On the way to Egypt’s petroleum future: Leverage location, encourage investment, reduce environmental impact

Sept. 25, 2006
Its Ministry of Petroleum has built a strategy that gives Egypt control of its bright oil and gas future.

Its Ministry of Petroleum has built a strategy that gives Egypt control of its bright oil and gas future. And the country"s unique assets-location, hydrocarbon resources, people, and expertise-make it an attractive place to invest.

As it becomes an increasingly important partner in the world"s largest industry, Egypt"s petroleum sector has a broad range of opportunities to add value to the country"s resources and enhance the quality of life of its citizens.

Taking full advantage of these opportunities will require capital, expansion, innovation, and the help of international investors and partners. And it must all be done in the context of reducing the environmental impact of both petroleum production and consumption.

A key goal: Attract investment

The Ministry of Petroleum"s restructuring of the oil sector will speed up the decisionmaking process and focus on growing activities in gas and petrochemicals, said Petroleum Minister Fahmy. These companies participate in joint venture partnerships with international oil companies.

As in the past, oil and gas still play an important role in the country"s economy. With a well defined economic model for investment, about $10 billion of foreign direct investment was attracted in the past five years, compared with $5.6 billion during 1996-2000, and $3.5 billion during 1991-1995.

Illuminated tower creates night scenes.
Click here to enlarge image

The Petroleum Ministry expects the country will attract approximately $20 billion of international and national investments over the coming five years, $16 billion of which will be foreign direct investment. The Ministry expects half of the foreign investment to be directed to upstream projects.

“The main thrust of our strategy is to increase petroleum products exports, reduce the investment burden on the state budget and attract more private and Arab international investments,” said Petroleum Minister Fahmy.

Ambitious plans for gas, petrochemicals

The world"s growing preference for natural gas will drive much of Egypt"s petroleum future. The country"s reserves, its LNG experience, its petrochemical Master Plan, and its access to markets all combine to make it a significant force in the global gas business.

Proved and yet-to-be-discovered gas reserves together provide Egypt the potential to become one of the leading gas producers and exporters in the world, while also providing feedstock for a world class petrochemicals industry.

“And there still are excellent opportunities for exploration to add more gas reserves and increase production,” said Mr. Ismail. “There will be a variety of new investment opportunities along the entire value chain.”

“Echem"s mandate is to deliver an ambitious 20-year investment plan involving new petrochemical projects valued at $10 billion,” said Ms. Moneim El Banna.

Though the plan was prepared after an international market overview that considered many factors, it is important to remember that the plan is dynamic.“Echem is the catalyst that will create many opportunities for serious and interested entities,” she said.

Sumed: Prepared for growth

The petrochemical Master Plan and refining capacity expansion that the government is implementing will be closely related to the Sumed pipeline.

“We will build new pipelines with the capacities and lengths needed,” said Eng. Gomaa. “The extensions depend mainly on the availability of new projects.” Expansions are expected in the Suez area or in areas very close to Sidi Kerir.

“We look forward to being one of the most important suppliers of crude oil for new refineries,” he said. Sumed now supplies the Midor refinery, and wants to supply new refineries, including the 350,000 b/d grassroots plant being considered for Kafr El Sheikh. Sumed management also is considering a product handling facility at Sidi Kerir terminal.

All of this is in addition to Sumed"s storage role that makes it a crucial hub for crude oil in the Mediterranean.

Fundamental responsibilities

Resource utilization and business expansion are critical elements in economic growth. To ensure that growth has a positive impact on society and the lives of individual citizens, however, business goals must be balanced with social responsibilities.

While it does pose risks, the petroleum sector can be one of the most effective industries in bringing positive change to the lives of people in the communities in which it operates.

In Suez, for example, two large refineries provide many jobs and support social services. In Damietta and Beheira, LNG projects have generated new industries and companies, and made infrastructure development possible. And in Alexandria, a petroleum industry center, large projects and ongoing operations continue to lower unemployment and contribute to the development of adjacent areas.

“It"s not only the industry"s expansion that is important to us; the environment is also very important,” said Mr. Nour El-Din. “Keeping the environment clean is a must.”

And in the end, a company"s success is determined by its people. Little progress can be made unless development of the health, skills, knowledge, responsibility and enthusiasm of employees is a top priority.