Tarek El Molla, Minister of Petroleum and Mineral Resources: Interview

Interview: Tarek El Molla

How can the private sector better align with and contribute to Egypt’s national energy strategy?

TAREK EL MOLLA: The strategic vision for the sector seeks to maximise private sector participation in oil and gas activities in a more effective manner, particularly in the petroleum industry, which has promising opportunities for fruitful partnerships with qualified private sector companies that have the technical and financial capability. In terms of the refining and petrochemicals industry, there are distinct models for a number of joint projects to fulfil the domestic market requirements and increase the value of the oil and gas sector.

For example, the Egyptian Refining Company project is one of the most significant joint ventures with the private sector, and aims to increase the amount of locally available petroleum products. There are also significant opportunities for greater private sector participation and investment, particularly in the natural gas domain. Under the country’s new gas law, active participation by the private sector in the Egyptian gas market and in mineral resources projects is encouraged, while the new investment law, which is expected to be passed shortly, will add several incentives to encourage private investors by creating a healthy climate to develop their investments in the petroleum domain.

How is the ministry addressing the backlog of arrears payments to international oil companies?

EL MOLLA: The ministry is keen to fulfil its obligations and find solutions to deal with the backlog of foreign partners’ arrears over the past years. In the framework of this commitment the Ministry of Petroleum (MoP), in coordination with the government, was able to reduce amount due from about $6.3bn at the end of 2013 to about $3.5bn by the end of 2016. Currently, we are coordinating with the Central Bank and the Ministry of Finance to manage the payment of a new batch of dues to our partners. The ministry is also keen on the regularity of payments to foreign partners, with regard to the purchase of their shares of crude oil and natural gas during FY 2015/16, which amounted to about $5.4bn, while $5.5bn was paid in addition to $100m in an effort to reduce accumulated dues. Increased confidence and a better public image will be the result of these continued efforts.

What can Egypt do to become a net gas exporter?

EL MOLLA: Egypt is preparing to become an energy centre, and while it is clear that our geographical location and natural resources are enormous assets, these are not enough in themselves. Egypt has excellent infrastructure from the Suez Canal to the liquefied natural gas plants in Damietta and Port Said, the refineries on the Red Sea and north coast to the Sumed pipeline. This makes us well positioned to not only produce our own energy, but to process supplies from other countries. So the gas surplus in our system by 2020 will be used for two things: to satisfy local demand — electricity, industry and so forth — including an expansion of our petrochemicals industry. Second, it will go towards meeting our contractual obligations for export. Between four big gas developments — BP’s West Nile Delta, Atoll, Zohr and Nooros — total production will amount to more than 5.5bn cu feet per day, representing more than $30bn worth of investments.

How can Egypt achieve a balance between natural gas production and consumption?

EL MOLLA: The ministry’s strategy to achieve a better balance between production and domestic consumption of natural gas is based on various factors, including the implementation of an integrated work programme for further developing Egypt’s resources and domestic production of natural gas. This new programme combines international bid rounds for oil and gas in Egypt and the signing of new petroleum agreements with major companies for exploration and production and the regular payment of foreign partners’ dues.