EOG Newspaper September 07 Issue by Egypt Oil & Gas

As Thrilling As Expected Going Indian Thriving political relations between Egypt and India are best reflected in growing investments in the oil industry page 10

September 2007

Issue 9

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Welcoming the Month of Mercy

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The Battle for Barrels

Street Gas Sellers: Legality Wonâ&#x20AC;&#x2122;t Bring Home the Bacon

What If... Oil Refineries were not invented

Considering the equipments by which no house can go on without, gas cylinders would be necessarily added to the list

Thanks to Oil Refineries, the separation process (of oil) has become easy and quick. But, how would this process be like if refineries were not invented?

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Published by Egypt Oil and Gas S.A.E

28 pages

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By Diana Elassy

Continued on page 14

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Editor in Chief Diana Elassy delassy@egyptoil-gas.com Managing Editor Yomna Bassiouni Junior Staff Writer Sarah Rashdan Contributors Mohamed El-Sayed Ethar Shalaby Vice President Laila Fayek lfayek@egyptoil-gas.com Distribution Manager Basma Naguib

Art Director Mohamed Madany Assistant Art Director Ahmed Ali Cartoonist / Designer Ramy Ameen Webmaster Ayman Rady Production Advisor Mohamed Tantawy Accountant Abdallh Elgohary Legal Advisor Mohamed Ibrahim

Newspaper Technical Advisors Eng. El-Sayed Orabi - EGPC Geologist Magdy Wedad PICOEnergy Petroleum Services Dr. Mohamed Ghareeb - Lufkin Business Development Officer Eng. Said Zaki - Weatherford Laila Solaiman Middle East Cairo-Egypt Capt Tarek Shawkat - Maridive Administrative Manager & Oil Services Marwa Madi This publication was founded by Omar Donia, Mohamed Sabbour and Mohamed Fouad Senior Business Development Officer Amr Hegazy

Publisher Mohamed Fouad

Technical Advisor Geologist Nasser Wali - EGPC

Contact Information: 5 h2, Khedr St., Extension El-Laselky St. Ground Floor, Suite 2 New Maadi, Cairo-Egypt Tel: +202 25164776 +202 25192108 Fax: +202 25191487 E-mail: info@egyptoil-gas.com www.egyptoil-gas.com

All rights to editorial matters in the newspaper 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 of the publisher.

ONE of the more interesting aspects of producing a specialized newspaper is that your target audience is smaller than that of a normal newspaper and thus our information network is supposed to be more close-knit. However, this, sadly, is not the reality of things here. Now, yes, we can say that the nature of the country does not encourage transparency or the free flow of information; we could also say that the nature of the market with its competitiveness does not thrust towards cooperation over data. There are many justifications for the lack of lucidity in the market…but, then what? Through countless conversations with countless constituents of the Egyptian oil and gas industry, one vision was common among them: a desire to have more transparency in the market. However, many acknowledged this desire as if it were to divinely be bestowed upon us. How wrong they are. If we truly wish to have certainty and clarity within this market, it is not solely the government that bears the burden of this noble task, but every company involved. How difficult it is to try and obtain a response over the topical and highly debated issues within the market or to try and simply get figures from companies that in many other places in the world are seen instinctively as belonging to the public domain. Henry R. Luce, a renowned American publisher once stated that “Journalism is the art of collecting varying kinds of information (commonly called “news”) which a few people possess and of transmitting it to a much larger number of people who are supposed to desire to share it.” The few people that posses information have a duty to disclose it in order for journalists to communicate this information; in order for academics to analyze this information; and ultimately, in order for this analyzed information to aid others in their decision-making. I say that the time has come for the Egyptian oil and gas market to step out of Kafka’s daunting and mysterious Castle to the bright clarity of tomorrow. If transparency is what is truly desired in this market, then companies have to lead by example.

Editor-in-Chief

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“PICO International Petroleum has finalized the transaction with the Egyptian General Petroleum Corporation (EGPC) in partnership with the Kuwait Foreign Petroleum Exploration Company K.S.C. (KUFPEC)”, Omar Hassan, Pico New Ventures Manager told Egypt Oil & Gas Newspaper. Last June, EGPC signed a concession agreement with PICO GoS Petroleum Limited (subsidiary of Pico International) and KUFPEC Limited for the Geisum and Tawila West fields. The award came after a competitive bidding process where PICO (operator) and KUFPEC agreed to pay $303million in upfront consideration and invest $80million over the first four years. “As Operator, PICO is currently proposing an aggressive field development plan which aims to simultaneously optimize production from the assets current facilities, further develop the assets proven reserves while initiating an exploration drilling campaign in the less explored areas of the Geisum and Tawila West Concession”, added Hassan. The Geisum and Tawila West Fields currently produce 7,400 barrels of oil per day and have remaining proven reserves of 19 million barrels. Hassan highlighted that this transaction is of a high

strategic value as it brings PICO one important step closer to achieving its objective of becoming one of the major producers in the Gulf of Suez region where it currently holds working interest in six concessions, in five of which is the Operator. EGPC has retained the right to market the Geisum and Tawila West crude in the local market and will assume their customary role as joint venture partners with PICO and KUFPEC upon implementation of the Concession Agreement. Through its various subsidiaries, EGPC engages in all aspects of the petroleum industry, including the exploration and production of crude oil, condensate and natural gas, the refining, marketing and transportation of crude oil, natural gas, condensate and refined petroleum products, and the production and marketing of petrochemicals. KUFPEC (Egypt) Limited is a wholly owned subsidiary of Kuwait Foreign Petroleum Exploration Company K.S.C. (KUFPEC). Established in 1981 as a subsidiary of the Kuwait Petroleum Corporation, KUFPEC is an international oil company that has interests in 15 countries worldwide, including its long established Egyptian venture.

Rachid, in the middle, during one of his international business trips (Photo Archive)

In an attempt to cut down the bill of gas and electricity subsidies for energy intensive industries, the Egyptian government plans to introduce a new pricing policy to ensure an efficient usage of the country's energy resources. Energy subsidies cost the Egyptian government E£20bn a year, with E£4bn going to industry, of which the 40 most energy intensive companies receive about 70%, said Rachid Mohamed Rachid, the Trade and Industry Minister. The new policy will save nearly LE 30 billion over the next five years, which will decrease the heavy burdens of energy subsidies on the treasury, added Rachid. The new pricing policy had been calculated to enable Egypt to remain competitive but would also ensure that energy resources were not "abused." The new pricing policy will be applied in the sectors which utilize massive amounts of subsidized energy, among which steel, cement, fertilizers and petrochemicals. It will initially affect 40 companies from this sector, but it will also be applied to the new entrants in those industries. According to the Financial Times, the cheap energy prices in Egypt resulted in a massive boom in energy intensive industries in the country over the past few years. This increase in energy intensive industries has also raised questions about Egypt’s capability to best use its natural gas reserves. "I was keen to ensure that we are going to build all these new capacities with clarity," said the minister. "I was dead scared that we [would] build all these factories and once we adjusted our prices, which we would be forced to do, I would see all those factories close." Over three years, the pricing policy is to raise the price of natural gas from $1.25 to $2.65 per million BTUs, the equivalent to cost price. Electricity prices will also be increased over the same period. Energy subsidies for other industries will be gradually phased out over the next six years, highlighted Rachid. (Financial Times)

Aker Kvaerner has been awarded an operation, management and maintenance contract for the Al Zaafarana FPSO offshore Egypt by operator Gemsa Petroleum Company (Gempetco) and partners. The NOK 200 million (1 US dollar = 6.5 NOK) contract is valid for a five year period effective from September 1, 2007. This contract is subject to possible extensions on the long run. "The award of this contract gives Aker Kvaerner Operations a foothold in North Africa and in the growing market segment of FPSO production,'' said John McKeown, Managing Director of Aker Kvaerner Operations. Located in the Red Sea and operated by Gempetco, the produced oil from The Al Zaafarana is stored in the FPSO and is transported onshore by shuttle tankers. Under the terms of agreement, Aker Kvaerner Operations and its partner Gravitas & Cie SA will be responsible for providing the personnel required to carry on works at the platform. (Rigzone)

Egypt, Syria, Jordan and Lebanon agreed to transform the Arab Gas Pipeline to an Arab Gas Network, planned to be linked with the European one after joining Iraq, with the possibility of making use of other resources of gas to be pumped through this network to increase the economic return of the pipeline's participating courtiers. This announcement came at the end of talks held in Cairo between the Egyptian Minister of Petroleum, Eng. Sameh Fahmy, with Eng. Sufian Al-Allaw, Syrian Minister of Petroleum and Mineral Resources, Dr. Khaled El Shereda, Jordanian Minister of Energy and Mineral Resources, and Mohamed El Safadi, charge Lebanese Minister of Energy. According to Fahmy, the Arab ministers approved a plan to form a joint working group to study the use of this network in an adverse exchange among the participating countries, which paves the way to "greater flexibility in gas exports and imports among them". The ministers decided to carry out a field visit, for the first time, to the work sites of the Arab Gas Pipeline at Jordan, Syria and Lebanon along with the Turkish Energy Minister. Al-Allaw assured that a study of the agreement between Syria and Iraq for developing the Iraqi gas field, Ekas, located at the Syrian-Iraqi borders, is underway. However, this comes as a preparation to link it to the Syrian gas network. It is worth mentioning that the field is characterized by its huge gas reserves.

Syria has also agreed to implement the 60 km length link inside its territories till the Turkish borders are prepared for linking the two networks by the next year. From his part, the Jordanian Minister clarified that initial agreement for increasing the exported gas quantities to his country has been completed, in order to meet the growing demand for energy. The Arab gas will be utilized in developing and upgrading power generations in north Lebanon, said the Lebanese Minister of Energy. (MoP)

Dana Gas has announced a new gas and condensate discovery from its Dabayaa-1 exploration well in the West Manzala Exploration Concession in Egypt, announced the company in a statement. Centurion Petroleum Corporation, the upstream division of Dana Gas, drilled the Dabayaa1 well to a total depth of 3,001 meters and encountered a hydrocarbon-bearing interval that extends over a 10 square kilometer area. Estimates of recoverable reserves from this new discovery are being evaluated. Commenting on this new discovery, Rashid Saif Al-Jarwan, General Manager of Dana Gas said, "We are very excited about this gas discovery which confirms our high expectations for the hydrocarbon potential of the Abu Madi Formation in our concession…We are in a very favorable position within the Nile Delta and this discovery is opening up more hydrocarbon prospects to be drilled on the same concession." The Dabayaa-1 well penetrated a gas bearing interval in the Lower Abu Madi Sandstone. An extensive DST program was held giving a production rate of 16.5 million cubic feet of gas per day (2,800 barrels of oil equivalent), and 330 barrels of condensate per day through a 32/64" choke. "We expect to finalize the new field's development plan soon so as to quickly bring the well on production. Dana Gas expects to commence production from Dabayaa-1 discovery by November of this year," said Hany Elsharkawi, Dana Gas Country Director in Egypt. (Dana Gas Press Release)

in the Concession, while focusing our combined talent and resources, are key considerations in our analysis of the merits of this combination.” David M. Thompson, President of Sea Dragon, is nominated to become the Chief Executive Officer of Mogul Energy upon the completion of the Business Combination. “We are excited about the combination with Mogul Energy and look forward to focusing our combined talent and resources toward development of the EWA Concession in Egypt, where we are currently drilling our first exploration well, in addition to Mogul Energy’s current Canadian assets,” said Thompson. (Oil Voice)

Mogul Energy International, Inc., an oil and gas exploration company with interests in the Gulf of Suez has entered into a letter of intent (LOI) to complete a Business Combination with Sea Dragon Energy, Inc., a private Canadian corporation through which Mogul Energy will increase its working interest in the East Wadi Araba from 20% to 60%. Naeem Tyab, President of Mogul Energy stated, “I believe that the planned combination of Sea Dragon’s 40% interest in the EWA Concession with Mogul Energy’s existing 20% interest is an exciting development for Mogul Energy. In addition to giving Mogul Energy a majority interest in the EWA Concession, the combination would allow the Company to focus the talent and resources of both companies on the development of the EWA Concession. The planned addition to Mogul Energy’s management of the experienced oil and gas team from Sea Dragon should benefit the Company. The ability to increase our interest

Mogul Energy International, Inc. has been notified by project operator Dover Investments Ltd. that drilling on the EWA 4X well at the East Wadi Araba (EWA) Concession is progressing as planned. The well is being drilled from an onshore location, and is being deviated to test the offshore Raha formation and a large light oil target in the Nubian Sandstone reservoir in the Gulf of Suez that forms the significant reservoir in several major oilfields. The well is currently drilling at 2200 feet at an angle of 41. The current drilling plan anticipates that 13 3/8” casing will be set in the next few days and then Dover will continue drilling the well which will deviate up to an angle of 65 from the vertical. Dover anticipates that the well will reach target depth, which is expected to be below 7,100ft (drilled depth), or 4,180 ft vertical depth in about 20 days time. (Oil Egypt)

Logria Corporation (the Purchaser), a subsidiary of National Petroleum Company S.A.E. (NPC) and an affiliate of Citadel Capital Company (Citadel Capital) entered into an Arrangement Agreement to acquire Rally Energy Corp. for approximately Cdn $898 million. According to the terms of agreement, the Purchaser will acquire all of the issued and outstanding common shares of Rally at a price of Cdn $7.30 per share in cash and all of Rally’s outstanding in-the-money options for their in-the-money value pursuant to a plan of the transaction. “We are pleased to announce that Rally has entered into the transaction with the Citadel/NPC group. Rally has built a tremendous asset base and delivered substantial shareholder value over the last two years. We believe the transaction, which is at a price per share above our all-time high, is in the best interest of Rally and delivers immediate and significant value to our shareholders”, stated Abby Badwi, President and CEO of Rally. The terms of this Arrangement Agreement have been reviewed and approved by a Special Committee formed by Rally's Board of Directors. “We are very excited about this transaction as it will significantly enhance NPC’s daily production numbers, provide an entry into the heavy oil business, and offer NPC its first exposure outside of Egypt through Rally's Pakistani assets. Overall, we believe that Rally's assets are very complimentary with NPC’s current assets which are primarily located in the Gulf of Suez and are exploratory in nature. NPC has been following Rally’s development for some time and is particularly pleased that we are in discussions with Rally’s management with respect to a management retention proposal following completion of the transaction”, said Karim Sadek, Managing Director of Citadel Capital and of NPC. Tristone Capital Inc., acting as financial advisor to Rally, recommended this transaction as it believes that the consideration to be received by the Rally shareholders in connection with the Transaction is fair, from a financial point of view, to Rally shareholders. In connection with the Transaction, an NPC affiliate has entered into an acquisition financing facility with Citi as mandated lead arranger and lender in the amount 1 of US $450 million. Citi has also acted as financial advisor to Citadel Capital and NPC. (Rally Energy Press Release and Oil Voice)

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The Egyptian Minister of Petroleum Eng. Sameh Fahmy agreed to participate in India's Petroleum and Natural Gas Conference, held in November in New Delhi, after receiving an invitation from his Indian counterpart Murli Deora. The Indian Minister stressed the importance of the participation of Egypt and its African neighbors. Deora has also asked Fahmy to deliver the opening address at the conference inauguration. “India’s invitation falls within the framework of establishing new partnership strategies between Africa and India in different economic and petroleum domains,” said the Minister. Indian companies have increased their activities in oil and gas exploration and production in Egypt. According to the Daily Star, Several Indian companies participated in the international bids organized by Egypt and succeeded in acquiring two exploration sites in the Mediterranean Sea and the Western Desert, with investments amounting to $470 million. India has also cooperated with Egypt in the petrochemicals domain through their $70 million investment in an acrylic project. From its side, Egypt sent a high-level delegation to India to establish an outsourcing partnership through sub-sourcing and support centers, as part of its plan to become the outsourcing hub of the Middle East. “The ministry of petroleum recognizes these strategies and is working to reinforce them through establishing solid relations [with India] within the petroleum sector,” the ministry’s office said. (Daily Star Egypt)

By Ramy Ameen

The Egyptian Ministry of Petroleum (MoP) revealed its plan to develop Al Hamra specialized oil terminal, which is one of the most significant and strategic oil sites for crude oil shipment and export, in order to increase its export and storage capacity and become a major international export hub. In his visit to some new fields in the are of the Western Desert, Eng. Sameh Fahmy, Minister of Petroleum pointed out that Al Hamra terminal comprises all significant factors to be a major export hub through an advanced framework. Fahmy added that a plan is to be set for the development of the oil terminal's facilities and the related pipelines in order to increase its current export capacity from 600 thousand barrels to one million

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barrels monthly, as well as its storage capacity from 800 thousand barrels to one million barrels. This terminal is considered a major gathering point for crude oil from the Western Desert area, where about 185 thousand barrels are gathered daily. This figure is expected to reach about 225 thousand barrels daily during the coming period. Eng. Shamel Hamdy, head of the Western Desert Development Committee, reviewed a report about production development from the Western Desert region in order to increase production in this region about 40 thousand barrels more daily, which means that the regionâ&#x20AC;&#x2122;s total production will reach about 270 thousand barrels per day by next April. (MoP)

Yemen is to offer 11 blocks spanning the Red Sea and Gulf of Aden areas through its first offshore bid round. Major international oil companies have expressed their interest in bidding for the blocks, such as Statoil (STO), Total (TOT) and Nexen (NXY). The Red Sea blocks on offer are 55, 22 and 23, located to the south of Saudi Arabia. Blocks 46, 61, 62 and 63 are in the south of Yemen in the Gulf of Aden. Blocks 93, 94, 95 and 96 are around the Yemeni island of Socotra, known for its unique wildlife. The deadline for the Yemeni bid is December 8. (Rigzone)

The Iranian caretaker of Oil Ministry GholamHossein Nozari said that Iran plans to export billion cubic meters of gas to Europe annually once a pipeline is laid to Europe through Turkish territory. The announcement came at the end of a meeting held between Nozari and a Turkish delegation headed by Helmi Guler, Turkish Energy Minister. Nozari and Guler agreed to establish a joint company to handle their venture of putting down pipelines in order to transfer gas from Assalouyeh (Bushehr province) to Europe via Turkey and transfer of Turkmen gas to Iran via Turkish territory. Based on a deal, signed with Turkish energy officials, the Turkish party will undertake development of phases 22, 23 and 24 of South Pars gas field, while Iran will be responsible for the marketing job. Nozari said, "The project for development of three phases of South Pars gas field will be

implemented on buy-back basis by the Turkish entrepreneurs." (IRNA)

TriStar Oil & Gas Ltd. and Real Resources Inc. announced that the plan of arrangement under the Business Corporations Act (Alberta) involving TriStar and Real has been completed effective August 16, 2007, forming a new intermediate, growth focused exploration and development company that continues under the name TriStar. According to the terms of agreement, each shareholder of TriStar received 0.4762 of a New TriStar share for each share of TriStar held and shareholders of Real continued to hold one share of New TriStar for each share of Real held. New TriStar will continue to trade on the TSX under the symbol "TOG". It is anticipated that the shares of TriStar and Real will be de-listed and the shares of New TriStar will commence trading within two to three business days. In order to receive New TriStar shares, TriStar shareholders and Real shareholders must exchange their share certificates in accordance with the instructions set forth in the Joint Information Circular of TriStar and Real dated June 29, 2007 and the accompanying letters of transmittal. New TriStar will continue to be led by the TriStar management team including Brett Herman, President and Chief Executive Officer, Jason Zabinsky, Vice President, Finance and Chief Financial Officer, Graham Kidd, Vice President, Engineering, Eric Strachan, Vice President, Exploration and Jeremy Wallis, Vice President, Land. New TriStar's board of directors (the "Board") consists of 10 members including Paul Colborne (Chairman), James Bertram, Fred Coles, Dallas Droppo, Richard Edgar, Brett Herman, Martin Hislop, Robert Michaleski, Jim Pasieka and Robert Peters. "TriStar is very well positioned to grow reserves, production and cash flow per share through the management team's integrated strategy of acquiring, exploiting and exploring. We are excited about the growth potential of the new company as we have a solid development drilling inventory of over 1,400 drilling locations for both light oil and natural gas, and numerous exciting, high impact exploration prospects including the Bakken play in southeast Saskatchewan, a number of 3D defined prospects on an extensive undeveloped land base in west central Alberta and significant Mannville CBM potential," said Brett Herman, President and Chief Executive Officer. For the remainder of 2007 the Company's drilling program will consist of a combined, high graded drilling program selected from each of TriStar and Real's extensive drilling inventories and will be focused on the Company's high quality development and exploration portfolio in southeast Saskatchewan (50% of drilling capex), west central Alberta (20% of drilling capex), southern Alberta (15% of drilling capex) and central Alberta (15% of drilling capex). (Oil Voice)

Iraq and Turkey agreed to boost energy cooperation between the two countries, including the shipment of Iraqi oil and natural gas to Europe through Turkish territories, reported the Milliyet Newspaper. In a meeting held in Ankara, Iraqi Oil Minister Hussain al-Shahristani and his Turkish counterpart Hilmi Guler said that the neighboring countries agreed on the measures of this mutual cooperation. Under the terms of agreement, the two countries will boost the capacity of the Kirkuk oil pipeline from northern Iraq to Turkey's Mediterranean coast. Guler said that he agreed with his counterpart to construct at least two thermal power stations in the two countries and expand existing electricity links to help meet Iraqi needs. Turkey is a partner in the Nabucco gas pipeline to supply Europe with fuel from western and central Asia. Guler added that Iraq invited Turkey's state oil company Turkiye Petrolleri Anonim Ortakligi to bid for contracts to explore for oil. (Bloomberg)

Dolphin Energy Limited, a joint venture company comprising Abu Dhabi government's investment arm, Mubadala Development Company, Total of France and Occidental Petroleum of the United States, announced its successful loading of first-ever cargo of 500,000 barrels of condensate, produced from its natural gas processing plant at Ras Laffan, Qatar. "Two additional cargoes will follow in August. About six similar-sized cargoes of condensate are expected to be exported every month once full production is reached," said Dolphin Energy in a statement. Through its supply of natural gas from Qatar, the Dolphin Gas Project will bring together the UAE, Qatar and Oman in a regional energy network for the first time. Dolphin Energy is owned 51% by Mubadala Development Company, on behalf of the Government of Abu Dhabi, and 24.5% each by Total and Occidental. (Gulf News)

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In a joint cooperation, the leading oilfield services provider, Schlumberger is developing a new borehole gravity metering (BHGM) in association with Saudi Aramco. "Saudi Aramco is actively pursuing the development of strategic technologies and tools for reservoir surveillance and monitoring," said Amin H. Nasser, Vice President of Petroleum Engineering and Development at Saudi Aramco. According to a report issued by Saudi Aramco, this project is to be executed by a technical team consisting of researchers from Saudi Aramco's EXPEC ARC and Schlumberger. Nasser, commenting on this joint project, said "collaboration with service providers is one of our approaches to develop next-generation tools that meet our needs." (Saudi Press Agency)

The Repsol YPF, Sonatrach, RWE Dea and Edison International consortium announced in a statement the discovery of gas from a deep well with a depth of 5,116 meters in the Reggane North region, Block 351c and 352. This is the first time for the Reggane-6 (RG-6) well to test gas from the Ordovicium formation. This discovery in this geological formation contributes to the increase of gas reserves in this region. It is worth mentioning that extensive exploration and appraisal work is ongoing in the Reggane Basin. RWE Dea has been active in Algeria since 2003. The Reggane North concession is being exploited by the company in a consortium with Repsol YPF as operator, Sonatrach and Edison International, in which RWE Dea holds a 30 percent share. Since the establishment of the consortium, Reggane-6 is the fourth well to yield gas. (RWE Dea Press Release)

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Since the establishment of Egypt Oil & Gas, we have been dedicated to serving the oil and gas industry through our mission of providing our clients with the timely, accurate and useful oil and gas information they need to succeed. And, based on our vision to become the leading oil and gas information provider in the MENA region, Egypt Oil & Gas is honored to introduce and host the first conference of its kind in the Middle East region: Brownfield Development and Production Optimization Conference & Exhibition, held on 9-10 September. This conference comes as a comprehensive sequel to our successful workshop, held last year, which reflected the great value of Brownfields in yielding positive returns on investment, in particular with the current high and encouraging oil and gas prices. The Brownfield Development and Production Optimization Conference presents a full image of this process by discussing various aspects, such as identification and quantification of remaining hydrocarbons, methods of reaching production optimization, economic barriers of Brownfields, demonstration of improved reservoir management techniquesâ&#x20AC;Ś and much more. Through the diversity of our technical agenda topics and the participation of professionals representing the major oil and gas corporations, not only in Egypt but also in the Middle East, the Brownfield Development and Production Optimization Conference will deeply analyze the recommendations issued during our workshop, among which: 1. Brownfields are economic and yield positive return on investment, in particular with the currently high and encouraging oil and gas prices. 2. Organizational culture and mindset are important in running any business, and all should be adapted to meet the challenges to manage Brownfields in order to achieve the maximum return on investment. 3. Terms and conditions of the applied production sharing agreement should be revised to achieve a win-win situation for shareholders. 4. Reserves are very dynamic figures and are directly proportional to technologies and economics. Economics depend heavily on Hydrocarbon prices. In light of rising hydrocarbon prices, it is an excellent opportunity to re-visit and evaluate our Brownfields assets. 5. Data is very crucial for Brownfields management, and technology is booming to meet the challenges of Brownfields development and management. As Arnold H. Glasow once said, "Success isn't a result of spontaneous combustion. You must set yourself on fire". Egypt Oil & Gas, being a member of the world of Oil & Gas, has meticulously studied the needs of the industry to better develop its E&P operations and cautiously selected the theme of Brownfields due to the high value of such a critical topic. Brownfields generally are more than 30 years old and account for 67%-72% of world production. The Brownfield Development and Production Optimization Conference evaluates the different aspects of this topic as a way to provide our delegates with a fruitful experience and impart upon them the most recent methodologies through which they can improve their strategic plans to wipe out the barrier of Brownfields and improve their production rates.

Images from last yearâ&#x20AC;&#x2122;s Brownfield Development and Production Optimization Workshop held during March

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By Mohamed El-Sayed EGYPT’s relations with India date back to the beginning of the twentieth Century. Egyptian historic figures like Saad Zaghloul, the leader of the 1919 Revolution and head of the liberal Al-Wafd party, were on good terms with India’s iconic leader Mohandas Gandhi, both of them shared the common goals of their respective movements aiming at independence from the British occupation. These solid relations, as a matter of fact, strengthened following the outbreak of the 1952 Revolution in Egypt, as close ties between Gamal AbdelNasser and Nehru resulted in the birth of the Non-Aligned Movement in 1955. Economic relations between the two developing countries went hand in hand with the political ties. According to latest governmental figures, Indian investments in Egypt are valued at $320 million. Trade between the two countries hit $1.5 billion in 2006, according to the Indian Embassy in Cairo. Given the Indian government’s ambitious plans to become an Asian industrial giant, like China, Indian energy companies have eyes for oil countries in Africa. Therefore, investments in the Egyptian oil industry have been high on the Indian businessmen agenda. With the growing Indian demand on oil, contracts were signed between the Egyptian General Petroleum Authority in 2001, 2002 and 2003 to export shipments of oil to India’s giant Reliance Petroleum Limited. Also, in 2004 the Gas Authority of India Limited (GAIL) bought 15% of Egypt’s Nat Gas distribution and marketing company. India’s interest in investing heavily in the Egyptian oil industry was further galvanized in 2004 when the then Minister of Petroleum and Natural Gas Mani Shankar Aiyar discussed with his Egyptian counterpart Sameh Fahmy giving a boost to Indian investments in Egypt’s oil industry. Earlier this year, however, the relations between the two countries gained more momentum when Preisdent Hosni Mubarak met the Indian Petroleum and Natural

Visit of Mr. Murli Deora, Minister of Petroleum & Natural Gas of India, to Egypt

Gas Minister Murli Deora in April. The meeting was aimed at giving a push to Indian investments in the field of exploration and drilling as well as setting up joint enterprises exclusively for oil derivatives and petrochemicals. “India is keen on cooperating with the petroleum and natural gas producing countries including Egypt since we need enormous quantities of petroleum, natural gas and energy in light of our ambitious programme of industrial development,” Deora said following the meeting. Deora then told Mubarak that the Indian energy company ONGC Videsh Ltd. and its partner IPR Red Sea Inc. made a significant oilfield discovery in their first exploration well in the North Ramadan Concession in the Gulf of Suez. Later in May, the Egyptian government announced that the Indian company ESSAR expressed keen interest in setting up an oil refinery in northern Egypt that will cost around $3.4 billion. Expected to start operation in 2010, the refinery will have a daily production of as much as 300 thousand barrels per day. Other Indian oil companies are studying a mega project to set up an oil pipeline extending from the Mediterranean Sea to the Red Sea coast to help increase

the amount of exported oil to Asia, and especially India. Nevertheless, the announcement this month about the biggest Indian investment in the Egyptian oil industry came as music to the ears of Egyptian officials. According to the Egyptian cabinet’s spokesman Magdi Radi, the Indian industrial group Reliance will invest $10 billion in the oil refining and petrochemicals and plastics industries in Egypt. Having met Reliance executives in the coastal city of Alexandria, Prime Minister Ahmed Nazif announced that the investments by Reliance would include $1 billion to build an oil refinery and $7 billion in petrochemicals. The company’s decision, of course, came in light of the good political relations between the two countries. In addition to being a politically stable country, Egypt, in fact, is becoming a big source of gas. Also, the strategically vital location, which Egypt enjoys—halfway between the African, European and Asian continents— has galvanized the Indian company to invest heavily in Egypt. Nevertheless, while all the governmental circles welcomed Reliance’s unprecedented investments, oil experts are still raising questions about the deal. Magdi Sobhi, oil expert at Al-Ahram Centre for Political and Strategic Studies viewed the petrochemicals factory to be set up by Reliance as the most important part of Reliance’s investments. “What is new about the incoming Indian investments is that they will not be spent solely on excavation; rather they will be used in manufacturing oil products in a petrochemical factory,” he said. The $10 billion figure raised many eyebrows, since it’s one of the largest in the history of Egyptian oil industry. Sobhi cast doubts on the $10 billion figure, notwithstanding. “The figure is a bit misleading and unclear, for officials didn’t mention a timetable for the projects to be set up according to this deal,” he pointed out. “These investments could be spent on the oil industry over a long period of time,” he added.

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By Ethar Shalaby If the government puts forth great effort to provide access to domestic needs, it is clearly noticed that gas demand goes far beyond governmental supply. It is more than common to see an exhausted man riding a bike with one or two gas cylinders and hitting on them with a heavy metal pipe wrench. Housewives are used to this sound every morning; they just realize it is the independent worker who calls to sell the gas cylinders everyday in the street. A gas cylinder for these street workers is considered a private business that has no ties with the governmental gas supply. It is rather a vital source of income that may slightly help them meet their daily financial and social needs. Yousef Ahmed, a 50-year-old worker who sells an average of seven gas cylinders per day, says he has been working in this business for more than 15 continuous years with his brother. “It is a hard job to go everyday and wander in the streets with a bike to sell gas cylinders. I am an old man, and carrying the gas cylinders up to apartments is quite a hectic job for me…but it is my only source of income. I have to bear,” said Ahmed. Ahmed starts his working day at 11 a.m that is when he buys the gas cylinders from the official storage area for gas cylinders to sell them for higher prices. “I know that governmental storages sell the cylinder for only LE 4.5. I sell it for LE 7 to make profit…people know it is expensive, but they still buy it because it is tiring for them to go and carry it from the main storages,” said Ahmed. Another gas seller named Moustafa Abdel Rahim believes that he can not find a better job than selling gas cylinders. “It is the most suitable job I can have. I earn about LE 30 everyday…I know it is not much, but at least I can spend on my family…I never regret working in this business; people can not live without gas everyday and I feel that I am their provider,” said the 35-year-old Abdel Rahim in a proud tone. It can be noticed that gas sellers classify themselves in different districts and in certain groups. For Abdel Rahim, one of the major problems between the gas sellers’ community is that some workers sell the cylinders in streets that other workers are known to sell in. “Most of the people in the district have my mobile number. They even call me to get them the required cylinders every day. It is really frustrating to find another worker selling in the street that you sell in. Every street has its known seller,” said Abdel Rahim. Despite the increasing number of street gas sellers who depend on the gas cylinder business for their livelihood, the non licensed sale of gas cylinders is considered illegal. An appropriate gas seller should be holding a license from the Ministry of Social Affairs or from Butagazco, the official governmental gas company, to sell and carry the cylinders to houses. Mohamed Mahgoub is a 32-year-old street gas seller who is fully aware that this business is legally prohibited, but said he wont quit because it is his main source of income.

“I know I can go to prison for selling gas cylinders because I should be following the official governmental gas company. But I can’t have another job in this country and there are no other solutions for my financial conditions except selling these heavy cylinders,” said Mahgoub while carrying a cylinder from the storage to one of the houses. Mahgoub assured that despite its illegal nature, most of the gas sellers have some deals with the workers at the main governmental storages that facilitate the process of getting the maximum amount of cylinders from the storages. “People in the governmental storages know that we sell the cylinders for high prices. They do not care…they know we are poor and we need to work,” said Mahgoub. As for Osama Hammad, a street gas seller and the father of six, the labor union has never thought of defending the rights of the street gas sellers, although there is a specific department in the union responsible for the workers of the petroleum sector. “The labor union has never thought of any solutions for us (the street gas sellers). They know that we have worked in this field for a long period of time and still consider it illegal…I don’t know why they haven’t tried to make a license for us,” said Hammad. But from the perspective of the government, street gas sellers do not abide to any governmental organization or institution. They are defined as “independent workers who run their own business and work in ‘mafias’”. Mohamed Saafan, the Secretary General of the

General Syndicate for Workers in the petroleum sector, said the labor union can not defend any worker who is not a member in the syndicate. He added that most of the street gas sellers work on their own and are not part of an authorized company. “The random sale of gas cylinders is a prohibited business. How can I defend a worker who works in an illegal business and is not even a member of the syndicate?” said Saafan. He stressed that the main aim of the General Syndicate for Workers in the petroleum sector is to protect the workers’ rights from being violated by their employers. But in the business of street gas selling, there is no employer and the syndicate does not have the ability to protect the workers. “Workers at gas stations are members of the labor union and we defend them in case they face any problems with the owner of the gas station. They work for someone and they have rights that we as a syndicate defend. But a street gas seller is a random guy that works for himself,” said Saafan. Sources at the Ministry of Petroleum asserted that street gas sellers do not belong to the ministry and do not carry any license that would allow them to proceed with their jobs legally. “They are just working in mafias. They make good profit from working in this business…but we do not deal with them and we are not even concerned with them by any mean,” said a source at the ministry who preferred to remain anonymous. Assem El Sayyed, president of the main governmental gas company Butagazco, said gas workers should be holders of a licensed ID that certifies their relation with either the company or the Ministry of Social Affairs. They should also be well-trained on carrying, preparing and fixing the cylinders in the houses. “What is happening now is that street gas sellers go to the governmental storages which sell the gas cylinder for LE 2.5 and sell it to people for LE 8 and LE 10. This is too much. They are also not trained and do not belong to any governmental structure that set a standard price for the cylinder,” said El Sayyed. He confirmed that governmental storages can satisfy the needs of most of the districts in Egypt, stating that the country has about 2,600 storages to avoid shortages, but still the phenomenon of street gas sellers exist. “A gas cylinder is a supply commodity that is very important to the people. Although the private and the public sector properly provide the suitable number of cylinders, the illegal phenomenon of street sellers is increasing and very dangerous,” said El Sayyed. El Sayyed said there is no proper governmental supervision to limit the dangers of this phenomenon, while the company does its best to raise the awareness through the media. However, at the end of the day, a gas seller does what he does, not out of joy and love of the job, but out of necessity. “I wish I can have a more proper and legal job than this…but I just have no choice than carrying these bulky metal cylinders on my back…It is the only way by which I can feed my family everyday,” says Ahmed, the 50-year-old gas seller.

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September 2007 - Issue 9

Continued from page 1 By Diana Elassy THIS feature in essence attempts to undertake two extremely vital components of the current trends in the local and international oil market: the first is the fact that brownfields not just in Egypt but worldwide comprise 2/3 of the world’s recoverable oil. This point will be further elaborated on via a brief examination of a few of Egypt’s many brownfields, their history and their present states. The second part concentrates on case studies of successful brownfield production optimization efforts throughout the world; a look at what technological advancements have meant for the international oil industry in order to ascertain what it can mean for Egypt in the not too distant future.

Where Egypt Stands The oil and gas industry in Egypt has played and will continue to play an ever-growing role in the country’s economic development. However, while there are certain aspects of the industry that have presented the nation with optimism for the future, such as the growing exportation of liquefied natural gas (LNG), which began in January 2005, there are other aspects which impart a menacing reality. In 1996, Egypt reached its peak point of oil production which essentially equated to 922,000 barrels per day (bbl/d). This in effect caused a decline in the country’s net exports of crude oil and petroleum products. In 2006, Egypt’s crude oil production averaged 658,000 bbl/d; a startling 40 percent decrease in production since its peak point more than a decade prior. Estimates place the country’s proven oil reserves at 3.7 billion barrels, which is approximately 0.3 percent of world reserves, while its more recent abovementioned daily production average equates to less than 1 percent of world production. In 2004, it was estimated that Egypt’s domestic oil consumption stood at 594,000 bbl/d while its exports stood at 134,000 bbl/d. In essence, consumption is swiftly rising while production is steadily declining. In fact, Egypt is expected to become a net importer of oil by the year 2015. And the answer to this dilemma cannot be solely found in natural gas, because in short natural gas cannot wholly replace petroleum and petrochemicals. Furthermore, while alternative energy is undoubtedly the next step to be taken in the long term for the world’s energy crisis, for the short term, there are three key efforts that must be addressed: conservation, exploration and brownfields. The first is redundant and thus will not be discussed in detail, suffice to say that conservation will always have to be on the government’s to do list. The second means of boosting oil production is newdiscoveries through exploration. There are a few problems with this approach however. The first and foremost problem of exploration is cost. Oil companies find exploration to be an expensive operation especially if exploration is pursued offshore. Deep-sea drilling is by far one of the most expensive endeavors world-wide, due to the incredibly high prices of equipment needed for offshore drilling. Secondly, while there have been recent discoveries made in the industry none have been major. The third method of increasing oil production in a country, whose production has waned in the past few years, and also the most economic method, is to utilize what is already there. And this is where the story gets a little more interesting… Increased production, greater investment, more job opportunities, higher exportation, enhanced fulfillment of domestic consumption, transfer of knowledge for advanced

when the well was first developed. One of the main problems with trying to optimize production from a brownfield is that technologies were not altered in order to adapt to the aging of the well. While infrastructure can remain the same, technologies have to advance in order to generate a greater output from a mature field. So how exactly can one go about optimizing production from a brownfield? The first step, undoubtedly, is to have better knowledge of the reservoir and to know the location of un-recovered oil in a field and to understand the fluid and pressure distribution of the reservoir. This endeavor has to be undertaken through the cooperation of field engineers, geophysicists and geologists. Once better knowledge of the reservoir has been acquired, facilitating access to these reservoirs must then ensue. Reaching the oil is by far one of the most important tasks, but optimizing the production of the un-recovered oil that has been found is equally as important. Optimization efforts range from completion and lift strategies to fluid management. There have been several discoveries in the field of production optimization. With the threat of an energy crisis on the horizon and present oil prices sky-rocketing, brownfields provide a viable solution for the future. So why are they not being concentrated on? Simply put, the answer boils down to economics, as most things usually do. There is not enough innovation specific to Egyptian fields on the part of researchers due to the lack of investment on the part of companies. There is a lack of investment owing to the shortage of incentives on the part of the government; a distressing absence of interest caused by the myth of a diminished rate of return. Only a few years ago was it true that developing brownfields was an overly costly endeavor that would have expenditure surpassing profit. However, recent technological developments have rendered production optimization methods more economical. These developments have been successfully implemented elsewhere and have economically recovered their cost while increasing the production of once deliberated wells.

Leading By Example

technologies, all this and so much more encapsulated in just one word: brownfields.

Brownfields: Securing Rising Energy Demand Brownfields are defined as mature oil and gas fields in a state of declining production or reaching the end of their productive lives. They are typically over 30 years old. So why worry about them? The reason is they account for 67 to 72 percent of world production and, therefore, represent a significant resource to provide future production while utilizing existing infrastructure. Brownfields are categorized as one among three types of fields, the other two being green-fields and deep-water fields. As already mentioned, green-fields are signified by new discoveries, something which has been taking place in Egypt but not in an astonishing manner, and not in a pace that will secure present and future consumption and export aspirations. Also, green-fields account for 2025 percent of world production. Deep-water fields also as previously addressed are expensive to explore for and to drill and they account for only 8 percent of world production. Due to the fact that brownfields account for more than 2/3 of world production, their efficient operation is essential. Currently, the average rate of recovery from a mature field is 35 percent for oil and 70 percent for gas. However, the international industry of oil and gas is attempting to raise this figure to reach 50 percent for oil and 80 percent for gas.

Brownfields in Egypt Egypt was among the first nations to explore the possibilities of petroleum having discovered several of its fields in the beginning of the 20th century. These fields have since long reached their peak and are now in a dire state of decline. Among these fields is the GPC field in the Gulf of Suez, which was discovered in 1915, with a 100% working interest going to EGPC. Production on the field commenced the same year as its discovery with 31.1 (‘000 b/d) reaching its peak in the year 1984 with 35.1 (‘000 b/d). In the year 2005 production rates had declined to 15.1 (‘000 b/d). Another EGPC field, Hurghada was also discovered in 1915. Unlike the GPC

field, the production rates of the Hurghada field were never that impressive with initial production standing at 0.5 (‘000 b/d). The field’s peak point did not raise its production rates at all, but decline began after the year 1965 and in 2005 stood at zero production. The Ras Gharib field was discovered in 1938 and production began on the field a year later, where production rates stood at 8.1 (‘000 b/d). In 1975, the field reached its peak production rate of 9.3 (‘000 b/d) and in 2005 that rate declined to 3.3 (‘000 b/d). However, it is the later discoveries which prove to be the true victims declining production rates. Among these fields is BP’s Morgan field operated by GUPCO. field was discovered in

1965 and began production in 1967 with a zero production rate. This rate boomed in 1970 reaching its peak of 268.9 (‘000 b/d). In 2005 this rate dropped to a staggering 22.8 (‘000 b/d). Another GUPCO operated field that is in a sad state of decline is the Ramadan field, which was discovered in 1974 and reached its peak production of 114.5 (‘000 b/d) in 1978. In 2005 the rate plummeted to 11.3 (‘000 b/d). The above examples of brownfields in Egypt are just the tip of the iceberg. There are close to 90 other fields which face similar states of decline of production. One can only imagine that if these fields were revived what possibilities they might present to the overall production of the country; meeting domestic demand, while also posing opportunities for export and thus the rise in investment, employment, technology and infrastructure for the nation at large.

So Why Not Invest in Brownfields? Logistics of the Field The reason brownfields are said to be the most economical means of increasing oil and gas production is that they as previously mentioned utilize the advantage of already existing infrastructure. This simply means that mature fields that contain wells with artificial lift systems, casing, tubing and surface facilities merely need a work-over. However, this does not mean that wells should be operated on with the same technologies that they were initially utilizing

The beginning of this millennium witnessed the rising prices of oil and gas coupled with rising political tensions in many of the prime oil producing countries, which caused a certain scare in the industry. Much like the great gold rush, this was the rush for hydrocarbons. In the international oil and gas industry buzz terms such as peak oil and resource nationalization shook the very fiber of oil dependent countries. These were very real problems that called for very real solutions. With the help of advancing technology, service companies created enhanced oil-recovery (EOR) methods, which could be implemented on brownfields. Such methods utilize oil-field chemicals such as biocides, surfactants, and lubricants. These methods along with these chemicals present a viable solution to the world’s rising oil demand. Now that the easy oil is gone, the hard is all we have. Several operators have implemented some of these optimization methods and have succeeded in their endeavors. Their success can prove to be a learning experience for some of the brownfields found in Egypt.

Brownfield Optimization Success Stories Case Study #1 In 2006, with the assistance of brownfield optimization methods and exploration success, TNK-BP, a leading Russian oil company, which was created in 2003 through the merger of BP’s Russian Oil and Alfa Access Renova group (AAR), managed to produce 620 million barrels of oil equivalent and to add 861 million barrels of new proved reserves.

Case Study #2 As one of the leading service companies on an international level, Schlumberger maintains an impressive portfolio of optimization successes. The intriguing aspect about the company is the fact that for over 25 years the company has made it its mission to address brownfield challenges. Thus, their experience in the field has become a tool for others to learn. Among their successes are several wells in Angola operated by ChevronTexaco. In this endeavor, the service company logged three wells and opted to used mechanical plugback tools (MPBTs) in order to increase production of the wells. The overall cost of the project was approximately US $400,000. This amount of money was recovered with the increased production in just eight days. In total, the increased production of the three wells reached to 2,400B/D. Another project undertaken by the company was comprised of an Integrated Project Management (IPM). Implemented on the Waddell Ranch in Texas—consisting of 1,300 wells in an area of close to 80,000 acres—the project was essentially a restructuring of the field organization and the implementation of a total field management program. Schlumberger began on the field in 1998 and has since managed to reduce well lift system failures to 0.25%, while increasing production by 40% and saving more than US $1 million rendering the rate of return on the capital invested more than 100%. Case Study #3 The Occidental Petroleum Corporation (Oxy), an international oil and gas exploration and production company, took over operation of the offshore Idd El Shargi North Dome oil field located in Qatar in 1994. When Oxy took over the field it had been in decline for close to 25 years. The field initially went into production in 1963. It reached its peak production in 1970, producing 50 (‘000 b/d). In 1994 this figure had dropped to 20(‘000 b/d). By implementing state of the art technology, advanced drilling systems, waterfloods and reservoir characterizations, Oxy

was able to enhance recovery rates and add new reserves. After the implementation of these measures the operator managed to boost production to approximately 138 (‘000 b/d), which is close to triple the original production rate. The field now has an estimated four billion barrels of remaining oil in place. Since the operator’s takeover of the field in 1994 they have managed to produce more than 200 million gross barrels of oil.

September 2007 - Issue 9

always be an option, albeit an expensive one, but no one truly knows what the future holds. Production optimization is not solely a science, but rather a culture. Borrowing from the motto of the Boy Scouts of America, one must always keep in mind that in order to survive you must be prepared. So let’s prepare for the future, let’s work with what we have so that we can face what we’re not sure of.

So What Did We Learn? The above case studies of brownfield success stories are telling of the possibilities that are present right within our country. The age of reasoning cost effectiveness as a deterrent to investing in brownfield production optimization methods is over. Both public and private entities have to take steps to cooperate in order to encourage the rejuvenation of mature fields throughout the country. As previously mentioned, Egypt possesses several brownfields that are in dire need of attention. Investing in these brownfields will create more jobs, will better the infrastructure of the site while maintaining good environmental standards, will increase revenue and will secure future local and global demand. The rising demand for oil, which in effect creates the rising prices of the commodity have rendered brownfield production optimization a necessity and no longer a luxury. On the side of the public sector a highly developed and motivated research center should attempt to scout for the future problem-solvers of the world, while also presenting the private sector incentives for operating brownfields. On the part of private entities, an awareness of advanced technology should be in the foreground of any new operating endeavor. It is not just brownfields that require enhanced oil recovery methods, but also greenfields so as to prepare for the imminent decline of production. One of the problems found in addressing brownfield challenges is the already existent infrastructure in the fields which did not take into account new technologies and development. With the recent discourse of peak oil and the instability of oil producing countries, it would be foolish to lightly dismiss more than 2/3 of the world’s recoverable oil. Exploration will

We, at Egypt Oil & Gas, asked Mr. Hesham Ismail, Halliburton’s Area Vice President for Egypt and Libya, to describe what he views as the main challenges faced when addressing the issue of brownfields in Egypt. What follows are his comments. Regarding brownfields, since we are talking from a government/economy perspective; a lot of the existing fields are already in the mature phase like those of Gupco. As these fields have been on production for so long, their costs have already been recovered, and hence, the portion of the production that used to be allocated to Cost Recovery (given to the operator) now turns into Excess Oil that is usually either split between the EGPC and the Operator or given entirely to the EGPC depending on the existing agreement. In either case, while in terms of the percentage of production allocated to the EGPC gets bigger, the production volume doesn’t necessarily means it’s more because the entire field production is lower. Accordingly it’s in the best interest of both the EGPC and the operator to rejuvenate or enhance the production of the field. Now in many cases, for the super majors that’s not a worthy investment and they would rather farm out the fields to smaller operators – mostly the independents- who are willing to make that investment. However, a crucial point to note, that with smaller, mature oil reserves now throughout Egypt - the government will eventually need to consider adjusting the laws to attract more of those independents into the country, perhaps increasing their production share that goes into the capex recovery or the profit oil, while it may mean a lower percentage of the oil to the EGPC, nonetheless, eventually they will need to resort to that or else we wont have anyone investing in our upstream oil segment.

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By Mohamed El-Sayed AS has been expected, the beginning of the 2007/2008 version of the National Soccer League was suspenseful. While the competition between the top three clubs — Ahli, Zamalek and Ismaili — in the 2006/2007 season reached its peak by the final stages of the tournament, the first stage of the new season heralded a breathtaking competition that will keep fans on their feet. The excitement kicked off earlier on August 8th when Ahli managed to snatch the Egyptian Super Cup from the formidable Ismaili, having won 4-2 after the regular time ended 1-1. It was the third time in a row that Ahli lifts the Super Cup. The game proved again that the competition in the new season will be like the previous one. Few days later, in the coastal city stadium of Port Said the defending champions Ahli commenced the daunting mission of maintaining the league title for the fourth time in a row. Facing Misri — the club that spent more than LE20 million to sign new players — was not an easy task for the Red Devils. Misri players proved that the money the club board spent on signing them was well deserved. Having come down from a 1-0 defeat in the beginning of the game, they managed to take the lead by netting two goals. However, illustrious midfielder Mohamed Abu Treika sent a tantalizing header from a difficult position to bring the game to a 2-2 draw. Ahli might have lost the first two points in its run for the fourth consecutive league title, but critics opine that big teams reserve their strength till the decisive stages of the competition. The news of Ahli’s draw in Port Said prompted Zamalek and Ismaili to fight for their first three points during their encounter in Cairo later on the same day. Given that the two teams experienced similar difficult circumstances before the beginning of the season, the

game was beyond expectations. Zamalek’s former French head coach Henry Michel quit after the team finished its training camp in France a few days before the start of the league. Having furnished no reasons, Michel’s sudden departure was a death blow to Zamalek’s board which decided to resort to its former Dutch coach Ruud Krol. Ismaili, on the other side went through the same ordeal. Its French head coach Patrice Nevue decided not to return from his vacation to lead the team in preparation for the new season. The club’s board quickly signed veteran coach Taha Besri who took over the responsibility starting from the Zamalek encounter. Ismaili gave a convincing performance during the first half, while Zamalek improved in the second. However, Ismaili’s Iraqi import Mustafa Kareem pulled the wool over Zamalek defenders’ eyes, netting the ball in critical timing to put his team in the lead. Desperate attempts by Zamalek players, especially their 33-year-old captain Hazem Imam, didn’t pay off. Consequently, angry Zamalek fans couldn’t believe that their team lost their first game like they did last year. As a result, they hurled insults on the team’s veteran players,

asking Imam to hang up his shoes. Imam, in a moment of despair, nodded for them that he would not continue. Ismaili’s win, as a matter of fact, came to end a fiveyear supremacy of Zamalek over Ismaili (Ismaili has not defeated Zamalek since 2002 when the former punished the latter 4-3 in Cairo). The defeat, in fact, left the white jerseys in ruins. Unless the club rearranges its ranks quickly, it would be too late for them to keep up with the tough competition. Other matches proved that the competition among the rest of the clubs would not be easy this season. Tersana, which escaped relegation last year, edged oil company team Petrojet 3-1 to take the lead of the standings in the first stage. Despite the fact that Petrojet ended in the eighth place last season, Tersana, under the leadership of veteran coach Farouk Gaafar, seems vying to be the black horse of the tournament. The newly promoted Baladeya succeeded in defeating the Arab Contractors 3-2, to take the second position in the standings. Ghazl Mahalla also punished oil company team Enppi 3-2. Ittihad of Alexandria drew 0-0 with the Coastal Guards; Aluminium defeated Egypt Telecom 10; and the Army edged Suez Cement 1-0.

Standings Team

Home

Away

Points

Tersana

Baladeya

Ghazl Mahalla

Ismaili

Aluminum

Al-Gaish

Al-Ahli

Masri

Ittihad

10 Harras Al Hodoud

11 ENPPI

12 Arab Contractors

13 Suez Cement

14 Zamalek

15 Telecom Egypt

16 Petrojet

FORMER England captain scored his first goal for L.A. Galaxy, inspiring his team to a 2-0 victory over D.C. United in the Super Liga semi-final match last week. Beckham’s first goal, in fact, was the perfect reply to scathing criticisms leveled by sports observers who saw his lucrative contract with his new team as a purely commercial one. Beckham outshined twice in the game. First when he curled a trademark free-kick giving the lead to his American team and sending a tantalizing through pass to his teammate Landon Donovan who did justice to the ball. Beckham, who has been in the centre of the spotlight since joining his American team from Spanish powerhouse Real Madrid earlier this summer, lifted his morale to new heights. ° I felt I was going to score as soon I got the ball in my hands," Beckham told reporters after the game. The former Manchester United captain had made great efforts to shrug off an ankle injury since joining Galaxy, making two brief appearances with the team before starting the game. ° I didn't expect to last an hour but it felt great after 10 minutes into the game," he said. "My confidence got up with my ankle and I was happy to be out there for 60 minutes. Overall, the ankle was a lot better than I thought it was going to be and I felt confident going into tackles." 18

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More than just a beach By Sarah Rashdan

ALTHOUGH it is an Islamic event, Ramadan is yet considered the month in which all people belonging to different religious affiliations in Egypt bond and unite; they exchange greetings and Iftar invitations, share social gatherings at night, organize family reunions…etc. The spirit of brotherhood and mutual love taught by all religions is highly illustrated during this holy month. This dominant spirit brings joy to many throughout the world, especially in Arab nations. Focusing on Egypt, the celebrations and preparations for this month usually start one month ahead and despite the differences from one person to another, there are common features in Ramadan's preparations. Colored and different sized lanterns, street ornaments, mesaharaty and the Iftar canon are the unique and marvelous signs of this month. The streets of the cities and towns remain decorated with lanterns and ornaments throughout Ramadan. What is very noticeable in people's attitude is their great concern paid to religious rituals. Mosques enlarge their praying areas with more carpets to accommodate as much prayers as they can. Also, many people prefer going to old historic mosques in Great Cairo, such as El-Hussein, El-Sayeda Nafisa, ElSayeda Zeinab…etc due to their religious significance. People's celebrations are not solely limited to religious rituals; some of them find it a time to relax and as such are attracted to cultural houses, which set a special program for this month in particular. Beit El Hawary and Zeinab Khatoon, and Beit El Seheimy are among the places which specialize in poetic and oriental musical nights. Both places are located in the Azhar district; Beit El Hawary and Zeinab Khatoon in Mohamed Abdou St. and Beit El Seheimy in El Moez Ledin Allah El Fatemy St.

Speaking of the Azhar District, one cannot forget to mention the area of Khan Al-Khalili as well. Ramadan nights are enjoyed by all in this area, where historic cafes are found in every inch of the area. The most famous among those cafes is El-Fishawy, established during the early 1900s, if not prior. With its Arabian-style decorations, old music as entertainment, Egyptian Sheesha (water pipes) and oriental drinks, such as Sahlab, Belila, Homos…etc, El-Fishawy attracts all people from all walks of life. Usually, people consort all night until suhur; the time when Muslims have their last meal before the start of the fasting day and spend their night with friends and family in cafes and hotel tents. Due to this phenomenon, people tend to work less, stay awake until the wee hours of the night to devote more time to praying in mosques or meeting with friends and relatives. Sports also play another part of the holiday’s celebrative verve. Clubs organize soccer tournaments, where people of all ages are encouraged to form their teams and compete. These tournaments are usually held for one or two weeks, during which matches take place after El-Taraweeh Prayers and finish late at night. In general, many people enjoy the liberty of playing football in side streets or in alleys. One of the more obvious traits found in the Egyptian persona is the love of food. However, this lovable trait contradicts the essence of Ramadan, as the lesson behind fasting is to share with the poor and needy their suffering from the lack of food. This food phenomenon is reflected in the over-crowded streets with people hurrying to stores to purchase Ramadan supplies like raisins, nuts, almonds, walnuts and pistachios. In terms of food, one cannot forget to mention

the special desserts associated with the holiday like Kunafa, Basbousah, Kataief and Khushaf (a cocktail made of dates, apricot, black plums & raisins). However, one must consider three preparations before the beginning of the holy month; these preparations are not solely confined to fasting and eating but rather, physical, mental, and spiritual preparations. Physical preparation is important since people consume energy to fast, they are not allowed to eat, drink or smoke, from sunrise to sunset, which is nearly 12 hours. People also spend their nights praying and fulfilling other acts of worship. All these biological changes need proper preparations so that fasting will not be difficult, especially the first few days. The reason why people feel tired and exhausted during the first few days of Ramadan lies in the fact that their bodies are still not fully prepared to cope with the biological changes that come with fasting. As we, all approach towards the end of Ramadan, one feels that fasting is something natural because our body has adapted to the routine of the month. The second aspect is mental preparations. One must keep in mind that Ramadan is a time for inner reflection, devotion to God, intensive worshiping, self-control, recitation of the Qur'an, alms-giving, purifying one's behavior and, simply put, doing good deeds. Last, but definitely not least, is the spiritual preparation, which is the most important of all preparations. Spiritual preparation requires us to clean our minds and souls from all abhorrent thoughts and seek God's forgiveness. So prepare yourselves for the joyous month and with that being said, I wish you all a happy Ramadan.

September 2007 - Issue 9 w

By Yomna Bassiouni REVOLVING around the ongoing controversy that the era of oil usage is fading away as overly-produced discoveries have led to an oil peak, endangering the world's stability, Duncan Clarke issued his piece of art "The Battle for Barrels: Peak Oil Myths and World oil Futures" in which he demonstrates that "the doom and gloom of the Peak Oil theory is mistaken." Clarke analyzes the model of peak oil to examine the truthfulness and validity of the varying arguments surrounding the controversy. He supports his endeavor by explaining main key factors, such as rising crude oil prices, new or future technologies, potential improved exploration acreage and/or access to restricted world oil zones, changes in government policies, new corporate strategies, development in unconventional oils...etc. In his analysis, the author refers to the crisis of Peak oil as a "Twilight in the Mind", clarifying that the difference between the peak oil theory and the real oil word is "stark." Clarke has further elaborated on the real circumstances and complexities that shape the present and likely oil future, with new insights on the world oil game. He claims that people's anxiety concerning the depletion of oil reserves is extreme and "built on shallow foundations". The book addresses the question of why the Peak Oil Model's gloomy outlook on reserves and discovery potential does not reflect a world terrain still much unexplored and under-exploited. Clarke's book has been appraised by many fine remarks, which reflect its highly valued content. Among the quotes listed on Amazon.com, we can list Leonardo Maugeri, Senior Vice President, Eni SpA who said, "Duncan Clarke offers a smart and insightful survey of one of the most intriguing issues of our times - Is the world running out of oil? – explaining why doomsayers are wrong. He diagnoses the

psychological mindset, the historical mistakes, and the current complexities concerning the evaluation of how much oil lies beneath, and shows a positive view of our energy future." "The Battle for Barrels lucidly shows that not all is known on potential oil reserves-in-ground, and Peak Oil is very wrong on its view that such reserves are now fully known and finite. Clarke credibly demonstrates that there is much conventional oil to-be-discovered while economics and aboveground factors such as global access and resource nationalism, plus technologies, will shape real oil world futures in ways unlike Peak Oil theorists presume, especially given the Earth’s vast oil endowment," commented Fred Dekker, Managing Director, Wessex Exploration, and former Vice President, Asia Pacific New Ventures, Unocal Corporation. "Peak Oil has caught global attention because the media love catastrophic news. Duncan Clarke, who has had close contact with top oil industry leaders and its best experts over three decades, has demystified this dogma and shown the crude realities," said André Coajou, Former Senior Executive, Elf Aquitaine. Dr. Alfred J. Boulos, former Senior Director, International, Conoco Inc., former President, Association of International Petroleum Negotiators, and European Petroleum Negotiators Group said that the author “provides a brilliant insight into the world upstream, peak oil, international corporate strategies, geopolitics, business, economics and technology. His unique worldwide experience provides an astute analysis of critical issues that clarify and interpret the historical future of oil and the modern world in the 21st Century." Christian Suter, CEO Petroconsultants, 1987-1998, and Member of the Board 1968-1999 expressed his evaluation; "This book portrays an independent mind and Duncan Clarke's analysis and interesting opinions shed much light. Few things are trickier than reserve estimates. We had the rule: ‘You will never know the reserves of a field, before it is depleted…and even then.’ What about reserves of not yet discovered fields?

Gerry Dixon, former President of Petroconsultants always said: ‘if we badly need it, we will find it’. Clarke's optimism on the world is justified. One day oil may be depleted, unless humanity does not need it before.” Clarke is Chairman and CEO of Global Pacific & Partners, a private advisory firm operating from offices in London, The Hague, Johannesburg and Nicosia. He received his PhD in economics in 1975, and was a lecturer, economist and advisor, before establishing GP&P, with a focus on economics and strategy in the worldwide upstream industry. The Battle for Barrels is published by Profile Books, in a hardback of 244 pages and is sold for $60.

September 2007 - Issue 9

September 2007 - Issue 9 w

Imagined by Yomna Bassiouni

SUBSTANCES such as gasoline, diesel fuel, heating oils, lubricants, waxes, asphalt and coke are obtained from refined oil. This refined oil originally contains a mixture of hydrocarbon compounds which include nitrogen, oxygen, sulfur, and small quantities of trace metals. One barrel of crude oil gives the following percent yield: gasoline, 46.7%; fuel oil, 28.6%; jet fuel, 9.1%; petrochemicals, 3.8%; coke, 3.5%; asphalt and road oil, 3.1%; liquefied gases, 2.9%; lubricants, 1.3%; kerosene, 0.9%; and waxes, 0.1%. This then traces the importance of oil refining. Before the1900s, early attempts to refine crude oil were inefficient; only one barrel of gasoline was yielded from every fifteen barrels of crude oil. The urgent need for more oil refineries was highly illustrated with the booming era of automobiles in 1908. The demand for gasoline was tremendously augmented, while the early refining process was inefficient, as previously mentioned, and unable to satisfy this demand.

If rfineries were not invented, everything will be affected, for example coal will be used ashelicopter’s fuel

In 1913, William Burton, an employee of Standard Oil of Indiana, developed a technique called thermal cracking; a process invented to enhance the efficiency rate of the refining process during that time. This thermal cracking utilizes the heat and pressure application in order to break down heavy hydrocarbons into lighter components. Through this technique, the amount of gasoline produced from a single barrel of crude oil had more than doubled. It was further upgraded when catalysts were added to promote chemical reactions. The oil industry also witnessed another boost when it was greatly developed to meet military needs. During World War II, new products, such as high-octane fuel for airplanes and raw materials for synthetic rubber were created to fulfill military requirements during that time. What if advanced oil refineries were not invented? How would the entire world function nowadays without the vital components derived from refined oil, which are affiliated with our daily tasks? Let's imagine it together… Most of the products coming from crude oil require processing beyond the refinery, except for two which get out directly; asphalt and waxes. These two products are considered as raw materials because they do not require extra processing. As commonly known, asphalt is classified as the principle material utilized for building roads. In the Egyptian society, there is a common belief that you have to reside in areas where VIPs, Ministers and top officials reside, in order to enjoy well paved roads, as most of Cairo’s streets quite shoddy, to say the least. If we assumed that asphalt was easier to get than many other products, then more roads would be built in suburban areas and more modifications would be made.

Now, moving on to the most interesting part, fuel; it forms the largest group of oil products. They are easily burnt and create large amounts of thermal energy. Petroleum fuels are preferred over other combustible materials such as coal or wood because they are cleaner, easier to store, and easier to transport from one location to another. Almost all of the fuels used for transportation and the majority of the fuels used for heat and electricity come from petroleum products. Fuel is associated with everything in our daily life routine, so what would happen if oil is not refined and fuel is not extracted? The answer lies in two words; coal and wood. In other words, instead of utilizing fuel to run our cars, we would instead use coal like the good old days. In the morning, before heading to your work, charge your car with one or two packs of coals. We might even go further back to the early days of the 18th century, when wood was used for heating, cooking… etc. And, as almost all of the fuels used for transportation and the majority of the fuels used for heat and electricity come from petroleum products, wood will be the alternative, despite the pollution it causes. As mentioned before, the refining process was developed during WWII to meet military demands. Devices like fighting helicopters, how would get the fuel they need or how would weapons be manufactured? Thus, it would be better for fighting countries to either end the war and choose peaceful solutions or depend on their soldiers since there would not be an air force. On a much more optimistic note, however, maybe wars would not

be as ghastly and destructive as they currently are. And while weapons prior to the existence and aid of petroleum were still harmful they were by no means as devastating on such massive proportions. As for the oil industry, factories would probably revert to the oldest and most common way of separating things into various components, known as fractions, which are carried out through using the differences in boiling temperature. This process is called fractional distillation; you basically heat crude oil brining it to a boil, let it vaporize and then condense the vapor. Needless to say, had the refining process not have been created, life would be a bit harder. Instead of house chores consisting of cooking and cleaning, you can add chopping wood to the list. Instead of individual cars, coal would render mass transportation such as trains, the only viable option for a means of transport. Weaponry would not be as sophisticated, but where has sophistication really gotten us. And as for petroleum products, will just take a moment to imagine life without plastic.

September 2007 - Issue 9 w

Oil & Gas Crossword

Oil & Gas Trivia 1. Workers who work on a drilling rig drill floor are referred to as… A. Roughnecks 2. The act of deviating a well bore to head in the direction desired is called… A. Directional drilling 3. What are the two basic types of drills? A. Drills that produce rock chips, and drills which produce core samples. 4. What is sonic drilling? A. It is utilized for the process of continuous sampling and monitoring well installation in non-consolidated and soft/fractured bedrock. This technique depends on sending high frequency resonant vibrations down the drill string to the drill bit

ACROSS 2 The cutting or boring element used in drilling oil and gas wells 4 An uncontrolled low of gas, oil, or other well fluids into the atmosphere or into an underground formation 6 Fluid such as gas, oil, or water that exists in a subsurface rock formation 7 A surface location where oil appears, the oil having permeated its subsurface boundaries and accumulated in small pools or rivulets. Also called oil spring. 8 An oil well that has come in with such great pressure that the oil jets out of the well like a geyser.

DOWN 1 Oil trade organization founded in 1920 that is the leading standard setting organization for all types of oil field equipment. 3 The first well drilled in the United States in search of oil. It was linear Titusville, Pennsylvania. 5 The natural gas that is emitted from the mouth or opening of an oil well.

5. In what year did crude oil, natural gas, condensates and liquefied petroleum gas (LPG) achieve the highest records, reaching the equivalent of about 71 million tones in Egypt? A. During 2005-2006

Answers: 1. American Petroleum Institute 2. Bit 3. Blowout 4. Drake well 5. Formation fluid 6. Gusher 7. Oil seep 8. Casinghead gas

Middle Eastern LPG in the Global Marketplace Doha, Qatar 4-7 September 2007 Organizer: Argus Media Tel: +44 20 7780 4200 URL: www.argusmediagroup.com The conference will cover issues of LPG supply and demand in the Middle East and explore questions about pricing and the trading situation in the market. Companies representing the exploration and production sector, refining, engineers and LPG buyers, sellers and traders will be able to get involved in a panel discussion on the future of the industry in the region.

3rd Asia Refining Conference Singapore 6-7 September 2007 Organizer: Centre for Management Technology Tel: 65-63469140 Fax: 65-63455928 URL: www.cmtevents.com/?EV=070935&PU=4353 CMT’s 3rd Asia Refining Conference provides the latest from refining project to CO2 emission management and future refining challenges. Leading industry panel will share on the following; - Perspective from China, India, Oman, Pakistan, Thailand and Vietnam on refining capacity and new/upgrading projects - Overcoming the global shortage of skill professional - Meeting hydrogen requirements - Efficiency achieved in an integrated petrochemical refinery - CO2 & emissions management in refining - Clean fuels specifications – Where are we now? - Refiners – Renewable Integration

September 2007 - Issue 9 w

Egypt Rig Count per Area August 2007

Table 1

RIG COUNT Area

Gulf of Suez Offshore

Total

Percentage of Total Area

13%

11%

54%

106

100%

Land

Mediterranean Sea Offshore Land

12 0

Western Desert 0

Offshore Land

Offshore

Land Eastern Desert Offshore Land

Sinai

0 7

Delta Offshore Land

0 7

Total

World Crude Oil Production (Including Lease Condensate) (Thousand Barrels per Day)

Table 2

Algeria Angola Argentina Australia Azerbaijan Brazil Canada China Colombia Denmark Ecuador Egypt

Source : Egypt Oil & Gas

September

1,835

1,438

716

500

680

1,733

2,601

3,659

527

260

533

640

October

1,835

1,376

715

510

690

1,762

2,602

3,658

528

353

519

660

November

1,805

1,452

660

470

780

1,766

2,658

3,682

528

350

511

615

December

1,805

1,484

693

473

700

1,787

2,669

3,710

518

327

515

619

2006 Average

1,814

1,413

696

429

640

1,723

2,525

3,686

531

342

536

639

2007 January

1,838

1,584

704

453

815

1,736

2,578

3,658

522

318

517

616

February

1,833

1,600

682

510

822

1,758

2,618

3,739

542

306

507

614

March

1,829

1,640

686

400

863

1,769

2,694

3,685

540

321

482

612

April

1,825

1,679

693

460

812

1,739

2,692

3,749

526

316

502

609

May

1,821

1,695

689

500

812

1,726

2,623

3,781

520

303

512

649

2007 5-Month 1,829 Average

1,640

691

464

841

1,746

2,641

3,722

530

313

504

620

Revised data are in bold italic font.

Table 3 Equatorial Guinea Gabon

India Indonesia Iran

Iraq

World Crude Oil Production (Including Lease Condensate) (Thousand Barrels per Day)

Table 4

Kazakhstan Kuwait Libya Malaysia Mexico Nigeria

United Arab Emirates

United Kingdom

400

2,702

1,354

5,188

470

400

2,702

1,482

5,195

8,800

400

395

2,602

1,504

5,149

Former Saudi U.S.S.R. Arabia1 Sudan Syria

Norway

Oman

Qatar

Russia

September

2,338

720

885

9,350

---

9,000

400

October

2,380

730

885

9,450

---

8,800

November

2,466

724

845

9,320

---

United States2

September

365

241

701

1,005

4,035

2,153

1,227

2,550

1,700

614

3,258

2,430

October

365

230

706

985

4,060

2,103

1,359

2,550

1,700

635

3,173

2,530

November

365

223

701

985

4,020

2,003

1,399

2,500

1,650

614

3,163

2,480

December

365

220

705

985

4,020

2,003

1,435

2,450

1,650

610

2,978

2,480

December

2,508

721

835

9,420

---

8,750

380

395

2,602

1,472

5,275

2006 Average

366

237

689

1,019

4,028

1,996

1,313

2,535

1,681

607

3,256

2,440

2006 Average

2,491

738

850

9,247

---

9,152

378

406

2,636

1,490

5,136

2007 January

373

240

699

988

4,040

1,753

1,298

2,450

1,680

627

3,143

2,480

2007 January

2,431

716

835

9,420

---

8,750

399

395

2,613

1,510

5,196

February

377

240

712

984

3,900

2,003

1,365

2,420

1,680

590

3,148

2,480

February

2,454

718

825

9,460

---

8,600

406

394

2,573

1,654

5,147

March

381

238

707

969

3,900

2,053

1,405

2,420

1,680

590

3,182

2,275

March

2,391

712

825

9,473

---

8,600

402

393

2,612

1,554

5,178

April

383

236

695

965

3,900

2,103

1,436

2,420

1,680

575

3,182

2,400

April

2,427

710

825

9,369

---

8,600

447

410

2,611

1,566

5,218

May

383

236

679

965

3,900

2,103

1,319

2,420

1,680

590

3,110

2,240

May

2,181

708

825

9,390

---

8,600

440

400

2,611

1,564

5,240

2007 5-Month Average

2,375

713

827

9,422

---

8,631

419

398

2,605

1,568

5,197

2007 5-Month Average 1

Source : EIA

World Crude Oil Production (Including Lease Condensate) (Thousand Barrels per Day)

380

238

698

974

3,929

2,002

1,364

2,426

1,680

595

3,153

2,373

Source : EIA

Except for the period from August 1990 through May 1991, includes about one-half of the production in the Kuwait-Saudi Arabia Neutral Zone. Kuwaiti Neutral Zone output was discontinued following Iraq's invasion of Kuwait on August 2, 1990, but was resumed in June 1991. From August 1990 through May 1991 all production in the Neutral Zone was included in the data for Saudi Arabia. In February 2007, Neutral Zone production by both Kuwait and Saudi Arabia totaled about 510 thousand barrels per day. Data for Saudi Arabia include approximately 150 thousand barrels per day from the Abu Safah field produced on behalf of Bahrain. 2 U.S. geographic coverage is the 50 states and the District of Columbia. --- = Not applicable. E=Estimated data. PE=Preliminary estimated data. Revised data are in bold italic font. Source : EIA

September 2007 - Issue 9

World Crude Oil Production (Including Lease Condensate) (Thousand Barrels per Day)

Table 5

Venezuela Vietnam

World Oil Supply1 (Thousand Barrels per Day)

Table 6

Yemen

Other1

World

OPEC-122

OPEC-112

Persian Gulf3

North Sea4

September

2,490

362

364

2,622

73,575

32,223

30,785

21,360

3,964

October

2,490

342

351

2,584

73,865

32,016

30,640

21,135

4,225

November

2,490

342

389

2,605

73,411

31,632

30,180

20,805

4,347

December

2,490

332

407

2,587

73,376

31,554

30,070

20,695

4,344

2006 Average

2,511

344

375

2,651

73,546

32,075

30,662

21,232

2007 January

2,380

332

418

2,629

73,135

31,392

29,808

February

2,383

336

358

2,664

73,402

31,281

March

2,445

341

356

2,666

73,267

April

2,445

341

354

2,667

May

2,444

336

344

2007 5-Month Average

2,420

337

366

United States2

Persian Gulf3

OAPEC4

OPEC-125

OPEC-115

World

September

8,499

23,727

24,750

35,411

33,949

84,740

October

8,455

23,502

24,530

35,214

33,814

84,985

November

8,378

23,172

24,122

34,839

33,364

84,436

4,343

December

8,556

23,062

24,032

34,760

33,252

84,233

20,471

4,298

2006 Average

8,370

23,598

24,580

35,262

33,827

84,504

29,681

20,351

4,447

2007 January

8,462

22,874

23,910

34,606

32,998

83,979

31,247

29,607

20,440

4,300

February

8,351

22,766

23,929

34,497

32,873

84,297

73,566

31,452

29,773

20,489

4,354

March

8,460

22,852

24,009

34,463

32,800

83,990

2,644

73,063

31,304

29,609

20,489

4,080

April

8,506

22,899

24,065

34,669

32,967

84,433

2,653

73,282

31,336

29,696

20,450

4,292

May

8,566

22,898

24,106

34,521

32,803

84,175

2007 5-Month Average

8,471

22,859

24,005

34,552

32,888

84,171

Other is a calculated total derived from the difference between "World" and the sum of production in all countries listed in Tables 3, 2, 3, and 4). 2 OPEC-12: Organization of the Petroleum Exporting Countries: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC-11 does not include Angola. 3 The Persian Gulf countries are Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates. Production from the Kuwait-Saudi Arabia Neutral Zone is included in Persian Gulf production. 4 North Sea includes the United Kingdom Offshore, Norway, Denmark, Netherlands Offshore, and Germany Offshore. Revised data are in bold italic font.

1 "Oil Supply" is defined as the production of crude oil (including lease condensate), natural gas plant liquids, and other liquids, and refinery processing

gain (loss). 2 U.S. geographic coverage is the 50 States and the District of Columbia.

Beginning in 1993, includes fuel ethanol blended into finished motor gasoline and oxygenate production from merchant MTBE plants. Production from the Kuwait-Saudi Arabia Neutral Zone is included in Persian Gulf production. 4 OAPEC: Organization of Arab Petroleum Exporting Countries: Algeria, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, and the United Arab Emirates. 5 OPEC-12: Organization of the Petroleum Exporting Countries: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC-11 does not include Angola. E=Estimated data. RE=Revised estimated data. PE=Preliminary estimated data. Revised data are in bold italic font. 3 The Persian Gulf countries are Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates.

Source : EIA

OECD1 Countries and World Petroleum (Oil) Demand (Thousand Barrels per Day)

Table 7

United OECD Italy Kingdom Europe2 Canada Japan

South United Korea States3

Source : EIA

Other OECD4

OECD1

World

20,472

3,313

48,595

2,060

20,757

3,339

48,972

5,214

2,363

20,544

3,471

49,817

2,260

5,915

2,537

20,697

3,518

50,070

15,562

2,223

5,159

2,174

20,588

3,418

49,123

84,433

1,827

15,090

2,272

5,214

2,390

20,559

3,366

48,890

1,787

15,249

2,433

5,562

2,387

21,271

3,421

50,324

1,712

1,786

15,200

2,347

5,404

2,282

21,529

3,530

49,292

2,368

1,631

1,776

14,712

2,188

4,876

2,215

21,579

3,307

47,877

2,406

1,677

1,794

15,061

2,308

5,260

2,318

20,722

3,407

49,075

France

Germany

September

1,994

2,922

1,750

1,804

15,991

2,210

4,499

2,109

October

2,044

2,792

1,690

1,774

15,908

2,170

4,738

November

1,913

2,777

1,766

1,857

15,881

2,344

December

1,890

2,556

1,686

1,811

15,143

2006 Average

1,961

2,663

1,732

1,830

2007 January

2,033

2,338

1,614

February

1,954

2,406

1,756

March

1,923

2,508

April

1,854

2007 4-Month Average

1,941

World Natural Gas Liquids Production (Thousand Barrels per Day)

Table 8

Saudi Algeria Canada Mexico Arabia Russia

Former U.S.S.R

United Persian OAPEC3 OPEC-124 OPEC-114 World States1 Gulf2

September

320

706

427

1,439

420

---

1,781

2,269

2,684

3,021

2,997

7,780

October

320

673

405

1,439

425

---

1,773

2,269

2,694

3,031

3,007

7,817

November

330

683

383

1,439

419

---

1,769

2,269

2,704

3,041

3,017

7,845

December

328

668

396

1,439

424

---

1,734

2,269

2,707

3,039

3,015

7,844

2006 Average

310

685

427

1,439

417

---

1,735

2,268

2,668

3,001

2,978

7,775

2007 January

341

712

411

1,439

424

---

1,670

2,305

2,763

3,088

3,064

7,895

February

340

762

405

1,439

426

1,706

2,316

2,771

3,090

3,066

7,978

March

340

680

416

1,439

426

---

1,767

2,314

2,769

3,089

3,065

7,895

April

340

661

420

1,439

422

---

1,749

2,311

2,766

3,090

3,066

7,935

May

340

670

413

1,439

423

---

1,787

2,311

2,767

3,090

3,067

7,939

2007 5-Month Average

340

696

413

1,439

424

---

1,736

2,311

2,767

3,089

3,066

7,927

1 OECD: 2

Organization for Economic Cooperation and Development. "OECD Europe" consists of Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom. 3 U.S. geographic coverage is the 50 States and the District of Columbia. 4 "Other OECD" consists of Australia, Mexico, New Zealand, and the U.S. Territories. NA=Not available. Revised data are in bold italic font. Notes: The term Demand is used interchangeably with Consumption and Products Supplied. Source : EIA

Average Currency Exchange Rate against the Egyptian Pound (July / August) US Dollar 5.6532

Euro 7.7631

Sterling 11.5044

Yen 4.7133

U.S. geographic coverage is the 50 states and the District of Columbia. Excludes fuel ethanol blended into finished motor gasoline. The Persian Gulf countries are Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates. OAPEC: Organization of Arab Petroleum Exporting Countries: Algeria, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, and the United Arab Emirates. 4 OPEC-12: Organization of the Petroleum Exporting Countries: Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC-11 does not include Angola. - - = Not applicable. E=Estimated data. PE=Preliminary estimated data. Revised data are in bold italic font. 2 3

Stock Market Prices

(July / August) Company Alexandria Mineral Oils (AMOC.CA) Sidi Kerir Petrochemicals (SKPC.CA)

---

High

Low

82.04

76.92

18.12

17.27 Source : EIA

Fig 1

Source : Egypt Oil& Gas

Fig 3

Source : Egypt Oil & Gas

September 2007 - Issue 9

Fig 2

Source : Egypt Oil & Gas

Fig 4

Source : Egypt Oil & Gas

Table 9 International Stock Schlumberger (SLB) NYSE (US Dollars) Halliburton (HAL) NYSE (US Dollars) Exxon Mobil (XOM) NYSE (US Dollars) Atwood Oceanics (ATW) NYSE (US Dollars) Weatherford (WFT) NYSE (US Dollars) Shell (RDS.A)NYSE (US Dollars) Apache (APA) NYSE (US Dollars) Baker Hughes (BHI) NYSE (US Dollars) BJ (BJS) NYSE (US Dollars) Lufkin (LUFK) NYSE (US Dollars) Transocean (RIG) NYSE (US Dollars) Transglobe (TGA) NYSE (US Dollars) GlobalSantafe (GSF) NYSE (US Dollars) BP (BP.) LSE Pence Sterling BG (BG.) LSE Pence Sterling Dana Gas (DANA) ADSM US Dollars Caltex (CTX) ASX Australian Dollars RWE DWA (RWE AG ST) Deutsche-Borse Euros Lukoil (LKOH) RTS (US Dollars)

International Stock Prices Mid-May-Mid-June High

Low

96.91

87.24

37.55

32.89

92.79

82.08

71.81

63.01

58.03

51.62

84.22

73.50

87.45

78.10

84.00

77.22

28.27

24.21

67.45

52.89

115.37

97.82

5.31

3.65

77.60

65.08

610.00

536.50

863.50

758.00

1.75

1.56

25.30

21.64

81.62

77.42

85.80

74.30

Source : Egypt Oil & Gas

September 2007 - Issue 9

September 2007 - Issue 9 w

In last monthâ&#x20AC;&#x2122;s news section, it was mentioned that Vegasâ&#x20AC;&#x2122;s concession, East Alamein, had 35% of its working interest farmed out to Pico Energy. To be precise, 35% of the concession was farmed out to PICO International Petroleum.