EOG Decarbonization Supplement October 2023 by Egypt Oil & Gas

ABOUT THIS

SUPPLEMENT The dangers of climate change are already being felt around the world. We are seeing more extreme weather events, such as heat waves, droughts, floods, and wildfires. Sea levels are rising, and glaciers are melting. These changes are displacing people, destroying homes and livelihoods, and threatening food security. Climate change is the greatest existential threat facing humanity today. It is a global problem that requires a global solution. The international community must work together to reduce greenhouse gas emissions and mitigate the effects of climate change. Decarbonization is the process of reducing greenhouse gas emissions to net zero. It is essential for addressing climate change and protecting our planet. The energy sector, particularly the oil and gas industry, is a key part of the global effort to mitigate climate change and boost decarbonization. Oil and gas companies are investing in a variety of technologies and initiatives to reduce their greenhouse gas emissions and help customers reduce their emissions. This Decarbonization supplement by Egypt Oil & Gas is made to shed light on the various activities and projects global energy giants are involved in to reduce carbon emissions and improve the environment. It also showcases Egypt's commitment to decarbonization, renewable energy, and a just energy transition that ensures sustainable growth for African nations. The supplement highlights the collaborative efforts of the Egyptian Ministry of Petroleum and Mineral Resources and multinational energy companies in achieving decarbonization goals. The supplement gives room for Oil and Gas leaders to emphasize their commitment to decarbonization, which is not just a technological and commercial endeavor but a test for humanity to unite and address the crisis that affects us all. Success in this endeavor will lead to a prosperous future, while failure will result in uncontrollable natural disasters. This supplement introduces some of the global leaders and innovators who are paving the way towards a carbon-free future for our planet.

General Manager AYMAN RADY Research & Analysis Manager DR. MAHINAZ EL BAZ Managing Editor IHAB SHAARAWY Senior Editors RANA AL KADY NADER RAMADAN Senior Writer SARAH SAMIR Staff Writer FATMA AHMED Research & Analysis Supervisor REHAM GAMAL Research Analysts JOLLY MONSEF MARIAM AHMED ABDULLAH MOSTAFA Statistician NADA ABBAS Chief Reporter WAEL EL-SERAG Business Development Manager SHROUK IHAB Creative Art Director OMAR GHAZAL Senior Graphic Designer MERNA WILLIAM Motion Designers/ Video Editors AMIRA HASSAN 3D Visualizer TAMER GAMAL Photographer HADY NABIL CEO Executive Assistant NOHA ZAYED Web Master OLFAT KAMEL Web Developer MOHAMED ELWAKEEL Administration TAGHREED MOUNIR Senior Accountant MAHMOUD KHALIL Accountant MOHAMED NAGY Distribution Officers MAHSOUB KENZI MOHAMED EL-SAYED MAHMOUD NABIL OSAMA MOHAMED HESHAM MOHAMED

Publisher MOHAMED FOUAD All rights to editorial matters in this supplement are reserved by Egypt Oil and Gas and no article may be reproduced or transmitted in whole or in part by any means without prior written permission from the publisher.

Egypt Oil & Gas Decarbonization Supplement 2023

TABLE OF CONTENTS The Minister Speaks: EGYPT’S EFFORTS TOWARDS CLIMATE ACTION An interview with H.E. Minister of Petroleum and Mineral Resources Tarek El Molla

Changing the Game: EMGF Spearheading Decarbonization Efforts in the East Mediterranean Region - EMGF

Pioneering Technology, Delivering Solutions: Carbon Capture and Storage - Wintershall Dea

Charting the Course to a Low-Carbon Future: Cheiron’s Strategies, Progress in Decarbonization - Cheiron, Capricorn

Powering a Greener Future: How Huawei Digital Power is Leading the Energy Revolution - Huawei

Flare-to-power: Debunking common myths about the world’s most misunderstood energy solution - Aggreko

IPR ENERGY GROUP – A SUCCESS STORY - IPR Energy

Why Decarbonise the Upstream Sector? - Wood Mackenzie

Why Oil & Gas Sector Needs Technology-Open Approach to Emissions Reduction - IOGP

PARTICIPATING COMPANIES / ORGANIZATIONS

Egypt Oil & Gas Decarbonization Supplement 2023

INTERVIEW

strategic pillars to complement Egypt's oil and gas sector activities in this respect. Accordingly, the sector is working to promote decarbonization activities, monetize decarbonization opportunities and instill a sector wide focus on decarbonization.

THE MINISTER SPEAKS:

EGYPT’S EFFORTS TOWARDS CLIMATE ACTION

Your Excellency, would you tell us more about the sector’s efforts towards decarbonization? The oil and gas sector is working to implement decarbonization projects to progressively lower the carbon footprint (carbon intensity) of the sector. The sector developed a six-year decarbonization projects plan with expected reductions of 8 million tons (mmt) of CO2 equivalent with investments reaching $600 million.

AN INTERVIEW WITH H.E. MINISTER OF PETROLEUM AND MINERAL RESOURCES

TAREK EL MOLLA

ith the world working towards achieving a carbon-free future, Egypt leads the African continent’s efforts to realize a just and realistic energy transition that shall guarantee a sustainable economic growth for the African countries. Egypt Oil and Gas sits with Minister of Petroleum and Mineral Resources Tarek El Molla to discuss Egypt’s decarbonization strategy and the steps that the country has taken to meet the objectives of The Paris Agreement.

Your excellency, how would you describe the current status of the global energy transition? The world demand for energy is rapidly increasing, being one of the main engines for economic development and the welfare of societies. However, to achieve sustainable development, energy sources must be also sustainable, meaning that it is all about energy transition: transitioning to produce more energy with fewer emissions. The energy transition is a crucial step to enhance the energy system’s global socio-economic footprint, global welfare, gross domestic product (GDP), and employment. Yet, the trilemma of providing affordable, reliable, and clean energy while tackling climate change is complex and sometimes divisive. All countries are currently heading for the transition to a low-carbon economy in the context of climate change and global warming. The Paris Agreement marked the first global treaty to combat climate change, control greenhouse gas emissions, and limit the rise in global temperature. It was adopted by world leaders at the United Nations (UN) Climate Change Conference (COP21) in Paris in December 2015. Egypt signed the Paris Agreement in 2016 and ratified it in 2017. The agreement's goal is to substantially reduce global greenhouse gas (GHG) emissions to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees Celsius. The world needs more than one energy transition pathway to consider the different circumstances of all countries according to the principle of “Common but Differentiated Responsibilities and Respective Capabilities” 6

(CBDR-RC). In 1992, the principle of CBDR-RC was officially formalized in the UN Framework Convention on Climate Change (UNFCCC). This principle recognized that countries have different duties and abilities to address the negative impacts of climate change, but all countries have an obligation to address climate change. Egypt is accelerating its decarbonization pace and working on energy diversification as it is committed to its “Sustainable Development Strategy: Egypt Vision 2030” and “Integrated Sustainable Energy Strategy 2035”, which were launched in 2015. The Egyptian oil and gas sector has a significant role to support this strategy through a number of projects and initiatives. The Ministry of Petroleum and Mineral Resources (MoPMR) also organized the “Decarbonization Day” at COP27 which highlighted the local, regional, and global success of decarbonization in the oil and gas sector and hard-to-abate industries. We understand that in order to advance emissions reduction’s objectives, the Egyptian oil and gas sector had to sustain the global rapid pace. What are the main pillars of the sector’s energy strategy? The Egyptian oil and gas sector is a main driver of economic and social development. The sector strategic pillars are centered around three main pillars for Energy Security, Financial Sustainability and Sector Governance. In line with the holistic approach for sustainable development, decarbonization and transition to low carbon energy sources were embedded within these

In line with Egypt’s leading regional role in climate action, H.E. President Abdel Fattah El Sisi announced that Egypt joined the Global Methane Pledge in the oil and gas track at the Major Economies Forum on Energy and Climate Change in June 2022. A methane measurement campaign was also conducted in 2022, which covered six gas facilities and one tank farm. A second methane measurement campaign was also recently completed in more than 25 facilities. Egypt also endorsed the World Bank initiative of “zero routine flaring by 2030” and the oil & gas sector is cooperating with the World Bank program for “Global Gas Flaring Reduction (GGFR)" to achieve this target. In this respect, the sector succeeded in implementing more than 20 flare gas recovery projects. Reducing flaring is a key element of Egypt National Determined Contributions (NDCs) to achieve flaring GHG reduction of 65% in 2030 compared to BAU.

Boost Energy Supply Diversify Energy Supply

Energy Security

Manage Energy Demand

Promote Decarbonization Activities Address Historic Arrears & Financial Interdependencies Financial Sustainability

Reform Energy Subsidies Maximize Value Added From Oil & Gas

Monetize Decarbonization Opportunities Improve Sector Governance & Organizational Structure Sector Governance

Capitalize on the Sector’s Human Capital Attractive Investment Climate -

Uniﬁed Sector-Wide Focus on Decarbonization

Sector's Decarbonization Key Pillars

Energy Subsidy Reform

Energy Efficiency

Decarbonized Natural Gas to complement Renewable Energy

Decarbonization (Carbon Intensity Reduction)

Renewables & Green Petrochemicals

Hydrogen

So, what are the pillars of the decarbonization strategy? Continuous Increase in Natural Gas Consumption

The Ministry's plan and activities towards supporting decarbonization and energy transition are based on six main pillars, which include energy subsidy reform, energy efficiency, renewables and green petrochemicals, decarbonized natural gas to complement renewable energy, carbon intensity reduction, and hydrogen. The Egyptian oil and gas sector is renowned for being one of the most proactive sectors, Your Excellency, what initiatives are underway when it comes to energy subsidy reform?

(Million Tons)

Natural Gas

Petroleum Products

1999/2000

23 35

2014/15

38 47

2020/21

In line with the economic reform program launched by the government of Egypt, an energy subsidy reform program was implemented in order to address chronic challenges of the energy subsidies borne by the government and to ensure a more sustainable approach for fuel pricing. Such challenges included the heavy fiscal burden on the government’s annual budget, disproportionate benefit of rich households due to their relatively higher energy consumption, and absence of a motive for energy efficiency. Through the energy subsidy reform program, the subsidies are now specifically directed to vulnerable groups and increased programs for targeted social protection measures (social safety nets) were implemented. Moreover, prices of liquid petroleum products are now subject to quarterly review through the Automatic Fuel Indexation system. Egypt's

31 50

2022/23

More than 3 Folds Increase in Natural Gas Consumption (%) Natural Gas

Petroleum Products

38 1999/2000

35 2022/23

2014/15

64 2020/21

Egypt Oil & Gas Decarbonization Supplement 2023

INTERVIEW successful implementation of the energy subsidy reform program received acclaim and recognition from leading international organizations. What role does natural gas play in Egypt’s energy transition? As a cleaner and more environmentally friendly fuel, Egypt took a strategic decision more than 20 years ago to use cleaner, less carbon intensive, and more environmentally friendly fuels. Decarbonized natural gas has increasingly become Egypt’s fuel of choice to complement renewable energy generation, which is in line with Egypt’s energy sector strategy for energy transition and boosting decarbonization. The sector managed to place Egypt on the global map of major players in the natural gas industry particularly in the East Mediterranean region, and after resuming exports. Would you say that promoting the use of natural gas in Egypt has been a success? Absolutely. Natural gas consumption increased more than threefold from fiscal year (FY) 1999/2000 to 2022/23. This increase came in light of Egypt’s vision to diversify its energy mix, enhance the transition towards green fuels, and boost decarbonization in the energy sector. more than 14 million households are now connected to natural gas and close to 500,000 cars were converted to CNG as a cleaner & environmentally friendly fuel for sustainable mobility. Natural gas usage has also expanded in other industrial sectors to increase its added value, including petrochemicals and fertilizers production. How is energy efficiency affecting the acceleration of the energy transition in Egypt? The Egyptian oil & gas sector considers energy efficiency as the first fuel and the most cost-effective way to achieve emission reductions. The sector has managed to achieve significant successes and achievements in this respect. For effective governance, the Ministry established a robust institutional setup for energy efficiency across the sector companies to enhance and support energy efficiency activities. In this regard, the MoPMR inaugurated the Center of Excellence of Energy Efficiency and Process Optimization, which will provide its services to improve energy efficiency in all energy sectors within Egypt and Africa. The Ministry also organized three editions of the “Egyptian Petroleum Sector Energy Efficiency Conference” while the fourth-edition preparations are ongoing. This is in addition to developing an energy efficiency capacity building plan for more than 1,000 trainees, and implementing the first energy efficiency middle management program for 247 Engineers. It also established a database for Energy Consumption and Emissions covering all sector operations. Moreover, 8

it implemented five energy audits across refineries, upstream and petrochemical companies that identified energy efficiency improvement projects with potential to reduce energy consumption and emissions by 15%. Apart from energy efficiency, how does hydrogen factor into Egypt’s decarbonization ambitions and what economic potential does it have? Egypt has several assets and strong points for leveraging its hydrogen potential, including a strategic location with access to potential global markets in Europe and East Asia, significant renewable energy resources, well developed infrastructure, as well as capitalizing on Egypt’s human capital. Accordingly, low-carbon hydrogen will be an integral part of Egypt’s energy transition. In this respect, hydrogen is a key pillar in Egypt’s oil and gas sector decarbonization pillars to capitalize on the sector’s expertise and potential across the hydrogen value chain. The MoPMR is supporting leading efforts to develop Egypt’s low-carbon hydrogen strategy in collaboration with an international leading consultant. Within this strategy, a vision was crafted to realize Egypt’s ambition to become a global leader in the low-carbon hydrogen economy. To enhance collaboration with partners and share best practices, The MOPMR continues to cooperate with leading countries and entities to advance hydrogen efforts. The Ministry co-signed a declaration of intent with the German Ministries of Economic Affairs and Climate Action, and Economic Cooperation and Development Cooperation in the field of green hydrogen, emphasizing the common goal of creating a suitable environment for sustainable economic and environmental development for both countries. The sector’s entities also signed a number of MoUs with leading organizations to cooperate in the field of hydrogen. Furthermore, the Ministry is participating in the "Hydrogen for Development Partnership" that was launched by the World Bank during COP27, which aims for developing human capacity, regulatory solutions, business models, and technologies toward the roll out of low-carbon hydrogen in developing countries. The Ministry of Petroleum and Mineral Resources is actively engaged in developing the anticipated incentives package for green hydrogen projects and its derivatives, and has played a major role in developing the proposal for Egypt’s National Council for Green Hydrogen and its Derivatives, which was recently established. Do you think that Egypt’s hosting of COP27 succeeded to highlight the country’s commitment to global climate action? Yes, COP27 witnessed the participation of over 100 heads of state and government, and more than 50,000 people. COP27 came as a key opportunity for strategists and experts to have open discussions on decarbonization,

energy transition, and policy-making. The international community praised Egypt's success in organizing the COP27 climate conference. Manage Energy The Egyptian oil and gas sector succeeded in organizing theDemand first ever "Decarbonization Day" as part of the official thematic days at COP27. This was the first time ever in COP summits that those who participated in COP27 had the opportunity to take part in Decarbonization Day, a day that not only seeks to highlight the importance of decarbonization as Reform Energy Subsidies a cause but was a clear demonstration of Egypt’s firm commitment to achieving the objectives of the Paris Agreement while pushing for a just energy transition.

Monetize Decarbonization Opportunities

I personally had the pleasure of opening Decarbonization Day which also witnessed the participation of H.E. John Kerry, U.S. Special Envoy for Climate, and H.E. Gerd Muller, United Nations Industrial Development Organization (UNIDO) Director General. It covered eight sessions and showcased efforts, commitments, and enablers for accelerating Uniﬁed Sector-Wide on Decarbonization decarbonization in hard-to-abate industries. This is inFocus addition to 20 bilateral meetings with a number of ministers, officials from international companies, as well as leading experts from global and regional energy institutions. What were the main outcomes of COP27 Decarbonization Day? By the end of COP27, the oil and gas sector was able to achieve a number of outcomes as a result of its participation, including the Egyptian Petroleum Sector Energy Efficiency Strategy (2022-2035), Sharm El-Sheikh Oil and Gas Methane Reduction Roadmap, Low Carbon Hydrogen Strategic Framework, and the EMGF Decarbonization Initiative. I am also proud that seven MoUs were signed between Egypt’s oil and gas sector and a number of international companies specialized in the energy transition, decarbonization, and hydrogen fields. The MoPMR also signed an MoU with the EU in partnership with the Ministry of Electricity and Renewable Energy on green hydrogen. Your Excellency, as our interview comes to an end, what are your expectations for the future of the Oil and Gas Industry? I would say that the emergence of a sustainable, low-carbon and circular economy is possible. The support of all stakeholders from governments, private sector, international organizations and financial institutions is essential to achieve this transition. The energy sector will play an essential role in the global energy transition. The Egyptian oil & gas sector is committed to continually advancing its decarbonization agenda to contribute to satisfying both local and energy demands with lower carbon intensity. The Sector will continue to collaborate with all stakeholders and partners to advance energy transitions that are both pro-climate and pro-growth. Moreover, the MOPMR will continue working to execute specific projects to realize its vision and strategy for emissions reduction to fulfill both local and regional energy demands while considering our environment.

More than 20 Folds Increase in Natural Gas Consumption (%) *

5 3

1980/1981

6 13

1999/2000

5 5

62 2014/15

12 5 4 12

9 6 5

16 2020/21

2 3

1 3

10 7 6

16 2022/23

1 4

*Iron & Steel, Cement & Other Industries

Energy Efficiency Projects

Energy Saved

0.9

247

GW/y

THE ENERGY EFFICIENCY PROJECTS INCLUDE:

Energy Load

Operational optimization

Management

Eliminating waste in utility systems

Water re-use and recycling

Heat and power integration

ANNUAL ENERGY SAVING

Value Saved

Through

$115

million/y

Applying No/Low-Cost Energy Efficiency Measures

Emission Reduction (MM TPA CO2)

5.4

1.4

Completed

Ongoing

6.8 Total

7 Signed MoUs with International Companies

Shell

Siemens

Toyota Tsusho

HiiROC

General Electric

TotalEnergies

Microsoft

SeaSplit

Egypt Oil & Gas Decarbonization Supplement 2023

OVERVIEW

CHANGING THE GAME:

EMGF SPEARHEADING DECARBONIZATION EFFORTS IN THE EAST MEDITERRANEAN REGION

ever has regional cooperation, and more importantly global cooperation, been essential to the existential threat that the world faces, especially in light of rising global temperatures and rapidly evolving climate patterns that could threaten the core foundations of human existence. Climate change is a matter of scientific consensus given the indisputable scientific data, the observable environmental incidents/crises that have taken place, and the concerning changes in the delicate ecological balance that has guarded humanity’s prosperity for such a long time.

Emerging from COP26, public and private sector decisionmakers around the world are reaffirming the urgent need to accelerate their decarbonization efforts. In 2015, an international treaty known as the Paris Agreement was signed by 196 countries aiming to keep mean global temperature below 2°C above pre-industrial levels, reaching net-zero emissions by 2050. Achieving this objective will require a 50 percent emissions reduction by 2030 and net zero by 2050. Transition to a low-carbon future requires the direction of resources and effort toward existing energy efficiency solutions, emerging technologies like hydrogen and carbon capture and storage, and lower carbon and renewable energy alternatives. It focuses policies, investment, and action on sectors central to low- or zero-carbon growth, supporting the decarbonization of products, processes, services, technologies, and supply chains. Global unity in the face of climate change has turned from being a dream into a reality, as the world begins to recognize the magnitude of this threat and react accordingly. Decarbonization has become a core concept in policy-making around the world with countries around the world seeking to create a more diverse energy mix that incorporates the extraction and production of fossil fuels in a more responsible less emissions-intensive manner, as well as the adoption of natural gas as a realistic and viable alternative that can power the energy transition forward, in addition to the use of renewables (such as hydrogen),. All over the world oil and gas companies accompanied by the relevant government authorities have been proactively taking measures to reduce emissions through the timely deployment of better technologies while enhancing energy efficiency and this is taking place at a faster rate than ever, with landmark private-public partnerships being a key enabler. Though the global effort towards a carbon-neutral future is impressive, it would need the combined potential of natural-gas-rich East Mediterranean markets which can help sustain the evolving needs of energy markets with an important environmentally responsible fuel as the energy transition continues to progress. The East Mediterranean is therefore a vital region not just for preserving the interests of global energy security, especially with the rising demand for natural gas, but it also has the potential to provide the momentum needed to push the energy transition forward.

The East Mediterranean Gas Forum (EMGF) was created to foster cooperation and collaboration across the East Med region, support the development of infrastructure for gas trade both within the region and with external markets, and unlock the full potential of the region’s vast natural gas resources. During 2021 and 2022 heading COP 27, the EMGF started a resilient decarbonization journey outlining 4 pillars to support and accelerate gas value chain Decarbonization: Policies & regulations, Financing, Technology and capacity building tools for decarbonization to support and accelerate the East Med Region gas value chain decarbonization. The financing pillar involves shortlisting priority investments according to a cost-benefit analysis as well as identifying their financing needs and financing mechanisms. The technologies pillar, assures the selection of the best compatible and applicable technologies that can cater to the East Med region specifically. While capacity building, entails pinpointing current capacity gaps and promoting workshops to enable the professional development of all concerned parties, this will go hand in hand with the policies/regulations pillar which aims to define regional decarbonization objectives, in accordance with each individual country’s strategic and energetic plan. COP 27 in Sharm El Sheikh elevated the voices of the Energy industry, during the decarbonization day which featured several sessions that launched initiatives including the Sharm El Sheikh Methane Reduction Roadmap and East Mediterranean Gas Forum decarbonization Report. Although it’s an infant organization, EMGF developed the Decarbonization in the East Med Region report which assessed key options to decarbonize the gas value chain and identified specific actionable recommendations for harmonizing and developing a common unified regional East Med market promoting Decarbonization. The competitive edge that differentiates this report is that it reflects an integrated collaborative effort from governments, financial institutions, policymakers & different industrial sector organizations.

vision of emissions reduction regulations and policies. Second, it will be effective carbon certification by developing and managing a sub-regional Carbon Intensity Certification (CIC) mechanism. Third, the EMGF will be a reliable financial consultant by supporting member countries to prioritize decarbonization opportunities. Fourth, the EMGF can be an indispensable knowledge aggregator by enabling knowledge creation, retention, and transfer between members. Lastly, the EMGF also seeks to be a reliable technical advisor by encouraging effective and efficient decarbonization solutions that can be applied. On a regional level, the EMGF’s decarbonization report can be summarized in two main goals, with Goal 1 being mostly concerned with each member country’s individual decarbonization plan and is advantageous in that it involves realizing quick wins. Goal 1 shall focus on decarbonization’s “low-hanging fruits” by paying particular attention to energy demand and efficiency (Lever 1) and methane abatement (Lever 2) within the next years. This can be accomplished through developing standards, targets, and incentives in the second year (Year 2) as well as setting policy requirements and requirements in the fourth year (Year 4), as part of the six-year plan. Low-carbon heat and power (Lever 3) and CCUS/DAC (Lever 4) will become the two main focuses from Year 6 to Year 8, up until 2030. Goal 2 will involve ensuring the establishment of a harmonized policy and regulatory framework for all EMGF member states. For Goal 2 in specific, the EMGF has diligently developed 6-8 years plans for harmonized regulatory and policy framework, which includes, CIC, carbon pricing, and Levers 3 & 4. As previously set forth during COP27, it was important that the EMGF addresses its latest framework development with two key roles as an outcome of its Decarbonization Report. The first role, which is policy/regulatory harmonization, will be done through the use of a harmonized policy and regulatory framework for the decarbonization of natural gas value chain operations in the East Mediterranean region, to be presented to EMGF member countries for adoption. This will include the definition of strategies, priorities, and objectives, flaring reduction and abatement of CO2 and methane emissions policies, decarbonization and carbon intensity targets, and the adoption of common standards, monitoring, reporting, and verification (MRV) protocols, timelines and required regulatory oversight and enforcement mechanisms at

national and regional level. In addition, harmonization will also involve the drafting of attendant legal and regulatory instruments and policy statements. The second role is the EMGF was to emphasize a carbon intensity certification mechanism, which involves a detailed proposal for the final design and implementation of an EMGF-based CIC mechanism to enhance the carbon competitiveness and marketability of the region's natural gas production and exports. The EMGF CIC has several objectives including ensuring independently certified adherence to or achievement of adopted CI target, boosting and enabling decarbonization and mitigating environmental impacts with climate change benefits, enhancing the perception and acceptance of-/ preference for EMGF natural gas by countries that import, securing the necessary finances for the EMGF, and supporting the expansion of the EMGF CIC to the EU and other parts of the world. In addition, the EMGF has identified five policy and regulatory objectives that were pinpointed to realize greenhouse gas abatement of natural gas produced by EMGF states, while cutting down on venting, flaring, fugitive, and combustion emissions. These objectives include( 1) harmonizing and determining aligned EMGF-wide industry MRV requirements for consistent estimation, measurement, and reporting of various types of GHG emissions derived from the natural gas value chain, (2) obligating energy efficiency improvement of natural gas operations through the adoption of efficiency targets and measures aimed at energy consumption abatement to reduce combustion emissions, (3) managing fugitive emissions by adopting unified LDAR principles, (4) developing and adopting policy and regulatory measures through the promotion of electrification and renewables to reduce harmful emissions, (5) reducing emissions from flaring and venting setting appropriate technical standards, permitting requirements and utilizing economic instruments. The EMGF will continue to play a critical role in leading the future sustainability efforts for the East Mediterranean market and the only way anything significant can be accomplished is through combining the efforts and resources many countries have together.

As a major force in climate action, the report identifies five key areas where EMGF can play a role in the decarbonization efforts of its member states’ natural gas value chain. First, it will act as a policy harmonizer by promoting a harmonized

Egypt Oil & Gas Decarbonization Supplement 2023

INTERVIEW

PIONEERING TECHNOLOGY, DELIVERING SOLUTIONS:

CARBON CAPTURE AND STORAGE

head of the United Nations Climate Change Conference COP28, the role of CCS in energy transition is widely discussed. The German E&P company Wintershall Dea, which is currently in the process of becoming a Europe’s leading gas and carbon management company, has stakes in major CCS projects in the North Sea.

I guess it is a bit more complicated than that. The CCS value chain consists of different elements than E&P and requires different kinds of partnerships. Therefore, another learning from Greensand is: expand partnerships. Contrary to traditional E&P business, we are not responsible for the creation of the product in the CCS business. Producers are overwhelmingly heavyemitting industries. These emissions should be captured, transported and safely stored. This needs creative thinking: Which emitters are suitable partners? Where are they located, and do they match any potential storage sites nearby? How can carbon dioxide be deployed from the production to the storage site in the most cost-effective way? In our European projects we see our role as a kind of ‘architect’ – bringing partners and parts of the value chain together to form an overall project that works.

We talked to Sameh Sabry, Managing Director Wintershall Dea Egypt, about the opportunities of the technology in general and its potential for Egypt.

Mr Sabry, why is Wintershall Dea focusing on CCS as technology? At Wintershall Dea, we are not only doing business. We believe that we can make a difference to energy security and on environmental sustainability in the countries where we operate. Given the fact that fossil fuels will remain a key factor for global energy security, we are constantly questioning our role in mitigating climate change. We at Wintershall Dea are convinced that the oil and gas industry has clear solutions to offer. One of them is Carbon Capture and Storage (CCS).

What is the role of CCS in the energy transition? We believe that CCS is essential for climate goals which hardly can be reached solely through emissions reduction. Capturing and storing CO2 enables us to produce and use natural gas in the most environmentally friendly way and bring it into accord with the global climate targets. And in the future, it can be implemented in Egypt, too. In March 2023, Wintershall Dea together with partner INEOS delivered a first CO2 injection at the Greensand CCS project in Denmark. A real milestone: a successful first full crossborder CCS value chain in Europe. For the pilot injection, first quantities of CO2 from a Belgian emitter were safely stored in the depleted Nini West oil field in the Danish North Sea. And with an annual storage capacity of up to eight million tonnes of CO2 from 2030 – more than ten percent

Do you believe that the oil and gas companies of today will be the CCS companies of tomorrow? Do you think we will see many companies shift their business models towards CCS?

of Denmark’s yearly emissions - the project will make a valuable contribution to European climate targets.

What type of environment should governments and decisionmakers provide to incentivise the IOCs and other companies to invest in CCS? CCS can only play its part in the Energy Transition with the right framework. In Egypt, His Excellency Tarek El Molla, Minister of Petroleum, has given a clear signal that he sees a future for CCS and wants companies to engage. That gives the market clarity and confidence. There is however a lot still to do. An investable regulatory framework needs some kind of price mechanism and incentive for CO2 capture. It needs regulation for transport and storage, and

environmental regulation that creates confidence in the technology. So, there is much to do, but this challenge is not unique to Egypt. Countries around the world are also at an early stage here. At Wintershall Dea, we are minds of engineers and pioneers at heart. This philosophy drives us every day and describes our commitment for our activities around the globe. And indeed, establishing a CCS industry resembles a pioneering act: It is a new territory which companies and governments have to work on together. Our promise is this: We will continue our valuable and trusting dialogue with Egypt in word and deed, also on the subject of CCS. Because we believe in it. And because our shared challenges require technological solutions.

How do you make sure that the CO2 stays under the surface offshore?

On the journey towards our CCS business in Europe, we have learned several takeaways which can be applied globally – including in Egypt. First: knowledge and expertise matter. Our CCS activities in the North Sea are based on 60 years of subsurface analyses and monitoring as well as over 125 years of E&P business in four continents. We are one of the longest-established companies in the North Sea and have more than a century of geoscientific, petrochemical and engineering expertise.

CCS is a safe technology. The idea of injecting CO2 into geological rock formations is nothing new. In fact, for decades, liquefied carbon dioxide has been injected into deposits in order to extract the remaining oil there as efficiently as possible. CCS has been used in Norway already since 1996. Wintershall Dea has gained valuable expertise as a shareholder in the Norwegian Snøhvit offshore CO2 storage facility. Since 2008, 4.7 million tonnes of CO2 have been captured and stored there.

The former production sites have a huge storage potential. That is where oil and gas come from and where CO2 can be finally stored. Throughout decades of E&P, the oil and gas industry has used traditional means as well as digital technologies to explore its concessions. This experience allows us to make thorough data-based decisions on storage potential. We believe that the data to identify storage sites already exists, but it takes experts to put the puzzle together.

Societies expect industry to implement the highest possible safety standards. And rightly so. At Greensand, Wintershall Dea follows the Offshore Safety Directive, which sets the highest safety standards for CO2 storage in the North Sea, certified by an independent expert in assurance and risk management. To gain trust

What takeaways and learnings have you already gained from your project participations in the North Sea?

by the broader public, it is necessary for governments to act on regulatory issues..

Egypt Oil & Gas Decarbonization Supplement 2023

INTERVIEW

CHARTING THE COURSE TO A LOW-CARBON FUTURE:

How has enhancing energy efficiency played an important role in cutting down on emissions at your assets?

protecting and enhancing biodiversity. Such opportunities can also secure livelihoods and working closely with local communities is vital.

Can you provide examples of successful collaborations or partnerships that Cheiron has established to advance decarbonization objectives and build capacity in the oil and gas sector

AN INTERVIEW WITH DAVID THOMAS, CHEIRON CHIEF EXECUTIVE OFFICER

Energy losses are a cost to the business as well as a potential source of GHG emissions, so enhanced energy efficiency saves the business money and helps the environment. It allows us to prolong the economic lives of our oil and gas fields by reducing late field life costs and, for new fields, maximizing the use of existing infrastructure can yield significant benefits. It is also important to look outside the boundaries of our operations to see how best to share the use of available infrastructure across the sector by arrangement with neighboring operators. Viewing greenhouse gas emissions through the lens of energy loss prevention also has benefits in focusing our organization and staff on the challenges ahead.

CHEIRON’S STRATEGIES, PROGRESS IN DECARBONIZATION

How does Cheiron measure, track, and report progress towards its decarbonization targets? How has Cheiron's approach to decarbonization evolved over the years and what steps have been taken to reduce greenhouse gas emissions?

We track the emissions generated directly from our operations and report these, along with our emissions intensity, on a monthly basis to monitor progress against our reduction target. Detailed information on environmental plans and initiatives, as well as performance data, are also included in our Annual Sustainability reporting. In the future we will be introducing a net carbon intensity indicator for our products that identifies how much carbon is emitted per unit of energy within our products. This indicator will reduce as we move to a greater proportion of gas within our product mix and subsequent diversification of energy streams into low-carbon fuels and renewable power.

Cheiron views Sustainability as one of the key pillars of its; supplying energy to meet Egypt’s social and economic needs whilst also protecting our workforce, the environment, and the communities on which we depend. We recognize that our emissions, energy use, and materials consumption are contributing factors to climate change and support the transition to a low carbon economy in line with Egypt’s national policies. We also recognize that oil and gas will have a vital role to play in Egypt’s economy for a long time to come. The company has been progressively implementing Good International Industry Practice as part of its broader sustainability agenda, with reductions in our greenhouse gas (“GHG”) emissions being a core objective. Last year we published our Sustainability Plan which formalises many of these activities and sets short, medium and long-term GHG related objectives and actions across the business. Like many companies, we continue to identify our role in the Energy Transition and are in the process of finalizing our Energy Transition Plan to support our broader Sustainability objectives. This not only looks at emissions from our operations, supply chain, and products but also key interactions with other sustainability issues including biodiversity protection, waste management, and community engagement.

What are Cheiron's decarbonization ambitions for the coming period? Can you provide insight into the timeline and milestones that Cheiron has established for its decarbonization goals, and how progress is being monitored? Cheiron’s short term target is to reduce GHG emissions per unit of production across all our Egyptian operations by 25% by the end of 2025 against a 2020 baseline. We support eliminating routine venting and flaring as soon as practical and no later than 2030 in line with the World Bank Zero Flare Initiative and also recognize the need to control methane emissions in the near term. This includes reducing fugitive emissions as part of Egypt’s Global Methane Pledge and in line with the Oil and Gas Methane Partnership. Cheiron also has the ambition to be a Net Zero energy company by 2050. Both our Sustainability Plan and draft Energy Transition Plan support these elements with benchmarks established for intervening periods. We support a decarbonization pathway using a common but differentiated convergence approach between developing countries, such as Egypt, and those with more mature economies. Cheiron is also aligning its actions with the United Nations Conventions on both biodiversity and climate change and this requires close collaboration with the Ministry of Petroleum, EGPC, and other Government agencies as well as our sister companies. A great strength in the Egyptian oil and gas sector is the way in which companies can work together under the auspices of the Ministry to achieve a common goal.

How does Cheiron plan to balance its existing oil and gas operations with transitioning to a lower carbon future?

What specific technologies or strategies is Cheiron considering or implementing to achieve its decarbonization goals? We have initiatives running that seek to minimize emissions and move towards Net Zero for emissions either directly associated with operations (called Scope 1 and 2 releases) as well as those associated with the supply and product chain (called Scope 3). To reduce emissions associated with our own operations Cheiron continues to substitute diesel fuel with gas. Individual well generators are being replaced across the portfolio with centralised gas-fired power and electrification units. Gas that would otherwise be flared is also being recovered for power generation. Projects to continue electrification of systems to deliver further energy efficiency gains are in various stages of both implementation and design. Such systems are already being introduced into new project designs along with pressure control systems that prevent the need for flaring or venting. All our companies continue to conduct detailed GHG emission reduction and energy efficiency opportunity assessments to optimise our existing operations. This is also being carried out in conjunction with an expansion of the number of companies certified to ISO 50001 (for Energy Management). We also continue to undertake studies of how we can use renewables, biofuel and potentially hydrogen as fuels for our operations in future. We are tendering for units to convert camp food waste to generate biogas for power in remote locations and generate a soil conditioner that local communities can utilise. We have also recently completed a major Carbon Capture and Storage feasibility study for our Bapetco facilities in conjunction that will progress to the next design stage. A design study to introduce a large-scale waste heat recovery project for waste heat generated by open cycle power turbines has also been conducted and this should move towards project implementation shortly.

To reduce the carbon intensity of products our aim is to substantially increase the proportion of gas in our total production volumes. Gas is required to displace higher carbon fuels and support emission reduction efforts in other sectors including electricity generation, fuel for transportation and homes, as well as emission reduction efforts abroad where gas is exported. This is to provide secure, affordable as well as low-carbon energy whilst also providing decent work opportunities and reducing social inequalities within a developing economy such as Egypt’s. Cheiron is also part of the diversified PICO group of Companies. Future opportunities exist for the group to take solutions beyond current oil and gas operations to diversify into low-carbon products. This includes services supporting hydrogen fuel and renewable power adoption as well as working with PICO’s agricultural business to develop naturebased solutions and regenerative farming practices that absorb carbon dioxide to generate useful products, including biofuels, and potentially provide carbon offsets.

How does Cheiron engage with stakeholders, including the Egyptian Ministry of Petroleum and Mineral Resources and local communities, to ensure a smooth transition towards decarbonization? All our operational activities supporting the energy transition are delivered through our Joint Operated Companies (“JOCs”) which are jointly owned by Cheiron, our Partners, and the Egyptian Government through the Egyptian General Petroleum Corporation (“EGPC”). This structure ensures that we stay fully aligned with the Egyptian Government policies and guidelines and allows us to benefit from collaboration with EGPC and the Ministry and other third-party operators who may use our infrastructure to process their oil and gas. Reaching alignment on the best GHG emission-reducing strategies with these various stakeholders is key to reducing GHG emissions even further. We also continue to work with our local communities to highlight the importance of environmental stewardship, particularly in the Gulf of Suez area which is a particularly sensitive environment. When we look ahead we can see opportunities to reduce carbon emissions through natural solutions using nature to capture carbon at the same time as

In Bapetco, one of Cheiron’s JOCs, we have developed a short, medium and long-term road map of GHG reduction initiatives in conjunction with our Partners and EGPC colleagues. The road map includes a step by step action plan of measures we can implement now (such as flare gas reduction and centralised power generation using gas), measures that require engineering study (such as waste heat recovery and the use of renewable energy sources) and areas we need to develop research and development collaborations (including Carbon Capture and Storage). Bapetco translates this vision into annual action plans which are approved and supported with funding by the Shareholders. Similar types of plans and arrangements are in place for all our JOCs, tailored to their specific operating environments. Where possible, we also encourage the use of innovative technologies and a good example of this are current studies, run in collaboration with Partners and Bapetco, to evaluate the possible use of thermal plasma electrolysis to convert flare gas to hydrogen and saleable carbon.

Do you think Egypt is taking the right steps to achieve the goals of The Paris Agreement? Why? Whilst Egypt has yet to define a Net Zero target date, it is certainly taking the right steps to reduce emissions. At a national level, the country is committing to reduce flaring to less than 50% of 2015 levels, and overall methane emissions by 30% below 2020 levels, across all sectors by 2030. Targets for renewable energy within the electricity supply mix are also defined as part of the country’s Long-Term Low Emission Development and Climate Change Strategy. The focus is on demand side emission management and adaptation, and this is understandable for a rapidly developing country like Egypt where further infrastructure improvements and economic growth are required to support a just and equitable transition. The country is also open to support from the global community for access to technology and international finance mechanisms such as carbon credits which can support GHG reductions for developing and developed countries alike.

What are the main challenges and obstacles that Cheiron is facing in its journey towards decarbonization, and how are they being addressed? At present, there are also no formal carbon pricing mechanisms in Egypt to ensure the social and environmental costs are fully incorporated into investment decision making. A carbon price, whether through formal mechanisms such as carbon tax or tradeable permits, or a mandatory inclusion as a cost sensitivity within economic assessments would highlight the true cost of emissions. We consider this would change how potential emissions reductions are perceived and prioritized. Also, whilst emissions reduction targets have been identified for the oil and gas sector, there is still work to do to determine how these targets are allocated and how reduction initiatives can be supported through the production sharing agreement processes. The role international carbon credits can play within such agreements where credits can support project financing and generate income for international investors and the Government also merits future discussion.

Egypt Oil & Gas Decarbonization Supplement 2023

INTERVIEW

POWERING A GREENER FUTURE: HOW HUAWEI DIGITAL POWER IS LEADING THE ENERGY REVOLUTION AN INTERVIEW WITH JOEY DENG, CEO OF DIGITAL POWER BUSINESS AT HUAWEI EGYPt Huawei launched its subsidiary Huawei Digital Power 2 years ago, what is your vision in digitalizing the strategic sector of oil and gas from global and local perspectives?

clean energy, cost savings, higher productivity,

two sources of energy can offer a clean,

low-carbon transportation hubs, and other

strategies accordingly. To succeed, the

sustainable source of power that lessens the

low-carbon urban scenarios.

company needed to transform its technologies

need for diesel generators and the related fuel expenses.

How are you planning to achieve carbon neutrality and build a green and better future for oil and gas?

and environmental sustainability to drive the energy revolution for a better and greener

In the next decade, renewables like wind, solar,

future at both local and global levels.

and hydropower will dominate as the main

and services, learn and understand customer Huawei Digital Power is committed to

requirements, and accumulate more project

becoming an "enabler" in global action

experience; for greater value creation.

to address climate change, promoting the utilization of clean energy across the globe

At Huawei, we always keen on being

with its leading products and solutions, and

the chosen company for customers; we

guiding all parties to build a zero-carbon

communicate customers’ requirements and

ecosystem.

expectations to the entire value chain of Huawei accurately, to build quality together;

sources of electricity and replace fossil fuels.

Looking ahead, Huawei will work with our

we respect rules and processes and do things

We look forward to joining hands with the

Egypt is considered a prosperous market in

partners and all parties of the industrial

right the first time; we fulfill the potential of

upstream and downstream of the industrial

the field of solar energy thanks to its strategic

chain to drive the high-quality innovative

employees around the globe for continuous

chain, governments, industrial organizations,

location and capabilities that qualify it to

development of the low carbon community

improvement.

standards organizations, and partners to make

become a major regional energy center.

to accelerate carbon neutrality; that creates a business ecology of common prosperity, makes

Moreover, we work with customers to balance

As the world is working to realize digital

concerted efforts in innovation and contribute to Egypt’s energy innovation, sustainable

At Huawei, our strategy is to invest in

continuous contribution to social development

opportunities and risks, promptly responding to

transformation and carbon neutrality, highly

development, promote the low-carbon,

research and development to find solutions

and build a zero-carbon ecosystem.

their needs and achieving sustainable growth.

reliable and low-carbon energy infrastructure

intelligent energy revolution and build a low

that integrate electronic and digital energy

has become an indispensable trend in the

carbon and intelligent society.

technologies to build a sustainable, low-

digital industry. We believe that intelligent infrastructure is a key means to promote the development of the data center industry. Sustainable development has become a

carbon society. The energy solutions that the

What are the most prominent solutions offered by Huawei Digital Power to support the oil and gas industry?

global strategy and has been integrated into

company presents, support our customers

We also undertake to provide customers

How can Huawei Digital Power’s vision and strategy be effectively aligned with customer needs?

diagnose and repair faults thanks to Huawei's

and partners from the public and private

latest AI and IoT technologies.

sectors in Egypt. In particular, the government’s

Generally, we align our vision for the future with

with quality-assured products, services, and solutions and consistently enable customers to experience our commitment to creating new value for each of them.

efforts to achieve digitalization in the sector

customer demands by closely listening to our

We seek to improve our offerings and offer

It aligns with our commitment to utilizing

and maximize the value of Egypt’s natural

customer's needs and aligning our product

a one-stop shop for hardware, software,

development

and energy management solutions in the

economic, social, scientific, and technological

At Huawei Digital Power, we keen on providing

solar energy efficiently through quality and

resources to reach an optimal mix for

d eve l o p m e nt a n d t h e c o nt i n u o u s

the latest energy solutions that contribute to

technological innovation. As for our slogan,

generating electricity from different sources,

commercial and industrial sectors. We work

development of digital technology and power

enhancing digitalization by improving energy

“Making the Most of Every Ray.” We use

which contributes to achieving carbon

to satisfy the particular demands that each

electronics technology has accelerated

efficiency and consumption, enabling the

technologies such as AI and Smart DC Systems

neutrality and sustainability, in line with the

industry has through ongoing innovation and

sustainable development.

transition to new and renewable energy.

(SDS) to improve PV energy yields and O&M

country’s vision for the energy mix 2035

Huawei Digital Power offers world-leading

efficiency, making power generation more

and the National Climate Strategy

From this point; Huawei Digital Power has been

products and solutions such as FusionSolar,

economical. We can also use smart PV +

2050.

pursuing the vision of “integrating digital and

Data Center Facility and Critical Power, Site

storage generators to form grids and increase

power electronics technologies, developing

Power Facility, DriveONE, embedded Power,

the proportion of renewables in energy

A s a g l o b a l e nte r p r i s e,

our product development

clean power, and enabling energy digitization

and Integrated Smart Energy, among others.

consumption by 30%. Plus, we can use arc-

Huawei Digital Power is

and innovation methods as

fault circuit interrupters (AFCIs) to implement

fully aware that it should

necessary, we strike the

We believe that Africa has the biggest

intelligent arc protection, this will promote

take responsibility for

balance between our future

potential for solar energy around the world,

the use of green power in more homes and

carbon management

vision and customer needs.

In 2021, we established Huawei Digital Power

with a long-term output of 4.51 kWh/kWp

businesses.

in the supply chain, we

Technologies leverages its advantages in

per day, especially Egypt; the accelerating

implement the carbon

Additionally, Huawei seeks

digital and power electronics technologies

growth of solar energy, as well as the growing

Aligned with decarbonization vision of the oil

re d u ct i o n c o n c e pt

to provide a lot of value-

such as AI, cloud, and big data to help

potential that the country possesses in terms

and gas industry in Egypt to cut emissions by

in our overall supply

added services for our

customers implement simple and efficient

of resources that allow it to lead in this field

65%. The objective is to use more renewable

chain management

customers; that results in

operation and maintenance while providing

in Africa.

energy resources, lessen the reliance on fossil

strategy and work with

time-efficient customer

fuels, and develop a more sustainable energy

suppliers to accelerate

experiences. Our goal

balance.

the decarbonization

is to provide what our

to drive energy revolution for a better, greener future”.

clean and stable power supplies. Huawei has

and innovation

improvement. Overall, by carefully listening to our customers' needs and adjusting

successfully applied ICT solutions to the oil and

Therefore, Huawei launched some solutions in

gas sector in over 45 countries, serving 70% of

Africa, including FusionSolar Smart PV Solution

of the supply chain.

customers need and

the top 20 global companies in the industry.

6.0+, which enables a PV system to be adapted

Solar energy can be used by Egypt's oil and gas

We are committed to

respond to their biggest challenges.

to various grid scenarios, especially in a weak

sector in a number of ways, including: Power

the development of low-

At Huawei, we believe that Egypt has the

grid environment. We have been using the

Generation, Solar-Powered Instrumentation,

carbon technology, through

potential to become a regional energy hub

FusionSolar brand since around 2015. The name

Solar-Powered Lighting; which can result in

cooperating with partners

especially with the efforts being exerted by the

“FusionSolar” represents the convergence of

improving energy efficiency, cutting costs, and

to accelerate the green and

government to transform Egypt into a strategic

solar PV and the idea that all energy sources

reducing greenhouse gas emissions.

low-carbon transformation of

regional energy hub. Aligning with this vision of

originate from the sun. "FusionSolar" smart PV

2030, we offer strategies for digitizing Egypt's oil

solutions that integrate electronic and digital

Further, Huawei is also concentrating on using

campuses, low-carbon buildings, low-

and gas sector through integrating digital and

energy technologies, are cost-effective, risk-

solar photovoltaic (PV) and lithium-ion battery

carbon hospitals, low-carbon schools,

power electronics technologies, promoting

free, and easy to install and operate, as well as

storage (BESS Systems) where combining these

cities, and building of low-carbon

Egypt Oil & Gas Decarbonization Supplement 2023

ADVERTORIAL

FLARE-TO-POWER:

DEBUNKING COMMON MYTHS ABOUT THE WORLD’S MOST MISUNDERSTOOD ENERGY SOLUTION

oday, flare-to-power solutions are garnering more and more attention as an innovative new method for tackling the environmental and economic hurdles tied to flaring within the oil and gas sector. These solutions have the potential to transform wasted gas into a valuable source of energy, while mitigating the harmful effects of flaring.

But like any emerging technology that’s often misunderstood, there are myths and misconceptions surrounding flare-to-power solutions that need to be debunked. Here, we'll take a look at some of the most common myths about flare-to-power, and shed light on the reality of these promising energy solutions.

Myth #1: Flare-to-power solutions aren’t environmentally friendly One of the most common myths about flare-to-power solutions is that they contribute to environmental harm. However, this misconception overlooks the key benefit of flare-to-power solutions: they significantly reduce greenhouse gas emissions. In reality, when natural gas is flared, it releases carbon dioxide (CO2), methane, and black soot into the atmosphere. This flaring exacerbates climate change, harms air quality, and damages human health. And with around 140 bcm of natural gas flared globally every year, this equated to 500 Mt CO2 equivalent annual GHG emissions in 2022. Flare-to-power solutions capture this wasted gas and convert it into energy, preventing harmful emissions and utilising a valuable energy resource that would otherwise be lost. By harnessing the energy content of flared gas, flare-to-power solutions align with environmental sustainability goals, making them a crucial tool in the fight against climate change.

Myth #2: Flare-to-power solutions are inefficient Another common myth is that flare-to-power solutions are inherently inefficient. Some critics argue that the process of capturing and converting flared gas into energy is too complex and energy-intensive, ultimately wasting more energy than it produces. In reality, flare-to-power solutions have come a long way in terms of efficiency. Modern technologies and engineering advancements have made these solutions highly efficient and capable of recovering a significant portion of the energy contained in flared gas. At Aggreko, we prioritise efficiency in our flare-to-power solutions. Using modular units that can adapt to fluctuations in gas availability, we have the ability to ensure a consistent and reliable power supply. Ultimately, this adaptability minimises energy wastage and maximizes the utilisation of flared gas.

Myth #3: Flare-to-power solutions are unreliable Some believe that flare-to-power solutions are unreliable due to the intermittent nature of flaring in oil and gas operations. The fear is that these solutions may not provide a stable power source for critical operations.

In reality, reputable flare-to-power solution providers use advanced technology and engineering practices to ensure maximum availability and reliability of their systems. To address worries about declining gas volumes, Aggreko works closely with clients to develop solutions that align with environmental goals. For example, by installing on-site gas chromatographs to provide real-time gas analysis, we can easily monitor and guarantee the consistent and verified quality of the gas supplied to the power plant. This level of monitoring and control enhances reliability. In addition, Aggreko's modular approach allows for seamless scalability, making it possible to adapt to fluctuations in gas availability. This means that even during periods of intermittent flaring, flareto-power solutions can continue to provide a stable power source.

Myth #4: Flare-to-power solutions are too costly Another myth surrounding flare-to-power solutions is that they are prohibitively expensive. Some critics argue that the initial investment and operational costs outweigh the benefits, making these solutions economically unviable. In reality, the cost-effectiveness of flare-to-power solutions depends on various factors, whether it’s the scale of the project, the efficiency of the technology, or the regulatory environment. While there may be upfront costs associated with implementing these solutions, they often yield significant long-term savings.

The use of modular units, real-time monitoring, and gas analysis technologies demonstrates the maturity of flare-to-power solutions. These technologies have been refined over time to ensure consistent performance and environmental benefits. Additionally, the growing adoption of flare-to-power solutions by major oil and gas companies indicates industry confidence in the technological maturity of these solutions. They are no longer experimental concepts but practical, proven alternatives.

Myth #7: Flare-to-power solutions are only about mitigating flaring Another common misconception is that flare-to-power solutions are solely focused on mitigating flaring, and do not offer any wider benefits. In reality, flare-to-power solutions provide a host of advantages beyond reducing flaring. While they play a crucial role in mitigating environmental harm, they also contribute to energy security, environmental sustainability, and energy equity – the three components of the energy trilemma. 1. Energy Security: Flare-to-power solutions optimise the use of valuable energy resources, enhancing energy security by reducing dependence on external power sources.

For example, Aggreko's flare-to-power solutions have demonstrated substantial cost savings for oil and gas companies. By harnessing flared gas for energy generation, these companies reduce the need to purchase electricity from external sources, resulting in substantial operational cost reductions. Additionally, the environmental benefits of reducing flaring can lead to regulatory incentives and goodwill in the market.

2. Environmental Sustainability: By curbing flaring, these solutions significantly diminish emissions, contributing to environmental sustainability efforts and mitigating climate change.

Overall, as technology continues to advance, the costs associated with flare-to-power solutions are likely to decrease, making them even more economically attractive.

These solutions align with the economic interests of oil and gas companies by offering the opportunity to optimise the total cost of energy, addressing both environmental concerns and economic efficiencies.

Myth #5: Flare-to-power solutions are only for large-scale operations A common misconception is that flare-to-power solutions are suitable only for large-scale oil and gas operations, and are not practical for smaller facilities or remote locations. In reality, flare-to-power solutions can be tailored to suit operations of various sizes. Modular units, such as those offered by Aggreko, provide unprecedented flexibility and scalability. These units can be deployed in both large industrial complexes and smaller, remote facilities. For remote locations that lack access to grid electricity, flare-topower solutions can be particularly valuable. They offer a reliable source of electricity, reducing the need for more expensive and environmentally harmful diesel generators. The adaptability of flare-to-power solutions makes them a viable option for a wide range of oil and gas operations, regardless of their size or location.

Myth #6: Flare-to-power solutions are not technologically mature Some critics argue that flare-to-power solutions are still in their infancy, and are not technologically mature enough to be considered a reliable alternative to traditional power sources.

In reality, flare-to-power technologies have advanced significantly in recent years, with cutting-edge technology and engineering processes helping to develop highly efficient and reliable solutions. These solutions have been successfully deployed across diverse projects and geographical contexts.

3. Energy Equity: Flare-to-power solutions redirect valuable energy resources towards productive and accessible ends, promoting energy equity and the more equitable distribution of energy benefits.

Embracing the reality of flare-to-power solutions Flare-to-power solutions hold the promise of transforming the oil and gas industry into a more sustainable and environmentally responsible sector. By debunking common myths, we can better appreciate the potential of these solutions to address the challenges of flaring while delivering a range of benefits, from cost savings to environmental protection. As the energy industry strives for a greener future and works towards the ambitious goal of zero routine flaring by 2030, embracing flare-to-power solutions becomes not just a choice but a necessity. With the proven success of companies like Aggreko and the growing recognition of the value of flare-topower solutions, it's clear that these innovative technologies are an essential part of our shared journey toward a more sustainable and equitable energy landscape. Download our free whitepaper to learn more about flare-topower solutions, how they can help you meet your targets, and why Aggreko is the partner URL: https://www.aggreko.com/en-mideast/sectors/oil-and-gas/ zero-routine-flared-gas-by-2030

Egypt Oil & Gas Decarbonization Supplement 2023

ADVERTORIAL

IPR ENERGY GROUP – A SUCCESS STORY

he IPR Energy Group (IPR) is an international organization that has been a growing force in the oil and gas industry for over four decades with headquarters in Dallas, Texas, USA, and branch offices in Cairo, Egypt, and Islamabad, Pakistan. Evolving from its roots in EOR, reservoir simulation technology, and production optimization, the IPR Energy Group offers a unique combination of expertise in all areas of the petroleum industry including exploration, production, acquisitions, management operations, integrated petroleum engineering, geological and field management, enhanced and tertiary recovery services, and oilfield services.

IPR is a multi-producing field operator and multi-exploration concession holder of various exploration and development leases and E&P concessions throughout the world, including working interest in eight concessions in Egypt, both onshore in the Western Desert and Nile Delta and offshore in the Gulf of Suez. A key region for IPR is the Western Desert, Egypt where IPR has taken marginal fields and extended the economic life for many years beyond predicted models. Key successes in 2023 include the recently announced unprecedented find of 27 ft of net pay with an average production rate of 3,300 BOPD at 36°API in the Lower Kharita reservoir, increasing production in the Yidma-Alamein field to over 6,500 BOPD and substantially raising IPR’s total output in Egypt from its eight concessions. The well was drilled utilizing the IPR1 Drilling Rig, while testing and completion were carried out with the IPR-2 Workover Unit. This well has unlocked major potential in the Lower Kharita formation and added significant material production for IPR and the Egyptian Government.

Dr. Mahmoud K. Dabbous Founder

IPR also recently announced the discovery of oil in its exploration concession in North Beni Suef where it operates the 5,060 km2 concession located in Upper Egypt near Beni Suef. The first exploration well, NBS 1X, was drilled to a depth of 8,185 ft MD after a successful drilling campaign. The well encountered multiple pay zones in the in the Abu Roash “G” formation with test rates as high as 1,120 BOPD pre-frac and 28.5°API oil. The well is currently being evaluated for early production facility (EPF) sizing and fast-track contribution to the local market. IPR is also conducting a 3D seismic program in NBS which is expected to add to an already robust inventory of prospects through enhanced subsurface imaging. Furthermore, the conductor has been driven on a second exploration well, which is expected to be completed in 4Q23.

While IPR’s mission is to profitably grow and diversify its portfolio in the energy sector, it remains committed to safety and environmental and social responsibility, including decarbonization in the oil and gas industry. Decarbonization is vital to combating climate change, but must be measured and balanced to ensure not only the industry’s economic stability, but avoid global economic consequences.

Egypt Oil & Gas Decarbonization Supplement 2023

ANALYSIS

WHY DECARBONISE THE UPSTREAM SECTOR? Authors: Adam Pollard – Principal Analyst Upstream, Nuomin Han – Managing Consultant Carbon Research

pstream companies are under increasing pressure to decarbonise. Governments, investors, financial markets, society, and other stakeholders are pushing for change. Companies need to define their energy transition strategies, future-proof their business, and protect their social licence to operate.

There are strategic advantages to producing less carbon-intensive hydrocarbons. Some consumers are looking for end products with lower embedded emissions and may be prepared to pay a premium. Lower emissions operations not only offer environmental gains, but many of the steps are value accretive. This includes greater production efficiency, reduced leakage, and the capture – and monetisation – of flare gas and methane fugitives. More and more companies are announcing carbon reduction commitments and net zero targets. Divestment is one way to help meet these goals, but for many assets, especially those already onstream, this simply passes the problem down the line. Applying decarbonisation solutions can reduce operating emissions where operators do want to retain their portfolio of assets.

Where do upstream emissions come from? Emissions occur throughout the hydrocarbon value chain – from wellhead to end-use. A few upstream companies are taking the bold step to tackle Scope 3, which accounts for around 90% of all emissions in the value chain of a hydrocarbon. The majority are

Carbon intensity by region 2023-2030

generated by combustion in power generation, transportation, and other final consumption. But there is much still to do on scopes 1 and 2 at upstream installations, which currently generate over 1.2 billion tons of CO2e per year (approximately 3.4% of global emissions). These are the operational emissions that upstream producers have control over. Each asset is different, so it will come as no surprise that there are regional variations. Oceania is heavily influenced by Australian LNG projects, high CO2 projects in Asia drive up venting to nearly 20% of total emissions. Flaring happens across the globe with the largest sources in the Middle East and Africa.

What are some of the solutions? Solutions to reduce Scope 1 and 2 carbon emissions range in cost and complexity, from smaller-scale operational efficiency solutions and best practices to transforming power generation.

Global upstream emissions by source, 2023-2030

Low-carbon power

Flaring reduction

Around 70% of emissions are produced to power oil and gas operations – production, processing, liquefaction and drilling. The type of fuel used to generate power is crucial. Most assets are powered by fossil fuels – using a portion of the produced hydrocarbons. Electrification gives operators the option to move to low-carbon power, either directly from renewables or by connecting to the grid where the grid mix is cleaner than the current fuel supply.

Essential flaring is hard to avoid, but many companies are now signed up to the World Bank’s Zero Routine Flaring by 2030 initiative. However, in some countries, large-scale flaring is a function of the reliance on income from oil exports. The lack of local gas markets and infrastructure, and minimal penalties and regulation meant flaring was the most economical option.

As well as lower emissions, electrification reduces maintenance, lowers fuel requirements, increases uptime, and frees up more molecules for sale. But there are challenges: ♦

Intermittency issues: renewable power may require back-up generation. Hooking up to the grid will only deliver emissions reductions if the power mix is cleaner and there is available capacity;

♦

Retrofitting onstream projects: not all installations can be electrified. Of those that can, some may only be able to handle partial electrification over full;

♦

Space and weight restrictions: electric motors can have a greater footprint and weight than the existing drive mechanisms, potentially limiting options offshore;

♦

Field maturity: capital outlay required makes electrification of most late-life assets uneconomic.

Norway is the global leader in low-carbon upstream electrification. Its grid power mix is predominantly hydroelectric (90%+) – a renewable energy source without any corresponding intermittency issues. This provides an almost unique opportunity for major upstream emissions reductions. Norway and other North Sea countries are trialling dedicated offshore wind generation but without substantial incentives the economics are challenging.

Power Supply to offshore North Sea oil and gas facilities

A focus on flaring emissions has seen a 23% reduction since 2019. Operational improvements reduce the volume of excess gas and new investments have been made in commercialisation via local and export markets. Gas capture can provide an additional revenue stream for the companies involved, greater income via taxes for governments and help satisfy unmet power demand, as well as have environmental benefits. Key considerations include: ♦

Gas markets: either domestic or export;

♦

Project economics: resource scale, capital outlay and fiscal terms determine viability;

♦

Number and size of flares: capturing from multiple sources can be a deterrent for flare-gas collection, even where local markets exist;

♦

Location of point sources: multiple small-scale emitting point sources with a large dispersion range are more challenging than a single large-scale point source;

♦

Midstream infrastructure: requirement for gas transport.

Reducing fugitive (methane) losses Methane is the molecule that packs a punch – it is 28 times more potent (over a 100-year horizon) than its carbon counterpart according to the 5th IPCC Assessment Report (2014). The oil and gas sector contributes almost 25% of global methane emissions, and as such it has a key role to play. Many companies and governments have already signed up to reduction pledges, including: Global Methane Pledge: announced at COP26 with the target to cut methane emissions by 30% by 2030. Globally, 150 parties signed pledges covering around 53% of global methane emissions; Oil and Gas Climate Initiative (OGCI): members, comprising over one third of global operated production, have pledged netzero methane emissions by 2030, in which Wood Mackenzie is a supporter and has endorsed this commitment.

Global Methane Pledge signatories

Source: Wood Mackenzie Lens Upstream, North Sea electrification tracker

Source: Wood Mackenzie Lens Upstream, Emissions Benchmarking Tool. Emissions are aggregated globally in the charts, but based on underlying asset-by-asset data and models. Excludes transportation emissions (not all oil and gas companies own pipelines and/ or tankers, hence they are not considered Scope 1 and 2 here).

Source: Wood Mackenzie

ANALYSIS Upstream methane losses are primarily via three sources – equipment leaks (valves, pipes, compressors etc.), incomplete flare combustion and venting. To address these losses, operators can: ♦

Identify, measure, monitor: methane leaks are often small and difficult to detect. Understanding areas to target helps determine the best solution;

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Flaring and venting reductions: prevents methane release but the same challenges for reducing these sources apply;

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Replace high bleed devices: plug/remove the leaks.

Decarbonisation – drivers for change The pace of decarbonisation varies from region to region, and asset to asset. One of the key differentiators is the level of government support. 150 countries have made pledges to reach net zero by 2050 to 2070, covering almost 90% of global emissions. However, no major economy is on track to achieve these very challenging goals. Commitments that have been translated into law only cover around 16% of the total 36 gigatons of CO2 emitted in 2021, meaning that pressure to decarbonise will increase significantly as governments work pledges into legislation. So far, 77 national and sub-national carbon prices and markets are in place, covering around 26% of global carbon emissions (of these, China is around one-third), and another 41 are under consideration. We expect significant global expansion of carbon prices, and increased prices aimed at meeting 2050 goals. Some countries have also been exploring carbon border taxes, creating incentives for other economies to introduce or lift their domestic carbon prices. The European Union (EU)’s Carbon Border Adjustment Mechanism (CBAM) reporting obligations will start with six selected sectors in October 2023, and transition into financial obligations starting from 2026. Although oil and gas is not among the initial CBAM-targeted sectors, the EU plans to expand CBAM to all sectors under the EU ETS, which include upstream and refinery operations. At that point, importers of ETS-relevant commodities, including both crude and refined products, will need to pay carbon prices aligned with the ones paid by EU producers (which have been around US$100/ton CO2e for most of 2023).

Source: Wood Mackenzie

Most countries’ oil and gas upstream operations are not directly subject to carbon prices yet. Carbon pricing mechanisms typically encompass Scope 1 emissions in specific sectors directly, such as power generation first, followed by some industrial sectors. Integrated companies can be impacted directly, while independent upstream producers will be indirectly affected by lower demand down the value chain and by carbon prices passing on higher power prices to the grid. In addition, carbon pricing regulations are evolving with some compliance regimes starting to target upstream-specific emissions. For example, the recently announced UK ETS reform package will include vented carbon dioxide from the upstream oil and gas sector from 2025. Upstream companies will face increasing regulatory requirements for their emission monitoring and associated financial obligations. Tackling Scope 1 and 2 emissions is fast becoming the minimum requirement for upstream operators, as they face increasing stakeholder pressure to decarbonise. Even if they do not have any direct value at risk from carbon prices today, due to the location of their operations, they may not be able to attract investment unless they show structured and realistic plans for decarbonising their operations. For this reason, many companies have taken bold initiatives to reduce Scope 3 emissions, not just Scope 1 and 2. Given the lack of direct control, upstream operators can change their vendors and buyers towards lower-carbon value chains, for example, or take a more hands-off approach by buying carbon offsets to compensate for emissions down the value chain. The most successful strategies will employ a mix of approaches that leverage their existing subsurface and market capabilities and employ them in areas such as carbon capture and storage. Taking bold, decisive action on decarbonisation is the only way to create sustainable business models that will continue to attract investment.

Reducing environmental impact through our technologies & strategic partnerships for a sustainable future United for Faster Decarbonization

Egypt Oil & Gas Decarbonization Supplement 2023

ANALYSIS

WHY OIL & GAS SECTOR NEEDS TECHNOLOGY-OPEN APPROACH TO EMISSIONS REDUCTION

t’s the time of year again, as across the world nations prepare for the world’s biggest climate-focused conference: COP. With COP28 set to be hosted by the UAE, all eyes are on the energy sector to see how it responds and engages with the event, and the industrywide commitment to the energy transition. IOGP supports this commitment to the energy transition and works with its members to help them decarbonise whilst maintaining the careful balance of energy security and affordability.

The past year has transformed broader discussions around energy and highlighted the significance of the energy trilemma. Global geopolitical events and the subsequent energy crisis brought home to many the significance of energy security and affordability. With many having to choose between eating or heating, it highlighted how the energy trilemma affects the most vulnerable in society the most. It has meant that there is a renewed focus on creating an ‘orderly’ transition. While this appears to be the right course of action, it also puts renewed pressure on the oil and gas industry to not only invest in decarbonisation, but also to ensure safe, reliable, and cost-effective operations continue. Despite the IEA forecasting that oil and gas will still be part of the energy mix in the future, it also associates decarbonisation with moving away from fossil fuels. Indeed, in its recent Energy Forecast, it has suggested that the world has already reached the peak of its demand for fossil fuels. It’s at this point that it is important to remember that the goal of decarbonisation is to reduce and even remove carbon from our atmosphere. Emissions are the enemy – not oil and gas. As a sector, we have an important role to play in the energy transition. Despite the broader messaging around reducing fossil fuels, it appears that others recognise it is important to engage with the oil and gas sector. COP28 being hosted in the

UAE, a major oil and gas producer, highlights how key stakeholders see our role in decarbonisation. As we’re all aware, tackling climate change while meeting global energy demand is one of the greatest challenges of our lifetime. Decarbonisation is an essential, and complicated part of the process. And must recognise that technology and innovation in particular will play a key role in the transition. We must adopt a technology-open approach to emissions reduction. The development of renewables remains critical to the energy transition; however, this must be done in a way that allows all solutions with the potential to reduce emissions to play an active role. Addressing these challenges and opportunities is daunting, and complicated – but IOGP has identified a way through, that can ensure this sector is part of the transition and seen as a driver of positive change. Its focus is on four areas: Carbon Capture and storage, Electrification; Energy Efficiency; and Flaring, Venting & Methane emissions Management. It has already published a host of reports and recommended practices and has plans for more in 2023 and beyond. Many of these reports can be accessed at https://www.iogp.org/energy-transition/

There are many exciting technologies that will support the energy transition, such as carbon capture and storage. CCUS is going to be key for the energy transition and closing the gap for a 1.5°C future. There are currently 40 different CCUS facilities in operation globally, with the capture capacity of 45 million tons of CO2. However, the IEA’s net zero emissions by 2050 pathway assesses that the world needs to capture 4 GT of CO2 by 2030 and 7.6 GT CO2 by 2050. Put simply, by 2030, that’s only 7 years away, we need to store 100 times more CO2 globally. It’s a huge task, and investment in these solutions is key. But it’s currently not there. In Europe, there are 35 projects in development, that are planned to have the capacity to store 105 MT in 2030. However, Europe needs to store between 350 to 500MT depending on the different scenarios, that’s between 3 and 5 times more than all the projects currently being constructed. We need to work together, both as an industry and with partners beyond our sector, to help bring this technology to fruition. Now is the time to jump on this opportunity. IOGP has developed state of the art literature to support CCUS adoption, providing guidance for both the sector, as well as policymakers and regulators to consider when determining legislation that will enable CCUS adoption. Similarly, Hydrogen is another energy source that plays a key role in unlocking renewable energy integration. Globally, there is an opportunity to grow hydrogen use dramatically, but investment at the moment is low. This is despite the fact that according to the Hydrogen4EU report, more than 50% total gross final energy consumption will be supplied by non-electrified technologies in 2050, such as low-carbon hydrogen and biomass. Driven by policy, demand for hydrogen could exceed 100 million tons of H2 by 2050. Our sector also has a responsibility to reduce its methane emissions. Detecting unplanned methane emissions and mitigating the impact of them is also key. It’s a major challenge for our industry, but with the right technology and data analysis, the industry can work to improve its methane detection and deploy technology that helps avoid flaring and venting in operations. Innovations such as flare gas recovery systems are a great example of a system that can help reduce flaring, ultimately reducing methane emissions. However, it’s clear when it comes to reducing methane emissions that a ‘one size fits all’ approach will not work, as operations are unique across the sector. In a collaboration between IOGP, Ipieca, and the Oil and Gas Climate Initiative (OGCI), we have developed guidance to help operators select and deploy methane detection and quantification technologies. Eliminating methane emissions from the upstream oil and gas industry represents one of the best short-term opportunities for contributing to climate change mitigation and for advancing the goals of the Paris Agreement.

Technology is ultimately a major enabler for decarbonisation across the sector. For example, electrification of operations creates the opportunity for oil and gas organisations to integrate renewables now, reducing the emissions associated with running sites. Even where renewable electricity isn’t available, electrifying now ensures that the sector has the technology in place to leverage green electricity where and when possible. Through its work with members, IOGP has developed guidance for key activities and studies to be conducted during project development. We have identified lessons learned from electrification schemes and are using these lessons to inform future recommendations. More broadly, digital technologies will be essential for the sector to decarbonise. Leveraging automation to create more efficient operations can help reduce emissions, reduce costs and create a safer working environment. By leveraging technology to be more efficient, our sector can significantly improve its energy efficiency. At IOGP, we recognise the challenge in improving energy efficiencies – often, high-efficiency technology comes at an equally high price, or members aren’t aware of certain technologies existence. However, the most economical method of reducing GHG emissions is to reduce energy consumed. IOGP and IPIECA have worked together to develop the Compendium of energy and GHG efficient technologies and practices. In 2022, we identified 13 different technologies that our sector can deploy to improve its energy efficiency. Despite technologies being available, adoption in the industry is still low. McKinsey reported in 2021, 70% of digitization projects in the oil and gas sector didn’t move beyond pilot phases. To help organisations identify the right technologies for them, IOGP has developed an online technology filtering tool (https://www.iogp.org/medq), including detailed technology data sheets covering over 50 technologies, and decision trees to guide technology deployment across the sector. It’s with tools like this that we can work together to help drive this positive change forward, to help the sector play its all-important role in the energy transition. Overall, the need for the oil and gas sector to decarbonise is only going to become more urgent. But with this challenge comes an exciting opportunity to transform how our industry operates. What is clear, is that it is possible to decarbonise fossil fuels, providing we work together to get the right infrastructure in place. Operating in siloes is only going to create barriers to success. Therefore, knowledge sharing, be that at conferences and events like COP28, or through industry bodies like IOGP, is vital. By connecting within the industry, and also with key partners outside of it, we will make decarbonisation a reality, and navigate a successful energy transition.