EXPORTING MARKETS(1st time since 2011) To The Netherlands
- Egyptian LNG Export to Europe
- Around 10-15 %
- 4X Exports of 2020
6.8
Announced Date
April 2022
EGAS & Eni
Total - Egyptian LNG Export toCapacity Europe
- The Highest in 10 Years
Exporting Port
EGYPT'S LNG EXPORTS
mmt
Parties
NEW To AA
Targeted LNG Exports
3 bcm
174,000 m - Around 10-15 %
3
Damietta Plant
EGYPT'S LNG EXPORTS
LNG Tanker To Argentina (1st Time Since 2013)
To The Netherlands (1st time since 2011)
Gaslog Glasgow
To The Netherlands (1st time since 2011)
LNG EXPORTS VALUE & VOLUME EXPORTING MARKETS Value ($ million)
Total Capacity
Feb 2021 - Egyptian LNG Export Exporting Port to Europe
184
270.65%
LNG Tanker
NEW AGREEMENT TO INCREASE EGYPTIAN LNG EXPORT TO EUROPE
174,000 m3 Feb 2022 - Around 10-15 % Damietta Plant
682
Gaslog Glasgow
No. Of Cargos Total Capacity Announced Date
April 2022
Parties
Exporting Exporting Port Port EGAS & Eni LNGTanker Tanker LNG
EGYPT'S LNG EXPORTS
VolumeTo (mmt) The Netherlands (1st time since 2011)
2020 2021
*The Highest Since 2011
1.5 Total Capacity
To Argenti
2
174,000 m3 Targeted LNG Exports
Damietta and Damietta Plant Idku Plants 3 bcm
Gaslog Glasgow The BW Brussels & the Stena Clear Sky
To Argentina (1st Time Since 2013)
Growth Rate 174,000 m3
333%
No. Of Cargos
2
6.5* Exporting Port
Damietta Plant
Exporting Port
Damietta and Idku Plants
LNG Tanker
Gaslog Glasgow
LNG Tanker
The BW Brussels & the Stena Clear Sky
JUNE 2022 - ISSUE 186 | 13
OVERVIEW
RUSSIAN - UKRAINIAN WAR TURNS THE OIL MARKETS SCALES BY FATMA AHMED
R
ussia is a key player in the global energy markets and one of the top oil producers in the world. Since the beginning of its attack on Ukraine, the oil and gas markets have gone through a new wave of uncertainty and destabilization. The news of the war has sent the world’s inflation higher and took oil and gas prices to unprecedented levels since 2014. The attempts by European countries and the U.S. to punish Russia through sanctions including measures against the oil and gas sector have doubled the worries about supply and prices.
The Break Out Russia is the third-largest crude producer and the second natural gas producer in the world. According to the International Energy Agency (IEA), oil and gas represent 45% of Russia’s federal budget. As a result, once Russian President Vladimir Putin announced his military operation in Ukraine on February 24, 2022, oil prices jumped by around 5% to reach $102.48 per barrel during the first hours of the day. At the same, time U.S. West Texas Intermediate (WTI) crude future recorded $96.95 per barrel. Oil prices continued in their upward trend to reach $139 per barrel in early March. At the end of March, the prices recorded $108 a barrel. However, it decreased in April to an average of $105 per barrel, according to EIA. Responding to the war, the U.S. administration along with the European Union (EU) announced on March 8, 2022 its decision to ban oil imports from Russia as part of their sanctions against Russia. The European Commission published plans to decrease its reliance on Russia gas by two-thirds before the end of 2022 and to fully end the imports before 2030. "That means Russian oil will no longer be acceptable in U.S. ports and the American people will deal another powerful blow to (Russian President Vladimir) Putin's war machine," U.S. President Joe Biden said to reporters at the White House. Sanctions against the Russian oil sector could spell trouble for the country's economy, according to analysts. As one of the world's largest producers and exporters, oil is considered a key source of income, essential for sustaining economic growth.. The U.S. oil imports from Russia recorded 16 million barrels until February 2022. The U.S. sanctions were not limited to the imports embargo, as several giant international oil companies (IOCs) announced their exit from Russia. Big names such as Equinor, TotalEnergies, BP, Shell, ExxonMobil, and Baker Hughes took the decision either to exit their investments there or stop introducing any new investments.
In Search of Alternatives Following the decision to ban Russian oil imports, European countries and the U.S. started to find other alternatives to compensate for Russian supplies. The UK was one of the first countries to announce boycotting the Russian energy imports, which represent 4% of the country’s supply. For finding alternatives, UK Prime Minister, Boris Johnson, visited Saudi Arabia and the UAE to discuss energy security.
14 | EGYPT OIL & GAS NEWSPAPER
Meanwhile, Germany, one of the top Russian gas importers, declared plans to establish a liquefied natural gas (LNG) terminal to boost its imports from other countries rather than Russia. This is besides its efforts to reach agreements with UAE and Qatar to develop LNG and hydrogen projects. In the meantime, Italy decided to install two floating storage and regasification units (FSRU), aiming also to increase LNG imports. The country also entered negotiations with Libya and Algeria to examine opportunities for supplying clean energy. In an attempt to contain the implications of the Russian war on oil prices, the International Energy Agency (IEA)’s members agreed on March 1, 2022 to release 62.7 mmbl of oil from their emergency reserves. Moreover, on April 1, 2022, they agreed to release further 120 mmbl from the emergency reserves. For its part, Japan announced, in April, that it will release 6 mmbl of oil from its private reserves. The U.S. increased its LNG supplies to Europe. Additionally, Germany and Norway cooperated in building hydrogen pipeline to help phase out Russian energy. The U.S. and IEA called on the Organization of Petroleum Exporting Countries (OPEC) to pump more oil to balance oil markets and ease the prices. However, OPEC refused their request, stating that “current volatility is not caused by fundamentals, but by ongoing geopolitical developments”. This pushed the U.S. Senate committee to pass the “No Oil Producing and Exporting Cartels” or “NOPEC” bill which could expose OPEC members to antitrust lawsuits for orchestrating supply cuts that raise global crude prices. However, some countries opted to consolidate their deals with Russia, taking advantage of Russian oil low prices. India was one of these countries that hurried to secure Urals oil contracts covering March, April, May and June.
Forecast The EIA expected that brent prices will reach an average of $107 per barrel in 2Q22 and $103 per barrel in the H2 2022. The EIA noted that this price forecast is not confirmed as “actual price outcomes will largely depend on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market.” However, it is expected that oil markets will be mostly balanced from Q2 2022 through the end of 2023. “Because oil inventories are currently low, we expect downward oil price pressures will be limited and market conditions will exist for significant price volatility”, said EIA.
LEGAL
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JUNE 2022 - ISSUE 186 | 15
INDUSTRY INSIGHTS
RUSSIA-UKRAINE
CONFLICT BRINGS LNG TO SPOTLIGHT BY RANA AL KADY
A
s Europe scrambles to replace the gas coming from Russia, liquefied natural gas (LNG) comes into the spotlight as an energy source that can replace the millions of tonnes of gas it currently buys from its main provider, Russia. Natural gas is the second largest source of energy in the Europe, accounting for nearly 25% of its total consumption. The consequences of current events could cost Europe its valuable source of energy. This can explain the recent rush by European countries towards securing more shipments of LNG, while consolidating the proper infrastructure for receiving it. As of May 2022, 11 EU Member States were LNG importing countries, for a total regasification capacity of 160 billion cubic meters (bcm) per year.
The war in Ukraine has altered dynamics of the LNG and the prospects of the cleaner energy source for years to come. Here is a look on the LNG new prospects.
few months. In addition, LNG ships travelling from Russia, the United States, and North Africa to Asian countries have experienced a substantial increase as well.
NATURE GAS CRISIS
When all of the nations' production and surplus statistics is examined thoroughly, they cannot be equated to that of the Russian gas and oil exports. Therefore, an
Considering that natural gas is the most common heat source across multiple nations, the course of gas prices over the next several months is likely to be determined by how frigid it gets throughout the globe during Q4. These shortterm pricing will have a significant influence on natural gas provider equities.
increase in oil flow via the Suez Canal is only likely to occur to a limited level, and this may already have occurred during the first quarter of this year.
However, the approaching direction of fuel prices is less important for enterprises that handle and export natural gas in liquefied states. The soaring costs this year have persuaded gas importers to secure long-term contracts at high prices. Substantial prices are expected to persist this year as nations want to prevent the pandemonium that has erupted in recent months due to uncertain gas markets. Gas purchasers are hurrying to secure contracts to assure supply for the next coming years as limited uncontracted supply availability is fuelling apprehensions about supply security.
GENERAL GLOBAL OVERVIEW Furthermore, high spot prices have indeed hampered trading and are expected to limit fuel demand growth in Asia, the world's leading consumer area, though some nations face growing gas supply shortages as domestic output declines. Meanwhile, in Europe, European leaders have addressed ideas to enhance the EU to become more tactically self-reliant from international suppliers in the oil and gas industry, especially after having been burned by supply constraints in microchips and medicines during the COVID-19 crisis. The unanimous decision was made to become less and less dependent on Russian supplies until eventually the region becomes fully independent and no longer in need of Russian oil and gas supplies. Furthermore, EU nations will integrate European gas and electricity networks in order to better share resources, completely integrate power grids, and strengthen emergency plans for supply security.
EGYPTIAN IMPACT While the situation in Ukraine is having a negative impact on Egypt, the Suez Canal is a different matter altogether. The surge of Western ships travelling through it in pursuit of oil and its derivatives made it the greatest income in Egypt thus far. In fact, more LNG is currently transiting the Suez Canal travelling north from the Arab Gulf area to Europe. This pattern is expected to persist over the coming
16 | EGYPT OIL & GAS NEWSPAPER
It is expected, however, that just after this sudden rise in Suez Canal income caused by the Ukraine war and the energy transition, the globe would experience a situation of stagflation defined by high prices and sluggish growth. A Production & Planning Manager, who preferred anonymity, suggested that, “because Egypt depends on Russian-Ukraine based financial activities for a percentage of its tourist and Suez Canal income, this [war] could result in considerable profits as a result of the hindered economy, for now.” Consequently, it was found that the potential to increase exports in the immediate term is constrained by two factors: (i) the total capacity of Egypt's LNG facilities, which is currently at 12.2 million mt/year, and (ii) more critically, the presence of excess gas in Egypt for exports (especially with the unpredictable future of potential production levels). Thus, the most cost-effective solution is to spend on infrastructure to carry more commodities to Egypt and to improve the size of Egypt's LNG facilities, albeit this presents the issue of over-reliance on a single shipping route via Egypt. Thus, it can be noted that the Middle East and Mediterranean regions are strategically well-located to add value to Europe's energy requirements, and it will strive to secure a share of these resources. The region's countries stand to benefit if they provide the necessary incentives to shareholders, beginning with the basics, but also the ability to implement initiatives at the regional level to reduce costs and encourage competition, with the ultimate intent of enhancing revenue growth opportunities. As certain nations strive to diversify energy supplies apart from Russian oil and gas, the Eastern Mediterranean region gets increasingly more crucial. All Eastern Mediterranean connectivity initiatives, whether it be via flowlines, LNG, or electrical linkages, must be closely investigated intensely to ensure effective execution. In a recent interview on the sidelines of the World Economic Forum in Davos, Minister of Petroleum and Mineral Resources, Tarek El Molla, disclosed plans with the East Mediterranean countries to increase LNG exports to Europe during the upcoming period. The Minister said that Egypt is currently exporting 1 bcm of natural gas per day (bcm/d) and it is expected to increase to more than 1.5 bcm/d over the next two years.
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JUNE 2022 - ISSUE 186 | 17
ENERGY ECONOMICS
THE ROUBLE GAS
ULTIMATUM:
A GAME OF
ECONOMIC CHESS A BY NADER RAMADAN
s the relationship between global conflicts and economics increases in its complexity, currency has become just another one of many pieces to make that final checkmate move. In defiance of international sanctions, embattled Russian President Vladimir Putin declared that all “unfriendly” countries that have bought Russian energy supplies must fulfill their payments in roubles. This stood as a pressing challenge for the European Union, which gets an estimated 40% of its natural gas from Russia. Though several countries have asserted that the contract does not legally require them to pay using the Russian currency, they might not have any other option but to comply. While this request has received its fair share of criticism, it is a key decision that will force the energy market to support the value of the rouble in the face of tumultuous economic conditions.
Economist Alexander Mihailov, an Associate Professor of Economics at the University of Reading, suggests that the benefit of this decision is that demand for roubles would go through the roof in international forex markets, which would corner the West into permitting buyers of Russian fossil fuels to purchase roubles to fulfill their payments. This is also an essential strategy for Russia’s central bank to sell roubles, which is essential given that roubles have taken a significant hit to their value since the RussiaUkraine conflict started followed by international sanctions. In Mihailov’s economic analysis titled “Why Paying Roubles for Russian Oil and Gas Might Matter,” he explains that “the exchange rate at which EU or UK importers and consumers would sell euros or pounds to buy roubles in international forex markets to pay for their imports of Russian gas will start to matter: an expensive rouble will be costly for everyone from the importing firm, to the industrial factory or transportation company, down to the household using, for example, Russian gas for heating. Under the proposed change in the pricing rule, longrun demand for – and hence, upward market pressure on the value of – the Russian rouble in international currency markets would appear ‘guaranteed’ by an underlying long-run demand for Russian gas and oil by the West.” Analysts have also pointed to the fact that this move is also an attempt to work around the hegemony of the US dollar. It has been adopted by the Kremlin to dodge sanctions by allowing Russia to trade in roubles. The outcome of restricting the sale of Russian gas to roubles has brought some positive results for the Russian economy as inflation in the country slows down. According to data from CNBC, the country’s consumer price growth plummeted from 7.6% in March to 1.6% in April, with Russia’s decision to sell gas in roubles being considered a major factor for this outcome. Russia’s commitment to see that their demands are met was further demonstrated when they shut their gas supply to both Bulgaria and Poland. Though the Kremlin’s decision may prove to be imposing, natural gas European buyers have been effectively taking steps to adapt to the current situation while ensuring their compliance with the sanctions of the EU. Some of them have
18 | EGYPT OIL & GAS NEWSPAPER
opened Gazprombank accounts to settle the required payments in Russian roubles. While some have claimed that this move may breach international sanctions, Gazprom has stated buyers would have to make their payments in Gazprombank in foreign currencies, which would then be converted into roubles. In this system, buyers would have to open two accounts in order to properly facilitate the transaction: one in foreign currency and the other in Russian roubles. In yet another move that could make the future outlook for Russia’s currency look more promising, Russia’s central bank took the decision to fix 5,000 roubles to one gram of gold, which would force people to make payments in gold in order to acquire roubles to finalize the necessary transactions. This decision would include overseas business partners who may potentially have to barter gold in order to attain the needed roubles to pay for energy supplies, as well as other products such as minerals and fertilizers. Though the rouble decision may have its shortterm benefits, it is to be noted that this strategy may have its limits as Europe has tried to deal with the current crisis by looking for alternative natural gas exporters and diversifying its energy mix. Recently, the EU Commission has released a EUR 210 billion plan to achieve energy independence from Russia by 2027. Given these recent developments, the rouble strategy may not be as effective in the long run as Russia’s main gas trade partners in Europe search for alternatives. As the currency disagreements continue, the situation is widely considered a lucrative opportunity for other natural gas suppliers such as Egypt, having both a geographic and supply advantage, to become a main natural gas trade partner with Europe. If Europe is indeed successful in realizing its energy independence goals through boosting trade with alternative gas suppliers, then the long-term outlook for the rouble may indicate that it will hit some rough tides in the future due to a potential dip in demand. Setting politics aside, the rouble is safe for now, but Russian strategists will need a long-term plan to ensure that the value of Russia’s currency remains stable as the European market gradually moves away importing Russian natural gas.
INE G AR
UP RO
PAN M
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TECHNOLOGY
DRONES EMPOWERING MORE
EFFICIENT OIL, GAS INDUSTRY BY SARAH SAMIR
U
sing Drones in the oil and gas industry enables safe operations and efficient processes. Through unmanned aerial vehicles (UAVs), also known as drones, oil and gas firms are able to boost inspection quality and improve safety. Drones can be used in many oil and gas applications and benefit energy operators. Whether it is for upstream monitoring, or for downstream maintenance, drones are among the most efficient, cost-effective ways to do business in the oil and gas industry.
FIELD OPERATION MONITORING Thanks to their operational capabilities and outstanding flexibility, drones are gradually proving to be beneficial in oil and gas exploration, especially in hazardous remote areas, enabling operators to mitigate the risks and avoid sending their employees to unsafe spaces. Oil and gas companies use drones to monitor the performance of their different assets, including fields, infrastructure, equipment, trucks, components, and tankers. This comes as UAVs are able to observe and access difficult areas and capture different angles. "Drones are able to deliver 360-degree views of subjects for the monitoring of field operations, keep an eye on the development of new facilities, and detect encroachment on pipelines, railways, and other valuable company property," Council of Petroleum Accountants Societies (COPAS) said on a report on Drones. With their capabilities, drones make it possible to remotely monitor and perform efficient inspections of automated offshore rigs. Using UAVs helps in providing "real-time images and video analytics delivered by drones can also assist in plotting the progress of oil spills or fires, which can help companies better manage emergency response activities and channel resources appropriately while guaranteeing workers’ safety and wellbeing," according to COPAS. This ensures the safety of assets and employees throughout the process.
INSPECTION AND MAINTENANCE OF HARD ACCESSED ASSETS Aside from monitoring and observation, drones enable oil and gas companies to advance in imaging and sensing technologies. Accordingly, UAVs allow carrying out maintenance in critical oil and gas infrastructure. "Merging drone data with AI-driven data analytics
20 | EGYPT OIL & GAS NEWSPAPER
helps predict the functionality status of the equipment and identify potential malfunctions," Rabih Bou Rashid, Managing Director at FEDS (Falcon Eye Drones), previously said. UAVs can successfully be used in maintenance as some include ultrasonic sensors as well as high-tech visual inspection tools. Some drones have thermal imaging devices and infrared cameras, which enable detecting system deficiencies, structural defects, and potential hazards. Moreover, putting drones provided data together with advanced data analysis allows oil and gas companies to assess their assets and foresee the possibilities of leaks or breakdowns. UAVs can further perform inspection and maintenance of hazardous and hard-to-access places, saving employees from getting exposed to unhealthy components. "Drones can eliminate traditional methods of inspecting areas like essential production components in oil refineries, chimneys, smokestacks, storage tanks, jetties, and other potentially hazardous environments," according to COPAS. Drones are beneficial to oil and gas firms in many ways as they "help companies increase their reporting turnaround by 25% and cut down site time wastage by 18.4% as they conduct activities at a more accurate and stauncher pace than manual labor. These UAVs can also slash project value costs by up to 11.8% as they can do repeat flights that help detect issues regularly, which can become exorbitant problems later on," Bou Rashid explained. Using drones comes with a great value for the oil and gas sector. It does not only protect the safety of employees and access to hazardous locations, but it also brings the energy companies huge turnarounds in a cost-efficient process. Drones also guarantee to inspect and maintain the good status of assets as well as oil and gas fields.
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i-Trak drilling automation services Get safe, efficient, and predictable drilling performance
Applications
• Wells with inefficient, or inconsistent or unpredictable drilling performance i-Trak™ drilling automation services from Baker Hughes reduce operational risk and well delivery costs by integrating and automating drilling systems.
hydraulics, and drilling optimization services.
• Wells with hole cleaning issues, stability issues, or challenging pressure windows
In today’s complex drilling environment where surface and downhole real-time systems must deliver according to plan in a predictable, efficient, and safe manner, automation of drilling systems is crucial. The drive to reduce HSE risks by moving personnel from wellsite red zones to remote centers is simplified and supported through the integration and automation of drilling systems.
i-Trak services offers two levels of automated control: • Advisory mode: recommended actions or parameters are displayed to the driller who can accept or reject them
• Wells that must be consistently and repetitively drilled
Baker Hughes’s i-Trak drilling automation services improve drilling performance, wellbore quality and trajectory; extend bit life; reduce nonproductive and invisible lost time (NPT, ILT) to deliver wells faster and more economically while reducing operational risk to enable de-manning at the rigsite. These benefits are achieved by aggregating real-time surface and downhole data and annular pressures, and using hybrid physics-based and data-driven models, in combination with automated standardized operating procedures and checklists. Our i-Trak drilling automation services manage well construction via fully closed loop-control of Baker Hughes rotary steerable assemblies, wellbore
• Closed-loop mode: parameter changes and instructions are automatically downlinked to downhole tools or transmitted to rig automation platforms to control surface parameters. In closed-loop mode, the human driller can start/stop the system at any time to make any desired adjustments to the drilling path or operational parameters. The i-Trak service is a fully integrated extension of Baker Hughes’ digital well planning software and ecosystem. This allows i-Trak to monitor and control drilling and reservoir navigation operations based on a continuously updated digital twin of the reservoir and downhole environment. Contact your Baker Hughes representative to learn how i-Trak drilling automation services can help you achieve safer, more efficient, and more predictable performance on your next well.
Copyright 2020 Baker Hughes Company. All rights reserved. 80390 Rev. 9/2021
• Wells using decision-making remote operations or leveraging integrated operations personnel models
Benefits
• Improved safety, lower risks - Openhole pressure regime monitoring with automated alerts
- Swab/surge NPT protection - Reduced personnel risks
• Superior drilling and reservoir navigation efficiency - Improved hole cleaning
- Optimized tripping speeds
- Guaranteed average-excess dogleg severity limits (AEDLS) <1°/100 ft. (30m)
- Increased hydrocarbon recovery • Predictable drilling performance - Increased gross ROP
- Fewer stuck pipe incidents - Reduced NPT and ILT
bakerhughes.com
JUNE 2022 - ISSUE 186 | 21
LEGAL
ECONOMIC DOWNTURN
CASTS SHADOW
ON GLOBAL ENERGY INDUSTRY’S FUTURE By Eng. Mohsen Ahmed Farhan Ali - Oil Well Drilling Department Head - Kuwait Oil Company (KOC) Consultant Oil & Gas Industry Trainer & Coach
C
ountries that have made a huge economic and scientific leap would not have taken a step towards prosperity and economic growth without legislation and laws that advance the wheel of development and preserve natural and human resources. Since the natural and political conditions change dramatically, quickly, and perhaps complicated from time to time, it was necessary to provide the needed flexibility for these legislations and laws in order to be suitable or compatible with the highly complicated global changes that occur and lead to negative economic effects on most people worldwide.
Since energy is one of the most important pillars of the global economy that affects human life in general, it was necessary to keep pace with energy legislation and laws for the great changes sweeping the world and hitting emerging economies with waves of stagnation and severe inflation. In the coming lines of this article, I will try to shed light on some legislative proposals that are suitable as energy bills and some organizational and structural proposals that serve the implementation of these legislations, as well as some economic policies related to the field of energy, which limit the effects of economic stagnation and high global inflation. At the outset, I think that countries with emerging economies, including Egypt, must periodically review and update their energy legislation and laws in line with the speed of various global economic changes. Firstly, with regard to energy subsidy laws, countries with promising economies need greater legal flexibility due to the gradual changes that the economies of these countries are going through. This means that energy subsidies should not be constant all the time, whether it is a full or partial or zero energy subsidy, as each stage of economic growth needs energy subsidies in a different form and percentage. In addition, in the case of economic crises, the wise and correct energy subsidy policy plays a major role in overcoming these difficult economic pitfalls. Therefore, energy subsidy legislation and laws should not be fixed and frozen over time. Secondly, new and effective ways & mechanisms should be developed to deliver energy subsidies to eligible individuals and economic institutions, which will reflect positively on the general economic performance of the state, and these mechanisms should be clearly explained and directly included in energy legislation and laws. Third, emerging countries may need to establish and develop an official governmental authority or institution to regulate their energy sector, as it is concerned with defining and implementing energy production and consumption policies within the state, as well as defining energy export and trade policies that exceed domestic consumption outside the borders of the state. Fourth, it is necessary for the state to deal with energy in all its forms as a strategic product or national asset, not a commercial commodity governed by the principle of gain and loss, so that it makes the development of energy production, ensuring its availability and rationalizing its consumption a national project and a strategic goal for the state regardless of the concept of direct financial profit. Therefore, the state must work on supporting the provision of energy as a top priority, as the availability of energy in any country is an existential matter. Therefore, the state must provide the necessary subsidies for the various energy sources within it, in a way that ensures the achievement of its economic development plans without looking at the commercial process of selling energy products locally and achieving
22 | EGYPT OIL & GAS NEWSPAPER
financial profits for some state companies or institutions, as the return from energy subsidies even if the energy subsidy reaches its maximum will inevitably be greater than just commercial profits from the sale of energy products at official international prices within the borders of those countries. As for the fifth and last proposal, I will present it in some detail to clarify the mechanisms that the developed countries have followed to achieve good economic results by implementing a flexible energy subsidy policy. In order for the features of energy subsidy policy and mechanisms to become clear in light of legislation and laws in those countries that have achieved economic progress, we need to develop an accurate classification of the different world countries according to their relationship with energy in terms of production and consumption. As oil & gas or hydrocarbon energy is still the most reliable, viable and cost-effective source of energy worldwide, the different countries can be classified into two categories based on production and consumption of oil & gas, one is a group of energy producers and the other is a group of global oil & gas consumers. Major oil & gas producers may not have economic challenges related to securing their needs of energy and they have a huge national income from their oil & gas sales that can be used for supporting national economic & social development plans. The other group of oil & gas consumers is divided into two sub-groups, the first includes those who are considered First World countries which have strong economies based on highly profitable activities and have no challenges in dealing with the energy requirements in their countries. The second includes those classified as developing countries that have under-development economies and they are facing more obstacles to securing their energy needs. Therefore, reform in energy legislation will be beneficial for the second group of energy consumers in supporting the economic development of those countries. The state providing full or partial energy subsidies all the time, or canceling the subsidies completely in the form of a specific, fixed policy will not be the optimal direction in most cases of countries with emerging economies that need greater flexibility in energy policies and legislation due to the rapid transformations these economies are facing and waves of ups and downs of the global economy. Therefore, I see that energy subsidies are directed at a specific percentage and for certain categories approved by legislation and determined by laws at specific times according to the development stage and economic conditions that the country is going through without committing to maintaining subsidies always or canceling them as a kind of rationalization of public spending of the state. In conclusion, I believe that developing countries should follow in the footsteps of countries that have achieved good economic growth in developing and updating energy legislation and laws in line with the economic & developmental stage that these developing countries are going through, especially in light of the current economic challenges that the whole world is going through.
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JUNE 2022 - ISSUE 186 | 23
EVENT COVERAGE
EPEEC 2022: UNITING THE SECTOR’S BEST MINDS UNDER ONE ROOF BY NADER RAMADAN AND ISRAA NOUR ELDEEN
A
fter a long hiatus due to the global pandemic, the third edition of the Egyptian Petroleum Energy Efficiency Conference and Exhibition (EPEEC) kicked off to a vibrant start in the presence of the industry’s most important notables on both the corporate and government levels. The conference was held on 17-18 May at Triumph hotel - 5th settlement.
In the presence of heads of organizations, holding companies and representatives from Egyptian and foreign petroleum companies, Minister of Petroleum and Mineral Resources Tarek El Molla, inaugurated the conference and exhibition, that was organized under his patronage, stating that "the Egyptian Ministry of Petroleum has been working consciously for many years on combating climate change and reducing emissions on many levels.” The minister highlighted the sector's intention to continue investing in energy efficiency opportunities in a way that enhances the sector's readiness to deal with any challenges and to step towards a sustainable future on the environmental side. The sector should adopt energy and resource efficiency in light of the global trend towards a low-carbon future, El Molla added. Outlining the importance of this occasion, Founder and CEO of Egypt Oil & Gas Group Mohamed Fouad said “improving energy efficiency is a key element factor in achieving the target of sustainable development goals not only on a global scale but also on a national one too.” Egypt Oil & Gas was the Media Sponsor of the event. In the meantime, Christian Berger, the European Union (EU) Ambassador to Egypt, also reiterated the importance of this conference, which sheds light on how to improve energy efficiency in light of the global interest in tackling climate change. "With the Ministry, we have enjoyed long-lasting and fruitful cooperation. It is a
24 | EGYPT OIL & GAS NEWSPAPER
signal and symbol of the very strong cooperation between the European Union and Egypt. This close cooperation is the fruit of the strong vision by the Ministry of Petroleum to modernize the oil and gas sector, thus paving the way for Egypt to become a main regional player in energy and also to ensure the sustainability of the sector at the national level."
Sustainable Energy Transition The conference started with a panel discussion that witnessed the participation of the European Bank for Reconstruction and Development (EBRD)’s Managing Director for the Southern and Eastern Mediterranean (SEMED) region Heike Harmgart, Chairman of the Egyptian Petrochemicals Holding Company (ECHEM) Saad Helal as well as Ahmed ElBeltagui, Energy & Transport Sector Manager for the EU Delegation in Egypt, and a high-level representative from KBC Advanced Technologies (Yokogawa). According to the panelists, efficiency refers to the use of less energy to accomplish the same task or produce the same results. Homes and buildings with efficient energy use less energy to heat, cool, and run appliances and electronics, and manufacturing facilities with efficient energy use less energy to produce goods. Ministry of Petroleum and Mineral Resources and its partners have a future vision to make a green transition happen.
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During the panel, participants indicated that green transition is not only a challenge but also an opportunity; an opportunity to find new transition energy sources for the future. The sector's experts should focus on energy efficiency, which can be considered as the first green transition fuel, to help Egypt become a green energy superpower.
Reshaping the future through the energy transition The session “Reshaping the future through energy transition” discussed how to secure a sustainable energy transition through energy efficiency technologies with an emphasis on financing solutions. It was explained, during the session, that funding obstacles are no longer a challenge to people who are interested in green projects, pointing out the availability of financing from four different banks. In addition, each of those four banks got somewhere between EUR 20-30 million to source into the green market. The borrower that fits the eligibility criteria will get a 10-15% discount on the loan. The challenges, in this case, are: Do the banks understand the green criteria? Do they have the technical expertise to determine these criteria? Can the bank explain to the borrower what green criteria is?
Modernizing Energy Efficiency through Digitalization and Artificial Intelligence The first day of the conference ended with a discussion about the role that digitalization can play in energy efficiency. Speakers in this session included KBC’s Senior Energy Consultant Alvaro Bolíbar de Rivera, Enppi’s Instruments and Control Engineering Specialist Heba Kadry, Emerson Automation Solutions’ Middle East Director of Business Development Andras Feher, and EPROM Energy Management (EnMS) Specialist Emad Darweesh. The discussions revolved around the idea that digitalization in business helps to improve the efficiency of its operations, enables businesses to modernize production processes, accelerate efficient work, strengthen security, and increase profitability. Energy companies need to realize the promise of digital innovation at scale, on a global scale, digitalization within the energy specifically sector presents a significant opportunity to transform end-use and systems efficiency. Adding that in terms of how the world produces and consumes energy, digitalization has a significant impact. By integrating AI (artificial intelligence) into energy efficiency strategies, energy management, energy forecasting, and renewable energy storage can all be improved. Machine learning not only helps to understand why certain operator makes a certain mistake but also helps to understand how to fix it and how to avoid the same mistakes in others operators. Participants also noted that machine learning could help to predict or forecast the future situation depending on the historical and current data. Based on presentations from industry representatives, digital technologies have the potential to optimize the energy used in many energy-using activities. In the Energy management system, optimization is based on reducing energy costs or emissions. Whether a company seeks to enhance energy efficiency to reduce costs or cut down on emissions, companies will need to look for an optimal way to supply their energy demands to carry out their field operations in the cheapest and cleanest way possible, participants indicated.
Innovative Solutions for Improving Energy Efficiency During the conference’s second day, the first session discussed the various innovative ideas and solutions that companies are using to enhance energy efficiency. Ryan Evans, Spirax-Sarco’s Global Strategic Account Manager for Oil, Gas and Chemicals, delivered an interesting presentation on how his company contributes to making the petroleum sector more efficient, highlighting its cuttingedge steam trap management services. His presentation placed emphasis on the technological solutions that the company has to offer the sector. In the next presentation, Khaled Elbedwehy, a Senior Business DevelopmentRenewable Energy at TotalEnergies Egypt, outlined his company’s success story in improving energy efficiency. Elbedwehy first mentioned TotalEnergies firm commitment to reducing carbon emissions and investing in carbon capture systems all over the world, while also taking measures to boost renewable energies. As part of a swiftly expanding multinational Indian giant Forbes Marshall, Yogesh Apshankar, the company’s Country Manager in Egypt, also presented their success story in Egypt, particularly in the areas of steam trapping, condensate recovery, and presenting other solutions to contribute to country’s quickly evolving energy sector. Being a Principal Machinery Engineer from Enppi, Waleed Sabe’s presentation placed emphasis on the significant technological role that Enppi plays in Egypt’s energy sector, discussing various technological solutions that the company has
introduced in Egypt for the first time as well as explaining a project where these new technologies were applied. Concluding the first session, Wissam Moubarak, the Business Development Director from Voith Group, also gave a brief presentation shedding more light on the more mechanical aspects of this field with emphasis on topics such as gearboxes and other types of essential equipment.
Energy Transition Pathway Towards Low-Carbon Fuels As global temperatures increase, it has become essential for the corporate world to work together and collectively agree on a commitment to reduce carbon emissions while ensuring a prosperous industry. The second session was an ideal platform for professionals from around the world to discuss both ideas and accomplishments revolving around the theme of this session which was “Energy Transition Pathway Towards Low-Carbon Fuels”. The session featured presentations by Axens Business Development Manager Jordi Pinent Armengol, KBC Advanced Technologies Senior Staff Consultant Azhari Dafaalla, Worley Director of Engineering and Technology Nathan Smith, as well as Hatem Shokry, VP of Business Development-MENA at Mitsubishi Heavy Industries. Many of the presentations talked about measures that have been taken or are being discussed to reduce, capture, and store carbon to achieve the objectives of climate action. Representing Apache Corporation, Siew Kheong (SK) Wong, Gas Operations General Manager at Khalda Petroleum (Apache), talked about the company’s journey in working together with the Egyptian General Petroleum Corporate (EGPC) and the Ministry of Petroleum and Mineral Resources to modernize operations, enhance sustainability, and increase energy efficiency.
Success Stories in the Egypt Petroleum Sector The third session involved an inspirational group of presenters and experienced professionals who come from various petroleum companies in Egypt. Their presentations spoke about specific case studies where they were able to effectively enhance their operations and optimize the energy efficiency of their activities in the field. This part of the conference featured Ahmed Zahran who is the Energy Efficiency Assistant General Manager at Abu Qir Petroleum, Saied Mashaal as the Vice Chairman of Plant Operations at Misr Fertilizers Production Company (MOPCO), Elsayed Maamoun who is the Turbo Machinery Department Head from Rashid Petroleum (RASHPETCO), and Ahmed Hassan, the Energy Optimization Assistant General Manager from Badr Petroleum Company (BAPETCO).
Enhancing Energy Efficiency in Oil & Gas and Petrochemicals Throughout the conference, the relationship between digitalization and energy efficiency was constantly emphasized as two elements that must work in parallel and, once again, this idea was reiterated in the conference's fourth session. It began with a presentation by Spirax-Sarco’s Country Manager for Egypt, Libya and Sudan Amir Wahba, who offered insight into how his company’s technological solutions can be used for steam trap management, which can help companies working in the petroleum sector save both energy resources and money. Moving to themes relating to reducing carbon in the atmosphere, Amgad Abdelrahim, a D&I Solutions Delivery Manager from Schlumberger, also talked about his company’s role in reducing carbon emissions all over the world. He specifically focused on the carbon capture and storage workflows that Schlumberger uses in the energy sector to ensure that the industry is heading in the right direction towards achieving its emissions goals. The session was concluded with two stimulating presentations, one by Amira Badran, a Process Engineer from the Egyptian Maintenance Company (EMC), which talked about EMC’s integrated energy efficiency services as well as zeroto-flare, flare-to-power, recovering waste heat, static equipment revamping, and other renewable energy solutions. The other presentation, which was by Gas Cool’s Engineering General Manager Mervat Mohamed, discussed her company’s services as the first to adopt district heating and cooling in Egypt with the use of energy-efficient solutions. She also mentioned her company’s involvement in various projects, including some in the New Administrative Capital.
JUNE 2022 - ISSUE 186 | 25
POLITICS
WAR IN UKRAINE:
TURNING POINT FOR ENERGY TRANSITION BY IHAB SHAARAWY
T
he Russia-Ukraine war has upset the world. Dramatic effects are seen in all fields. The war has exacerbated supply and demand tensions, damaging consumers everywhere and threatening global economic growth.
However, energy, in particular, has emerged as a major issue in Moscow’s war. The war has led to a quick jump in oil and gas prices across the globe, while growing demands to halt Russian hydrocarbon purchases could send oil and gas markets into uncharted territory. Not only has the conflict disrupted global energy markets, but also upended the climate policy conversation as plans to quit Russian oil and gas pushed the US and European countries to find alternatives, reembrace traditional fuels that could push emissions higher and may ultimately slow down the phase-out of coal and locks in reliance on liquefied natural gas.
released oil from emergency stockpiles to make American fuel cheaper than elsewhere in the developed world. Biden even resorted to pressuring the OPEC group to increase production, a request that the group resisted. The environment-friendly president even allowed the Environmental Protection Agency to temporarily lift regulations prohibiting the summer use of an ethanolgasoline blend called E15, which contributes to smog in warmer months. Focus on high gas prices and increased oil flows fall short of Biden's pledge to wean Americans off oil and other fossil fuels and halve global warming emissions by 2030.
There were amounting worries by environmentalists while watching calls for increasing hydrocarbons, increasing consumption of coal, and the return of nuclear power to the spotlight. The developments in the energy scene following the European political crisis left many experts to wonder if we would be able to treat climate change as the emergency that it is.
Since the start of the war in Ukraine, however, Biden has mostly stopped making the case for his environmental plans, instead he turned his focus on pumping as much oil and gas as possible.
ENERGY SECURITY COMES FIRST
Drilling companies are in a stronger position to demand higher day rates for their equipment after several lean years that led the companies to a wave of mergers and scraping older rigs, leaving fewer available now that demand is picking up.
The conflict with Russia has bushed the issue of energy security back toward the top of the political agenda of the West’s leaders. The disruption of gas exports from Russia, one of the world top producers, is not only threatening economic activities, but even the ability of people to heat their homes during biting winter days.
The rush for more fossil fuels has even pushed rental rates for offshore oil and gas rigs higher, boosted by a race to lift production.
Although investment in oil and gas has fallen by about 30% since the outbreak of the coronavirus pandemic, there are signs that rising demand and rising prices could lead to a reversal.
This threat to energy security has prompted a flurry of responses, including the UK's decision to review the 2019 ban on shale gas exploration, while more and more European policymakers and investors are paying more attention to traditional fuels that were once taboo in Europe.
Producing countries and companies are expected to rush to compensate for their losses incurred during the pandemic with more drilling for oil and gas around the globe, which should make oil abundant and affordable again.
Germany decided not to go ahead with its plan to shut down all its nuclear power plants by 2022. The plan was put forward after the nuclear disaster in Fukushima in 2011. However, under the current energy crisis, the German government allowed the last three nuclear power plants in the country to continue operation. At the same time, the decision was made to phase out coal-fired electricity by 2038 at the latest.
SAVING THE ENERGY TRANSITION
With few options that offer energy independence from Russia, there is now renewed enthusiasm for nuclear energy among politicians in Europe. The British Prime Minister announced that his country would build up to eight new nuclear plants by 2030, while the UK’s Coal Authority gave a mine in Wales permission to increase output by 40 million tonnes over the next two decades, while China recently approved three new billion-dollar coal mines. Many other European countries hurried to secure oil and gas contracts with other producers and urged their oil and gas companies to ramp up production and investments which could delay the EU’s net zero-emission goals. The fears about the ability to achieve these goals were already on the rise following the decision by the European Commission to give nuclear energy and natural gas a green label, which angered critics who saw that such a decision could bring the objective of climate neutrality under threat.
DANGEROUS POLICY SHIFT Even before the beginning of the conflict, US President Joe Biden struggled to secure the energy needs of his allies away from Russia. Many observers saw Biden reversing his declared environmental policies by calling for more drilling and urging oil companies to produce quickly from their federal concessions. Since the beginning of the conflict with Russia, Biden has repeatedly
26 | EGYPT OIL & GAS NEWSPAPER
Rising oil company profits could also give them the confidence to postpone their net-zero emission plans and depend on fossil fuel exploration for their future growth.
Reflecting on energy markets following the Russian attack on Ukraine, Saudi Arabia’s top energy official, Prince Abdulaziz bin Salman said, “Look at what is happening today, who is talking about climate change now?”. Abdulaziz added that the world's top oil exporter would not hesitate to produce fossil fuels. The stark change in the tendency towards fossil fuels has caused an alarm among environmentalists and climate action activists. The fears have pushed the U.N. Chief Antonio Guterres to warn that the assault on Ukraine will likely have major implications for global heating targets, especially since many countries are turning to imports of coal or liquefied natural gas as alternative sources to Russian energy. Guterres described this rush to fossil fuels as “madness,” before warning that humanity’s “addiction to fossil fuels is mutually assured destruction.” Haunted by the fears over the future of global climate action, Guterres launched a five-point plan to jump-start broader use of renewable energies, hoping to revive world attention on climate change. The plan came after the UN's weather agency reported that greenhouse gas concentrations, ocean heat, sea-level rise, and ocean acidification hit new records last year. In some ways, the Ukraine conflict may be slowing energy transition and giving traditional energy sources a new life. However, it can also encourage the argument that ramping up investments in renewable energy and climate action may be the best strategy to address the root cause of many crises, including the fossil fuels politics complexities and those crises triggered by climate disasters, water scarcity, desertification, harvest failures, and rising sea levels.
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Figure 2. Torque and Drag Model
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JUNE 2022 - ISSUE 186 | 27
OPINION COLUMN
ENVIRONMENTALLY RESPONSIBLE STRATEGIES TO TAP INTO THE RED SEA’S RICH HYDROCARBON ASSETS
RENEWABLE ENERGY: FUELING A SUSTAINABLE FUTURE
Oil prices experienced an unexpected jump especially with the current world economic crises forcing countries to move forward with renewable energy. It is a type of energy that is generated from natural sources, which means that it does not run out due to overconsumption and is permanently renewable. It differs from non-renewable energy sources in that it is unlimited and environmentally friendly. Its effect on environment is simple and incomparable to the effect of fossil fuels.
E
gypt is a country that has been blessed with rich hydrocarbon reserves and a wide variety of crude oil resources. In Egypt, we are ranked as one of the top 10 countries with reserved gas, as per the last estimations from the discoveries in the Mediterranean Sea.
However, the Red Sea is likely to play an essential role in the new developments happening worldwide through a promising discovery in the near future at concessions that had been declared in the last bid round (2021/2022). As much as we are all hoping to find new discoveries, we also need to ensure environmental responsibility in order to achieve optimum results. This will help add more production to Egypt’s hydrocarbon map while minimizing environmental impact on the Red Sea as one of the country’s main tourist attractions. Most of the concessions are located in the most attractive tourist area in Egypt as well as the best spot for fishing and aquatic activities, such as scuba diving. As a petroleum engineer with almost 13 years in the petroleum field and with fair experience in the Red Sea, I could guarantee that we have the tools and strategies that could enhance petroleum activities without hurting tourism. One possible strategy is to create a manifold over an island or a huge platform between the concessions that could serve the production from the expected drilling wells. Those platforms or artificial islands will act as a hub that will collect the output from different wells in order to execute the first stage of separation before sending the product (gas, oil or water) to the mainland. At the same time, we have to ensure that onshore refineries, plants, and tanks are a safe distance away from any resorts or hotels. That’s why the idea of having a spot at the intersection between the concessions will solve the creation of different plants at shore for each company or joint venture. The platform or the hub that is located in the middle of the sea will do most of the work before the product is collected once again at the shore. The benefits of such an idea will reduce the impact of having lots of installed pipelines in the sea as well as cut manufacturing and running costs for the plants. If Red Sea concessions prove to have additional value to the Egyptian hydrocarbon industry, then it will be essential to have a clear vision for the facilities that would be built and established along the shore while securing touristic areas, coral reefs and marine life.
MOHAMED NABIL AMMAR PETROLEUM ENGINEERING DEPARTMENT HEAD OSOCO PETROLEUM COMPANY
28 | EGYPT OIL & GAS NEWSPAPER
There are a number of advantages that renewable energy can offer human communities. First, it remains with the human being on the face of the earth, the water is constantly flowing, the sun shines every day, the light wind does not stop, and the strong wind is permanent in some places, which provides the world with a great source of energy. The second advantage is that it is environmentally friendly; unlike fossil fuels that produce carbon, the cost of installing some of their types is rather low. Third, it requires low maintenance and is cost-effective, such as with wind and solar power generation. Using photovoltaic panels is less expensive than gas generation. Fourth and most importantly, it is safe for humans, meaning it is not flammable, and its use helps the world to get rid of hazardous substances which are always in need of more attention. The fifth advantage is that it is cost-effective and with progress, it will only increase in its efficiency to benefit more people. Finally, the use of renewable energy minimizes and even prevents the release of greenhouse gases such as carbon dioxide. This means that it has the power to stop global warming while improving the environment. Renewable energy has been noted to have a number of social and economic benefits. First, it promotes self-sufficiency by cutting down energy imports while also proving beneficial to maintaining human health. It does not emit harmful gases into the atmosphere, which means reducing the percentage of health conditions that could spread among people. As a trend, renewable has also been to be beneficial for job creation, since installation and maintenance services will require the necessary manpower. This means that it could successfully reduce unemployment levels significantly on a global level. It is important to consider a number of disadvantages starting with the fact that production capacity of electricity from renewable energy sources is still not sufficient for human consumption in full. Also, some consider renewable energy unreliable because it depends on sources that are bound by time limits, such as the sun that partially disappears in the winter, and the wind that calms down from time to time. Renewable energy needs highly efficient and costly installation practices to ensure regular maintenance is kept to a minimum. It also needs a lot of space to accommodate almost huge equipment. In conclusion, renewable energy appeared after the world turned towards non-renewable energy, which is about to run out, and this explains why researchers and engineers resort to harnessing renewable energy such as the sun, wind, heat of the earth, seas, tides, rivers, and organic materials in the production of electricity that no house in this world is free from its use. It’s the main operator of the world in all respects such as the military, industrial, commercial, and domestic aspects.
MOHAMED ABDELRAOUF Production General Manager Qarun petroleum company
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Midstream: Transportation, Storage and Infrastructure (MID)
Environmental Sustainability, Climate Change and Energy Transition (ENV) Hydrogen, Biofuels, Alternative Fuels and Renewable Energy (BIO)
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JUNE 2022 - ISSUE 186 | 29
ECONOMIC SNAPSHOT
Value and Volume of Shares Traded for Energy & Support Services Sector in April 2022
MAIN ECONOMIC INDICATORS March 2022
VALUE TRADED ENERGY & SUPPORT SERVICES
0.29
TOTAL
50.9
April 2022
ANNUAL INFLATION HEADLINE CPI % OF TOTAL VALUE TRADED
13.1
10.5
0.75
NET INTERNATIONAL RESERVES
VOLUME TRADED ENERGY & SUPPORT SERVICES
0.08
TOTAL
7.18
37.08
37.12
46.5
46.9
% OF TOTAL VOLUME TRADED
1.11
Performance of Petroleum Companies in the Egyptian Exchange in April 2022
$
£
British Pound
NATIONAL DRILLING CURRENCY
CLOSE PRICE
USD
4.69
24.14
CLOSE PRICE
EGP
3.89
EUR
23.30
YTD PRICE CHANGE
USD
22.75
22.66
20.04
19.62
19.44
19.21
18.50
18.54
18.47
18.32
Week 4
Week 2
Week 3
ALEXANDRIA MINERAL OILS CO. CURRENCY
EXCHANGE RATES
€
APRIL
Week 3 MAY
YTD PRICE CHANGE
6.28 CAPITAL MARKET INDICATORS EGX 30
EGYPT GAS CURRENCY
CLOSE PRICE
EGP
33.47
EGX 70 EWI
YTD PRICE CHANGE
7.26
11,048 10,679
10,548
SIDI KERIR PETROCHEMICALS CURRENCY
CLOSE PRICE
EGP
8.48
10,383
2,768 1,831
YTD PRICE CHANGE
17-21 APR
1,874
2,851
26-28 APR
8.72
Source of Raw Data: CBE, CAPMAS, Egyptian Exchange, IHS Markit
30 | EGYPT OIL & GAS NEWSPAPER
EGX 100 EWI
*Week 1 in May was off, a public holiday.
1,833
2,786
8-12 MAY
1,837
2,768
15-19 MAY
www.egyptoil-gas.com
EGYPT STATS
TESTING THE FAJR-8 DEVELOPMENT WELL IN THE WESTERN DESERT
EGYPT’S NATURAL GAS EXPORTS IN 2021
- 4X Exports of 2020 Company
Operator
6.8
APEX
PetroFarah
- The Highest in 10 Years
mmt Concession The South East Meleiha (SEM)
Area
1,713 km2
PETROCHEMICALS UPDATES IN PROGRESS PROJECTS
Well's Rank The 5 Well in Fajr Field th
1- The Medium-Density Fiberboard (MDF) Production Project
Crude Oil Production
Starting Date
2,440 bbl/d
May 8
Capacity
Location
Investments
205,000 m3/y
Idku
EUR 284 million
2. The Methanol Production Project
Capacity
Expected Total Production from SEM (bbl/d)
+6,000
4,300
Investments
100,000 t/y
$112 million
NATURAL GAS NETWORK EXPANSION PROJECTS OIL & GAS SECTOR IN FY 2022/23 STATE’S BUDGET Investments EGP 6 billion Average Brent Crude Oil
Petroleum Subsidies
$80 /bbl
EGP 28.09 billion
1. El Tina West/ Meet Nama Gas Pipeline
52.6% (YoY)
Length
Investments
170 km
EGP 4.5 billion
2. The Expansion Project of Dahshour Compressor Station
The 5th & 6th
ALLOCATION PER ACTIVITY (EGP billion)
Added Units
3.5
0.494
Natural Gas Delivery to Residential Units
Car Conversion
From 27.5 to 46 mmcm/d
EGP 3 billion
Increase Capacity
Investments
3. Reduction & Measuring Stations
Borg Al-Arab Station Midor Expansions Al-Waleedia Power Plant
INTERNATIONAL OIL PRICES BRENT PRICES ($/BBL) 127.98
08 March
113.45
30 March 07 April 25 April 06 May 19 May
OPEC BASKET PRICES ($/BBL)
100.58
127.74 110.46
112.39 112.04
4.53 5.61
100.16
102.32
NATURAL GAS PRICES ($/MMBTU)
6.36
101.93
6.67 114.37 112.04
8.04 8.31
JUNE 2022 - ISSUE 186 | 31