CAIRO - 9 May 2021: The Ministry of International Cooperation held a multi-stakeholder platform (MSP) titled “Egypt as an Energy Hub: Reforms and Prospects in the Petroleum and Gas Sector” in the presence of Minister of Petroleum and Mineral Resources Tarek El Molla, and officials from major foriegn and private companies operating in Egypt, including Apache Egypt, TAQA Arabia, Schlumberger, and SAP.
This is in addition to multilateral and bilateral development partners such as the World Bank Group (WBG), International Finance Corporation (IFC), the African Development Bank (AfDB), and the Germany Embassy among others.
This comes as part of a series of interactive meetings organized by the Ministry of International Cooperation within the framework of the MSP. The platform aims to create interaction and integration between government entities, multilateral and bilateral development partners, private sector, and civil society to implement Egypt’s 2030 Vision.
The meetings also shed light on the reforms that have been put into place over the past years, alongside the enhancement of cooperation with the private sector, and discussions on financing opportunities within the framework of the Government of Egypt’s priorities.
During the meeting, Minister of International Cooperation Rania A. Al-Mashat affirmed that the MSP aims to shed light on the economic sectors that have undergone radical reforms over the past years; which has contributed to enhanced economic development and opened new horizons for private sector participation. As reiterated previously by Al-Mashat, 2021 is the year for private sector engagement in development efforts.
The Minister pointed out that the petroleum sector is one of the most critical sectors, as the Government of Egypt announced its intention to transform the country into a regional energy center that would further enhance its leadership across many fields.
Al-Mashat added that through the MSP and in partnership with the relevant government entities, the Ministry of International Cooperation promotes the reforms that have been implemented, the flagship projects that are in progress, and the successful projects that have been implemented; showcasing the achievements of the past years aids in providing opportunities for international partnerships and development efforts.
She added that, “the Ministry aims to achieve this through several steps, namely exploring opportunities for cooperation in projects that the Ministry of Petroleum and Mineral Resources offers to international partners, highlighting areas that allow for private sector participation, identifying areas of participation in the short, medium and long term, and creating integration between various multilateral and bilateral development partners.
Al-Mashat emphasized that although the petroleum sector acquired only 5% of the total ongoing development cooperation portfolio of the Ministry of International Cooperation, the story of development and reforms implemented over the years is a story that needs to be told. This is a story that reflects the commitment of the Government of Egypt in moving forward with development plants and reforms across sectors, despite the circumstances posed by the COVID-19 pandemic.
The Minister added that several MSPs have been held for the transportation, public business, and health sectors, to strengthen international partnerships that go hand in hand with the country’s development agenda. In 2021, the first MSP held was centered around digitization and innovation, and in the coming period more meetings will be held catering to Small and Medium Enterprises (SMEs).
The Petroleum Sector Continues to Implement the Development Vision
Minister of Petroleum and Mineral Resources Eng. Tarek El Molla expressed that the petroleum sector continues to implement its integrated vision for the development and modernization of oil, gas and mining sectors. The overall aim is to unlock the potential within the framework of the country’s 2030 vision for sustainable development, and increase investment as a result of the positive economic reform program implemented by the Government of Egypt.
El Molla elaborated that Egypt’s petroleum modernization plan consists of 3 strategic pillars; Energy Security, Financial Sustainability, and Sector Governance. These pillars have contributed, and led to many successes such as signing 98 agreements with international companies that aim to drill for oil and gas worth $16 billion. The new strategy has lured in new international entities to work in the Egyptian petroleum sector, and this reflects confidence in the sector.
He pointed out that this sector has progressed from 11% negative growth in 2015 to 25% positive growth in 2020. This came about via Egypt’s achievement of self-sufficiency in gas, and in providing a surplus for exporting; through the expansion of the liquefied natural gas process in Damietta and Edku situated on the Mediterranean Coast, and the establishment of the Gas Regulatory Authority to regulate activities of the gas market. This has allowed for the entry and participation of private companies in the Egyptian gas system, and in paying 80% of the dues of foreign companies operating in the country.
El Molla indicated that the oil and gas sector amounted to 24% of the GDP in 2019/2020, and the sector’s total investments from 2014/2015 to 2019/2020 amounted to $74 billion.
The Minister of Petroleum and Mineral Resources pointed out that 6 million more homes were added to the 11.8 million homes that have natural gas. He explained that the refining industry is witnessing the implementation of a plan to develop and modernize old refineries, and establish new refineries that comply with European standards and specifications. This has contributed to reducing gasoline and diesel imports by 35% and the overall goal is to achieve self-sufficiency in petroleum products by 2023.
El Molla also reviewed the ongoing program for the development and modernization of the mining sector, which is based on several pillars including legislative and financial reforms, and the development of human capabilities that can contribute to positive results by attracting 11 Egyptian and international companies to invest in 82 mining areas .
Results of International Partnerships in the Petroleum Sector
The ongoing development cooperation portfolio for the petroleum sector and gas sector includes 6 projects worth $1.12 billion, making up for 5% of the current ODA portfolio. The Ministry has collaborated with several development partners pushing forward Egypt’s energy plan, including the European Bank for Reconstruction and Development (EBRD), the World Bank Group (WBG), the Islamic Development Bank (IsDB), the Kuwait Fund for Arab Economic Development (KFAED), and the European Union (EU).
These projects contributed to the delivery of natural gas to about 2.3 million homes, the production of 3 million tons of crude oil annually, the reduction of carbon dioxide emissions by about 295 thousand tons, and the provision of energy by about 300 thousand megawatt hours per year.
World Bank Group (WBG): Petroleum Sector Reforms Enhance its Sustainability
Marina Wes, the World Bank Country Director for Egypt, Yemen and Djibouti noted: “the way policy reform has helped leverage private sector engagement leaves me optimistic about the potential progress in Egypt going forward. The reforms outlined today were challenging to implement, yet Egypt was successful in its executional framework,” leading to a sustainable development of the oil sector’s value chain.
She explained that the improvement of the petroleum and gas production promotes economic and social development by contributing to economic growth and job creation. Moreover, the sustainable development of the sector is important for the promotion of affordable and clean energy by adopting sustainable production practices and infrastructure.
Apache Corporation: “We have invested more than $20 billion in Egypt”
David Chi Vice-President of Apache Corporation and General Manager for Apache Egypt Companies said, “we have been Egypt’s partner for 25 years, investing over $20 billion in the country. Egypt is in a great place in terms of resources, location and leadership, which makes it a regional hub for foreign investments in the energy sector.”
TAQA Arabia: “Reforms in the oil sector have strengthened confidence among investors”
Khaled Abubakr, the Executive Chairman of TAQA Arabia said that the reforms that took place in the energy sector in the past 5 years represented a basic pillar for any local or foreign investor that is seeking to expand in Egypt. “These reforms are an important factor for our company to implement expansion plans, as we were part of the national program to deliver gas to 5 million customers over the past years. We were also part of the natural gas strategy where we tripled the number of stations in the last 18 months to 24 stations instead of 7. We aim to reach 50 stations by the end of the year,” he said.
Abubakr stressed that the dialogue between the Ministry of Petroleum and Mineral Resources and various companies and relevant entities is necessary in allowing the private sector’s participation in project implementation in the oil and gas sector.
Digital Transformation is a Key Factor in Developing Energy Sectors Globally
In the context of the petroleum sector’s endeavor to keep pace with technological developments, Karim Badawi, Managing Director for Egypt and East Mediterranean at Schlumberger shared that digital transformation is key to achieve the sustainable development desired by the global community. “Digital enablement is a key topic in the global energy transition conversation. Egypt is taking strides towards digital transformation, attracting foreign investments in the energy sector aiming to push towards the global sustainability targets,” he said.
The Ministry of Petroleum and Mineral Resources also aims to launch “Egypt's Electronic Portal” project for marketing petroleum blocks for exploration, in cooperation with Schlumberger International. This will allow for more international companies to identify investment opportunities.
Hoda Mansour, the Managing Director of SAP - a private entity leading on software development worldwide, presented some of the projects being implemented in the petroleum sector, as the company is working on several developments with the Egyptian General Petroleum Corporation (EGPC) in the field of digital transformation. The cooperation aims to limit the use of paper transactions in all companies and provide only one source for information in order to increase the accuracy of reports, and the speed of making decisions and completing transactions.
In 2020, the Ministry secured $9.8 billion in development financing; of which $6.7 billion were secured for financing sovereign projects and $3.1 billion for the private sector.