minister of petroleum and mineral resources eng. sherif ismail · petroleum and mining sector in...
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PETROLEUM AND MINING SECTOR IN EGYPT“Unlocking Egypt’s Energy Potential”
Minister of Petroleum and Mineral ResourcesEng. Sherif Ismail
I. SECTOR STRENGTHS & CHALLENGES
II. STRATEGY FOR THE SECTOR
III. INVESTMENT OPPORTUNITIES
IV. KEY MESSAGES
Egyptian Aspirations
3
Enhance living standards and alleviate
poverty
Improve public services
Increase job opportunities
Restore Egypt’s Regional and
International Leading role
Realize Significant Growth Rate
A Clear Vision to Achieve Egyptian Aspirations
4
Strategic ObjectivesStrategic Objectives
Ensure energy Security and satisfy domestic demand
Maximize Added Value of Egypt’s natural resources
Build National Capacities with high efficiency
The Vision The Vision
Secure local energy demand within reasonable prices to fuel sustainable economic development & realize Egyptians’ aspirations for better life
Energy Security
5
2730
34 3841
4652
6067
72 73
0
10
20
30
40
50
60
70
80
Million Tons
Petroleum Products Natural Gas
605 Million Tons
348 Million Tons
Almost double the previous period
Supply demand deficit and financing Current supply deficit of 700
MMSCF/day for gas IOC Arears
Rising Consumption driven by Population growth, high energy intensity and subsidies
6
Energy Security
Infrastructure DevelopmentMarket Structure
Oil and gas96%
Coal1%
Hydro3%
Egypt
And Increasing
9.5
8.2
6.5
5.28
3.85
USA
Canada
Europe
Levant
Egypt
Average Refinery Complexity
Primary Energy Mix
Unbalanced Energy Mix
Financial Sustainability And Governance
7
7
22
3.6
12
1.4
4.8
0 10 20 30
% of GDP
% of Budget
Health Education Fuel subsidies
Comparison of energy (including electricity) subsidies with social spending
Overview of energy subsidies
327
128
27
64
SocialSecurity
FoodSubsidy
PetroleumSubsidy
Health Education
51timesSocial
Security
2 times Education
Budget
5 timesHealthBudget
5 timesFood
Subsidy
Energy Subsidy Sector Governance
The Egyptian Oil & Gas sector: A Unique Position
8
In Global Gas Production
Gas Producer in Africa
Non-Opec Oil Producer in Africa
Worldwide in Gas Reserves -~ 1% of global reserves
1
2
15
16
Significant development potential with a robust, multi-decade track-record of success
Substantial Exploration Potential – Increase focus on Upstream Activities
Continuous Upgrade and Expansion of Infrastructure
Leverage Egypt’s Location to potentially become a regional Energy Hub and a vibrant ecosystem for Petroleum investments
I. SECTOR STRENGTHS & CHALLENGES
II. STRATEGY FOR THE SECTOR
III. INVESTMENT OPPORTUNITIES
IV. KEY MESSAGES
The strategy for the sector comprises 3 strategic pillars and 8 action areas, supported by 23 separate policy measures
EnergySecurity
Boost energy supply
Diversify energy supply
Manage energy demand
FinancialSustainabilityAddress historic debts (arrears)
Reform energy subsidies
Address internal debts
SectorGovernance
Modernize sector governance
Boost private sector investment
10
Petroleum Sector Strategic Pillars and Action Areas
23 policy measures
5 action areas and supporting policy measures have particular relevance for investors
EnergySecurity
Boost energy supply
Diversify energy supply
Manage energy demand
FinancialSustainabilityAddress historic debts (arrears)
Reform energy subsidies
Address circular internal debts
SectorGovernance
Modernize sector governance
Boost private sector investment
11
Petroleum Sector Strategic Pillars and Action Areas
23 policy measures
1
2
3
4
5
Boost Energy Supply
12
Policy measures
Encourage new gas expl. & development
Secure new LNG import contracts
Expand & upgrade infrastructure
Progress to date
$13 billion of ongoing and planned gas developments
56 upstream agreements signed, $12 billion minimum expenditure
Ports Refineries
Port Shipments
Accelerate existing gas field developments
1
FSRU Pipeline
Pipelines & Storage Marketing
Boost Energy Supply
14
Policy measures
Encourage new gas expl. & development
Secure new LNG import contracts
Expand & upgrade infrastructure
Progress to date
$13 billion of ongoing and planned gas developments
56 upstream agreements signed, $12 billion minimum expenditure
Accelerate existing gas field developments
1
Ports Refineries
Port Shipments
FSRU Pipeline
Pipelines & Storage Marketing
Diversify Energy
15
2
Primary Energy Mix
Policy measures Progress to date
Launched Discussion to Introduce New Sources of Energy
Develop Cyprus Gas Utilizing Egypt LNG Facilities
Diversify Energy Mix
Strengthen Regional Energy Trade
Oil and gas61%
Coal20%
Nuclear10%
Other9%
Global Energy
Oil and gas96%
Coal1%
Hydro3%
Egypt
And Increasing
Address Historical Debts
1609
/10
08/0
9
1.1
07/0
8
1.31.6
06/0
7
0.5
05/0
5
0.6
05/0
6
0.5
4.8-47%
Jun.
14
3.1
5.9
Dec
. 14
5.4
11/1
2
12/1
3
10/1
1
Dec
. 13
3.2
6.3
Arrears to IOCs ($ billion)
3
5.0
10.7
7.9
Jul. 14 - Dec. 14Jul. 13 - Jun. 14
IOC Receipts & Payments($ billion)
Receipts Payments
Policy measures Progress to date
Restore EGPC Financial Balance $7.9 billion in arrears paid from July –December 2014
11.2
Reform Subsidies: A 5-Year Plan
17
4
Policy measures Progress to date
Adjust energy prices to cost recovery levels by 2019
Improve subsidy Administration
July 2014 announcement on comprehensive subsidy reform
3.0 million smart cards issues
71.184
90.214
128.2
140.00
0
20
40
60
80
100
120
140
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Billion LEInitial budget
70bn
100bnRevised budget
Expected Value
Modernize Sector Governance
18
5
Policy
Regulation
Market
Ministry
EGPC, EGAS
Ministry
Regulator
EGPC, EGAS,Other
Suppliers
Ministry
EGPC, EGAS,
Past Current Future
Shadow Regulator
Policy measures Progress to date
Modernize Gas Sector Shadow Regulator Established
Moving Towards Free Market
Mining Sector Plan
19
Increase Mineral Resources contribution to Egypt GPD to more than 5% in 10 years
New Mining Law
Restructuring of Mineral Resources Sector and capacity building
Reduce Exports of Raw Materials to maximize added value
Regularly issue new bid rounds
Develop A Master Plan to include integrated industrial complexes to maximize added value – Example The Golden Triangle Project
The Golden Triangle project in Upper Egypt aims at establishing a World Class Economic Zone including Mineral Extraction, Industrial Facilities, Commercial Hub, and Touristic Zones.
New Mining Law Highlights
20
Generating decent revenues to the state
Maximizing added value
A special law to govern the exploration and concession agreements for areas exceeding 16 km2 through international tenders
Allocation of 1% of the output for social development within the relevant governorate for the area being developed
Allows different models of exploration agreements
I. SECTOR STRENGTHS & CHALLENGES
II. STRATEGY FOR THE SECTOR
III. INVESTMENT OPPORTUNITIES
IV. KEY MESSAGES
Significant Investment Potential
22
Minerals
3.4
Transmission
1.4
Petrochemicals 16.9
Refining
8.7
Exploration
17.5
Gas Devt.
21.5
Investment by Sub-Sector to 2022
The Strategy requires investment of $70 billion through 2022, including $25bn of new investment
(Ongoing – Awarded – Open for Investment)
$ billion Investments
MIDORRefinery Expansion$1.4 billion
0.5 MMT/Y Ethylene
0.4 MMT/Y Poly-Ethylene
ANRPCCatalytic Reforming$250 million
Gasoline / LPG / Hydrogen-rich gas
Major Downstream Projects Recently Awarded/Ongoing
24
PPCSokhna-Tebeen Pipeline$174 million
ERCHydrocracker Complex$3.7 billion
4.2 MMT/Year
LPG / Jet Fuel / Gasoline/Gas Oil/ Coke / Sulphur
170km Fuel Oil / Gas
Oil
ETHYDCOEthylene & Poly Ethylene$1.9 billion
0.5 MMT/ Year
Gasoline / Diesel
ASORCCCR$250 billion
PPCBeni Sweif-Menia Pipeline$60 million
0.8 MMT/Y
Gasoline
145km Fuel Oil / Gas Oil
Upstream Investment Opportunities
25
EGAS 2015 Bidding Round GANOPE 2015 Bidding Round
8 shallow-water blocks 10 onshore blocks (W. Nile, E. Nile, S of Gulf of Suez) Data available from EGAS and GANOPE Closing date 31st May, 2015
A total of 18 new blocks are offered for exploration in two recent bid rounds
Ready Now
Short-Term
Medium-Term
Downstream Investment Opportunities: $18 billion
26
Downstream Investment Opportunities$ billion
Assiut - Sohag LPG Pipeline
0.2
New Atmospheric Distillation Unit
Propylene and Derivatives
CCR & IsomerizationRe- Habilitation Coking complex
Full Conversion Hydrocraker Complex
Aromatics & Fertilizers Complex
Gold Mining Round
Bio-Ethanol from Molasses
Formaldehyde and Derivatives
Mineral Resources Bid Round
Minia-Assiut Product Pipeline
Sohag - Aswan Product Pipeline
0.30.3
2.1
0.3
0.1
0.20.1
Glass Sand
2.1
El Hamra Petro-Refinery Hub Project
0.5
0.10.1
0.02.5
New Lubrication Oil Complex
8.00.0
Bio-Ethanol from Rice Straw
0.9
0.2
Phosphate Misr
Petr. Basin, Bunkering and Solar
1.2
Refining Trans. / Rec.Petchm. Minerals
Unlocking Egypt’s Energy Potential
27
Valu
e of
Inve
stm
ent
Assiut - Sohag LPG Pipeline
Mineral Resources Bid Round
Bio-Ethanol from MolassesSohag - Aswan Product PipelineBio-Ethanol from Rice Straw
Ganope 2015 Bid RoundNew Lubrication Oil Complex EGPC 2015 Bid Round
EGAS 2015 Bid Round
Phosphate Misr
Full Conversion Hydrocracker Complex
Readiness for Implementation
Petr. Basin, Trade and Solar Energy
2017 Bid Rounds
El Hamra Petro-Refinery Hub Project
Glass Sand
Minia-Assiut Product Pipeline
Formaldehyde and Derivatives
Gold Mining Round
New Atmospheric Distillation Unit
CCR & IsomerizationRe- Habilitation Coking complex
2016 Bid Rounds
Aromatics & Fertilizers Complex
Propylene and Derivatives
Strong Investment Landscape
Medium-Term Short-Term Ready Now
Trans./Rec.PetchemUpstream
MineralRefining
I. SECTOR STRENGTHS & CHALLENGES
II. STRATEGY FOR THE SECTOR
III. INVESTMENT OPPORTUNITIES
IV. KEY MESSAGES
Strategic Objectives: Major Progress
29
EnergySecurity
56 upstream - $12bn concessions awarded2 current bid rounds
New gas terms, prices & investments
LNG imports finalized
FinancialSustainability
IOC arrears reduced($6.3bn to $3.1bn)
Energy subsidy reform ongoing(1st Phase Completed –July 2014)
SectorGovernance
New mining law ratified
Shadow gas regulator established
$45 billion in oil, gas and mining investment currently ongoing $25 billion new investment opportunities available for private sector participation