Egypt Energy rief NEWS ANALYSIS Issue 71 DATA...

Egypt Energy Brief Issue 71 1 June 2017

NEWS ANALYSIS PROJECTS DATA COMPANIES

ENERGY NUMBER OF THE WEEK

6

Chinese-Egyptian joint venture Chint-Egemac is aiming to generate

$6m in total sales orders this year from

its recently-opened low voltage switchgear

factory in 6th of October City.

Marketing Manager Haytham Kandil told

the Egypt Energy Monitor that the JV is

planning to produce at least 750 switchgear

panels this year.

Part of the Egypt Energy Monitor | energy.frontieregypt.com

POWER AND RENEWABLES EETC gives transmission work schedule to Benban developers Chint-Egemac eyes $6m sales from new Cairo plant KarmSolar 2MW FiT plant starts operations EEHC allocates EGP7bn for electricity distribution upgrades Construction of EU-funded Gulf of Suez wind farm 'to begin in 2018' Elsewedy posts strong Q1 results Al Fanar, Elsewedy amend contract value Siemens 'to start operations at Burullus by June' WTE tariff 'postponed to October' NUCA installs 60kW rooftop solar in New Qena

OIL, GAS, FUEL AND PETROCHEMCIALS SDX Energy gives SD-1X flow test results KIMA pays EGP300m to Tecnimont Eni said to finish eighth Zohr well Add Energy wins BP West Nile Delta contract Gas exports jump in H2 2016 EBRD tenders for Egypt gas transmission consultancy services Gas production up 12.5% in March PMS 'finishes installing three pipelines' at Zohr Dana Gas approves "limited" additional drilling in Egypt Petroleum ministry hires energy consultants Misr Petroleum finishes 90% of Badr City warehouse Apache Egypt production stable in Q1 AMIG said to win Petrojet insurance tender Cabinet approves six exploration agreements El-Molla meets Total VP Social solidarity, petroleum ministries sign mains gas agreement El-Molla meets Dow regional head Butane imports up 27% in March El-Molla meets Norwegian, Belgian ambassadors EGX Updates (Maridive & Oil, KIMA, NDRL) EGX Updates (Ferchem, El-Dawlia for Fertilisers and Chemicals)

energy.frontieregypt.com

energy.frontiermyanmar.com

POWER AND RENEWABLES

EETC gives transmission work schedule to Benban developers The Egyptian Electricity Transmission Company (EETC) has sent a letter to Benban developers outlining its projected schedule for completing transmission infrastructure for Feed-in-Tariff (FiT) projects at the zone, a source told the Egypt Energy Monitor. According to the EETC letter, the construction of the four Benban substations is set to be complete by the end of June. Construction of 220kV transmission lines is set to be completed in November, while the 22kV underground cables are set to be finished by the end of December. Substation 3 is set to be upgraded with a 500kV switchgear by March 2018, the letter says. By the same time, the EETC aims to finalise construction of a 2x500kV, 5km temporary overhead transimission line (OHTL), which will connect Substation 3 to the existing OHL (High Dam-Nagaa Hamady). Following this, it will build a separate, permanent 2x500kV OHTL, which will extend 180km, connecting Substation 3 to the Nagaa Hamady substation. The permanent OHL is set to be completed by July 2018. The Egyptian German Electrical Manufacturing Company (EGEMAC) is responsible for building the Benban substations, which are thought to include 12 transformers with a capacity of 175MVA. Earlier this month, international lenders involved in the Feed-in-Tariff (FiT) scheme were reportedly concerned about the slow progress made on installing two OHTLs at the Benban zone.

Unnamed solar developers told local outlets that lenders were urging companies to sign the Power Purchase Agreement (PPA) with the Egyptian Electricity Transmission Company (EETC) to help speed up the process. They said that the EETC had promised to issue a tender for the project soon. The Egypt Energy Monitor understands that a tender issued in November 2015 to build 32km of double circuit 220kv OHTL was awarded to the High Dam Electric Transmission Company at a value of EGP14.6m. The process was put on hold to assess using thermal conductors on the interconnection. Firms seeking to be involved in the second round were required to provide preliminary approvals from international lenders by 28 April, or risk being disqualified from the scheme.

In June, the EETC is set to finish assessing the initial commitment letters from lenders, with financial closure by October.

Egypt Energy Brief | 25 May — 31 May 2


Benban transmission projects

Project Completion date

Substations June

220kV transmission lines

November

22kV underground cables

December

Upgrade Substation 3

March 2018

2x500kV, 5km OHTL

March 2018

2x500kV OHTL, 180km

July 2018


Chint-Egemac eyes $6m sales from new Cairo plant Chinese-Egyptian joint venture Chint-Egemac is aiming to generate $6m in total sales orders this year from its recently-opened low voltage switchgear factory in 6th of October City. Marketing Manager Haytham Kandil told the Egypt Energy Monitor that the JV is planning to produce at least 750 switchgear panels this year. It envisages exporting about 25% of its production, with a focus on West Asia and Africa, where it already has around 15 distributors. The remainder will be sold in Egypt. Chint-Egemac held an official opening for the factory in February, attended by various company officials. It produces low voltage switchgears and switchboards. Kandil added that the number of staff working at the factory is expected to reach 90 by September. Chint and Egemac formed the JV in June 2016. Egemac was established in 1979 and manufactures a range of electrical parts including distribution panels, transformers, and switchgears. Chinese private-sector conglomerate Chint is active in the power and energy sectors, with a focus on low voltage electrical products, power transmission and distribution equipment, and PV power systems. Chinese firms are becoming increasingly active in Egypt's power and energy sectors, chiefly in conventional power generation projects and the supply of components and equipment.

KarmSolar 2MW FiT plant starts operations A 2MW PV plant built under the first round of the Feed-in Tariff (FiT) scheme by local firm KarmSolar started commercial operation last month. Farida Zaki, Business Developer at KarmSolar, told the Egypt Energy Monitor that the plant was built on privately-owned land in Sahl Hasheesh, near Hurghada, leased over 25 years. It is the first-such plant of this size to enter into operation under the first round of the scheme, which offers a lucrative rate of around 14 US cents per kWh produced. KarmSolar signed a 25-year Power Purchase Agreement (PPA) with the Canal Electricity Distribution Company (CEDC), the offtaker for the project. The company created an SPV, called Sahl Hasheesh For Solar Energy, to own and operate the plant. It was part-funded by an SME loan from EG Bank. KarmSolar reached financial closure on the project last October.

Some of the components were sourced locally, including mounting structures and cables, with others imported. KarmSolar also received its permanent license last month from EgyptERA, the regulator, Zaki told the Egypt Energy Monitor.




It has also recently contracted to supply a rooftop PV installation for a mall in 6th of October. The firm now has around 64 employees, spread across its main office in Cairo and at multiple sites. KarmSolar was established in 2011 and provides solar power solutions to a range of clients. It is focused chiefly on off-grid plants to private-sector clients, but Zaki said it was now more bullish about opportunities in on-grid given rising electricity tariffs and greater interest in renewables. Only three larger-scale projects were approved under the first round of the FiT in Benban. Several dozen more are under assessment for the second round, which requires financial closure by October. EEHC allocates EGP7bn for electricity distribution upgrades The electricity ministry has allocated EGP7bn for upgrading transmission infrastructure in FY2017/18, according to Vice Chairman for Transmission and Distribution at the Egyptian Electricity Holding Company (EEHC) Al-Hussainy El-Far. El-Far told Al Borsa that the ministry will focus on modernising networks and installing automated control centres and smart meters. This will include replacement of distribution panels, improvement of main line performance, replacement of substations, establishment of new dispensers and new medium-voltage feeders, strengthening city and village networks, maintaining kiosks, and replacing cables and wires. According to the report, Egypt's state electricity distribution firms have raised their allocated budgets by EGP500m during the current fiscal year, up from EGP1.2bn previously planned, due to the currency flotation. In FY2017/18, allocations will increase by 311% to EGP5.3bn, said the report.

El-Far added that the EEHC has agreed 10-30% compensation for companies that signed contracts before the flotation. He said that the EEHC determined the percentage after calculating the local and foreign components on a case-by-case basis, with additional amounts to be paid at different times according to each distribution firm's management. Nagi Aref, Chairman of the North Cairo Electricity Distribution Company (NCEDC), said that his company's current fiscal year budget is now EGP250m, higher than it was before the flotation. He added that the NCEDC has set a budget of EGP1.7bn for FY2017/18. Earlier this month, local press reported that thirty power firms submitted official requests to the electricity ministry to obtain partial compensation for losses they incurred as a result of the currency flotation. Unnamed ministry sources said at that time that the companies seeking compensation included ABB, Egemac, International Cables Company and Giza Cables Industries. The electricity ministry aims to upgrade transmission infrastructure projects over the next two years, in order to accommodate additional capacity expected from traditional and renewable energy sources. Construction of EU-funded Gulf of Suez wind farm 'to begin in 2018' Construction works on the planned 200-250MW Gulf of Suez wind farm are reportedly expected to start next year. An unnamed source told Al Mal that the project is expected to be built over three years. Earlier this month, local press reported that Vestas, Siemens, and Acciona Windpower had purchased the terms of reference for the project. Other firms are also thought to be bidding.




Last month, the parliament's energy and environment committee approved an umbrella agreement from various EU-based institutions to fund the project. It ratified an agreement signed last November with the Agence Française de Développement (AfD), the EU, the European Investment Bank (EIB), and Germany's KfW. According to a statement from the international cooperation ministry last year, the bodies are contributing the following amounts: • EIB: €115m • KfW: €72m • AfD: €50 • EU: €30m In March, the NREA issued a tender for the design, manufacture, implementation, construction, and operation of the scheme. EPC contractors were invited to submit their prequalification documents by 29 May. More information about the tender is available for premium subscribers in our tenders section. Norway's DNV GL is acting as a consultant on the project. It is one of a series of wind schemes planned along the Gulf of Suez and the Red Sea, several of which are being funded by government agencies from countries including Spain and Japan. Private sector-led projects planned for the same area have been severely delayed, but donor-led schemes appear to be moving forward more quickly - albeit still at a relatively modest pace. Elsewedy posts strong Q1 results Elsewedy Electric posted around EGP1.5bn in net profits in Q1 2017, according to the firm's recently released consolidated financial statement. Net profit roughly doubled year-on-year from EGP768m in Q1 2016.

Unconsolidated net profits rose 375% y-o-y, up to EGP115m in Q1 2017 from EGP24m during the same period of the previous year. Operational revenues increased by 109% y-o-y, up to EGP9.8bn from EGP4.7bn during Q1 2016. Gross profits were up 165% y-o-y, increasing to EGP2.5bn from EGP942m. As of 31 March, the firm's projects under progress in Egypt included EGP15m in transformer plant additions, EGP58m in fiber optics and special cables, and EGP269m in machineries and equipment for subsidiaries expansions. Elsewedy is also carrying out other unspecified expansions in Egypt to increase production capacity. In April, the firm announced that it had posted around EGP976m in net profits after taxes for 2016, a 29% increase compared to EGP754m in net profits the previous year.

Contract revenues jumped to EGP6.5bn, up from to EGP137m in 2015. Earlier this month, Elsewedy signed an EGP4.2bn contract to design, provide, and install two overhead lines in Upper Egypt for the Egyptian Electricity Transmission Company (EETC). Both lines have a capacity of 500kV. The first is an 180km transmission line connecting eastern Assiut to Akhmim in Sohag, and the second is a 176km line connecting Akhmim to East Qena.



Elsewedy results

Q1, 2016 Q1,2017

Unconsolidated net profits

EGP24m EGP115m

Operational revenues

EGP4.7bn EGP9.8bn

Gross profits EGP942m EGP2.5bn


Also this month, Elsewedy, Orascom Construction, and Mitsubishi-Hitachi Power Systems (MHPS) submitted an offer for the 6GW Hamrawein coal plant as a consortium, one of the bidders told the Egypt Energy Monitor. The plant is not expected to begin operations until around 2025, and will be built on an EPC + Finance basis. Elsewedy is a major integrated local company active in various subsectors of the energy and power industries, including EPC on power generation projects, wires and cables, transformers and renewables. Major ongoing projects include work on a major Siemens gas-fired plant, in addition to a range of transmission infrastructure. Al Fanar, Elsewedy amend contract value Al Fanar Contracting Company has amended the value of its contract with Elsewedy Electric for Trading and Distribution to install an unspecified number of 500kV transmission towers, according to an EGX statement. The contract has been raised in value from EGP355,800 to EGP448,360. It did not specify why the values had increased, but it is likely related to the currency devaluation in November. Earlier this month Al Fanar signed a similar agreement with Elsewedy to amend the contractual values of civil and construction works it was carrying out at the 500/22kV East Assiut GIS Substation. According to statement released by Al Fanar, the total value of the agreement was increased to EGP15.5m, up from the original value of EGP10.3m. The two firms are working on other transmission projects in the area. In July, Al Fanar signed a contract with Elsewedy to provide linking works on a power transmission project.

The firm said at that time that the scope of the project involved a 500kV power transmission line connecting Al Kuraymat-Assiut and Tebin-Samalout and was worth EGP550,000. Established in 2009, Al Fanar offers services across contracting, construction, trading and land reclamation. Elsewedy Electric is a major integrated local company active in various subsectors of the energy and power industries, including EPC on power generation projects, wires and cables, transformers and renewables. Siemens 'to start operations at Burullus by June' Siemens is planning to start commercial operations at two 400MW units in the Burullus plant by the end of June, unnamed sources told Al Borsa. The sources said that commercial operations will begin after each 400MW unit has undergone trials for a month. According to the report, Siemens has now begun commercial operations at units with a total capacity of 4,800MW in the Burullus, Beni Suef, and New Capital plants. There is conflicting information about what capacity at the plants is actually operating commercially at present.

In March, the head of the Upper Egypt Electricity Production Company (UEEPC) Ibrahim el-Shahat said that five units, with a combined capacity of 2,000W, were set to go into operation that month at the Siemens plants.



Category

1

2

3

4


He said that commercial operations would start at three 400MW units at the Beni Suef plant, as well as a 400MW unit in Burullus and a 400MW unit in the New Capital plant. Earlier that same month, it was reported that the trial operations for three units at the under-construction Beni Suef power plant had been completed, and commercial operations were set to begin in early April. An unnamed source said at that time that UEEPC had started commercial operations for an additional 400MW unit at the plant. The German firm is leading the development of three 4,800MW combined cycle gas-fired plants in Egypt, each with eight units. The plants were agreed upon in an €8bn contract in June 2015. The projects are being implemented on an EPC + Finance basis. WTE tariff 'postponed to October' The government has reportedly decided to postpone announcing the Waste to Energy (WTE) tariff to October, unnamed sources told Al Borsa. The sources said that the level of the tariff has been approved, but its implementation will be delayed due to the Egyptian Electricity Transmission Company's (EETC) financial situation and the current 4,000MW electricity surplus. Reports earlier in the year suggested that the government would set the WTE tariff at 121 piasters per kWh and link 50% of the price to the dollar exchange rate at the due date. This rate is higher than the provisional 92 piasters that was outlined in 2016. Unnamed environmental ministry sources said that the new tariff reflected the change in the exchange rate, and that it may rise as high as 145 piasters if the EGP weakens further. There is tbought to be sizable commercial interest in WTE plants in Egypt, but the relatively low tariff on offer may be problematic.

Furthermore, the lack of a reliable and cost-effective supply chain for significant volumes of waste is considered to be a challenge. NUCA installs 60kW rooftop solar in New Qena The New Urban Communities Authority (NUCA) says it has finished installing 60kW of rooftop PV capacity at its building in New Qena. Assistant vice president of NUCA for Development and Urban Development, Kamal Bahgat, said that the project cost around EGP662,505, equivalent to EGP11,041 per kW. He said the panels would produce an estimated 125,710kWh of power per year, saving greennhouse gas emissions of 63 tonnes annually. It was not clear which company carried out the installation work. NUCA awarded the project in April 2016 after having issued a tender.

Various other government bodies continue to make progress on installing rooftop PV. Earlier this month, the state-owned West Delta Electricity Production Company (WDEPC) finished installing two rooftop PV systems with a total capacity of 65kW. One 40kW unit is located on a WDEPC building, while the other 25kW unit is located on the roof of the Sidi Krir power station. In October, the Egyptian Electricity Transmission Company (EETC) finished seven rooftop solar installations for five company-owned buildings.




EETC chairman Gamal Abdel Rahim told local press that the installations are part of a project to complete 10 rooftop solar installations that year, with a total capacity of 360kW. Egypt aims to install solar systems on top of 1,000 government buildings, at a capacity of 40kW each, in a bid to cut power costs.

OIL, GAS, FUEL AND PETROCHEMCIALS

SDX Energy gives SD-1X flow test results Canada-based SDX Energy has started well test operations at its SD-1X well in South Disouq concession, according to a statement. The firm said that the well had "successfully flowed dry natural gas at a stabilised rate of 25.8 MMscf/d on a 48/64” choke." According to the statement, the flow rate was higher than expected and "limited by the surface facilities put in place to test the well."

"The well has now been shut in for an initial build-up after which a series of additional flowing periods will be conducted and fluid samples taken," it said. Testing results will be incorporated into the reserve evaluation work that is already under way. The reserve evaluation results will be used in an early development plan proposal that will be negotiated with the firm's partners and an unspecified authority, it said. Information from that proposal will be released to the market this summer, said SDX, adding that it is working to begin commercial production at the discovery as quickly as possible. SDX added that it drilled the SD-1X well to a total depth of 7,777 feet, finding 82 feet of net pay with 25% average porosity in the Abu-Madi section. According to previous statements released by the firm, this target depth was for the Upper Abu Madi section.




Earlier this month, SDX announced that it had drilled to the second target depth at the SD-1X well - a depth of 11,068 feet - but did not make a commercial discovery. President and CEO Paul Welch said in the recent statement: "Not only do we have this excellent result in the upper Abu Madi section, we also remain very upbeat about the oil potential in the deeper Cretaceous horizon, where a working petroleum system was also discovered." "Whilst the work of bringing the gas discovery into production is our primary focus, we are also planning for further drilling in the lower Cretaceous age horizons where we see additional potential." Last week, SDX released its quarterly results, announcing that it produced 1,904 barrels of oil equivalent per day (boepd) from the North West Gemsa concession and 646 barrels per day (bpd) from the Meseda concession in Q1 2017. In April, SDX said it had found gas at the SD-1X well in its South Disouq concession, with discoveries "in line with pre-drill estimates". SDX, which now focuses on Egypt and Morroco after exiting Cameroon, has interests in South Disouq (55%), NW Gemsa (10%), Meseda (50%), and the South Ramadan concession (12.75%). KIMA pays EGP300m to Tecnimont The Egyptian Chemical Industries Company (KIMA) paid some EGP300m in April to Italy's Tecnimont for work on the KIMA 2 facility at the existing site of the company's Aswan fertiliser complex. KIMA’s Head of Investor Relations Maher el-Abd told Al Borsa that the company has now paid EGP2.6bn out of the total amount due to the Italian firm, adding that another EGP200m is expected to be paid by the end of this year. He said that Tecnimont has so far completed 50% of the construction work for the project.

KIMA is also close to finalising a $380m loan agreement with a consortium that includes Banque Du Caire, the National Bank of Egypt (NBE), Banque Misr, and the Arab African International Bank (AAIB), he said. The funding will be used to import equipment for the new facility. In January, el-Abd told local press that KIMA had paid Tecnimont some EGP1.3bn as of end-2016 for the project. He said at the time that work had begun that month and would be completed by November 2018. According to the January report, the project will cost $797m over two phases. The first will cost $658m and will involve building two ammonia production units, while the second $139m phase will renovate the existing facility. El-Abd added at the time that KIMA paid Tecnimont out of its internal resources and by raising its capital by around EGP1bn in 2015. In 2009, KIMA embarked upon a two-part, $730m project to build a new facility, called KIMA 2, at its existing site in Aswan and convert its production lines to operate with natural gas instead of electricity. A turnkey EPCC contract worth $540m was awarded to Tecnimont in 2011, but the project was delayed significantly. In October 2015, KIMA agreed to pay the Italian firm some $65m in compensation over the delay. Production from the new plant is not expected to start until at least 2018, and anticipates a daily output of 1,200 tonnes of ammonia and 1,500 tonnes of urea. In September, local press reported that KIMA had borrowed some EGP300m from the Chemical Industries Holding Company (CIHC), one of its shareholders, to expand its fertiliser complex in Aswan.




The source said that the loan carried an interest rate of 11.7%. Established in 1956, KIMA is a state-controlled company producing nitrogenous fertilizers and chemicals, including hydrogen and ammonia. The company owns a chemicals factory on a 1,100 acre site near Aswan. State-owned CIHC is a major shareholder in 19 chemical and petrochemical firms including KIMA, El Nasr Company for fertilizers & Chemical Industries as well as Delta Company for Fertilizers. Eni said to finish eighth Zohr well Italy’s Eni has reportedly completed drilling eight wells at the Zohr field, concluding the first phase of the project, according to an unnamed source from the Ministry of Petroleum. The source told Al Shorouk that the firm started horizontal drilling at the first well, and was working with contractors to extend the pipelines connecting the field to the onshore processing plant at Port Said. No further details were provided in the report. In March, petroleum minister Tarek el-Molla visited Port Said to check on progress at Zohr. Drilling was reported to have started on the eighth well in February, which once complete was expected to add further quantities to reserves. It is thought that the offshore work at the field is running ahead of progress on the onshore gas plants, though this is not fully clear. Production may start as early as October, several months ahead of the original schedule for the scheme, but no official date has been given yet. The permanent onshore gas processing plant - which is also known as El Gamil - was originally slated to be completed in October. According to the original schedule for Zohr, the first six wells were to enter production by the end of 2017 and produce around a billion cubic feet of gas (bcfd) per day.

Ultimately the field could produce up to 2.7 billion cubic feet of gas per day. Total investment required in the project is expected to be more than $12bn and potentially up to $16bn. Add Energy wins BP West Nile Delta contract Energy consultancy Add Energy has won a £1.4m maintenance build contract with BP Egypt for the offshore West Nile Delta (WND) concession. According to a statement released by the Norway-based consultancy, it will develop a full asset maintenance build over the course of 18 months. Work has started and the development is set to be finished in March 2018, it said. Add Energy will provide "delivery of an asset register and functional hierarchy build, equipment criticality assignment, development of maintenance strategies for critical and non-critical equipment, job plans and procedures, critical sparing and Bill of Materials (BoMs) development." Executive Vice President Peter Adam said: "As we continue to work closely with BP, we are delighted to have been selected for this project in Egypt. We believe that Add Energy’s wealth of experience in delivering this type of work in amalgamation with our ability to deliver cost effective solutions within our current Global Maintenance Centralization project, has positioned Add Energy as the most suitable contractor for this job." Add Energy provides consultancy services to the energy sector, including engineering studies and improvement plans, technical assessments, and performance analysis and management. Earlier this month, BP announced that it had begun production at the Taurus and Libra offshore fields in its North Alexandria concession, eight months ahead of schedule and below budget. A number of new offshore fields are expected to come online earlier than projected this year, raising Egypt's domestic production and reducing the need for LNG imports.




It said that Taurus and Libra fields, which are part of the WND project, are now producing over 700 million standard cubic feet per day (mmscfd) of sales gas - 20% higher than planned - and 1,000 barrels per day (bpd) of condensate. The WND project, which is comprised of five fields located in the North Alexandria and West Mediterranean Deepwater offshore concessions, is expected to produce up to 1.5 billion cubic feet per day (bcfd) of gas once it enters full production in 2019, said the statement. The project is being led by BP and Germany’s DEA, in partnership with EGPC and EGAS, and has total reserves of 5 trillion cubic feet of gas and 55 million barrels of condensates. Gas exports jump in H2 2016 Gas exports jumped sharply year-on-year in the second half of FY2016/17, rising from $6.5m to $126m, according to the latest figures from the Central Bank of Egypt (CBE). The increase is due to the larger number of LNG shipments that were exported from Idku in the second half of 2016. In February, it was reported that from September to December, four shipments were exported through Idku. They are understood to have been part of an agreement with Shell aimed at unfreezing work on Phase 9b of its West Delta Deep Marine (WDDM) project. The Idku plant was initially contracted to received 1.1 billion cubic feet of gas per day (bcfd), but has lain largely idle because domestic gas output has been consumed locally rather than exported. A number of gas fields are coming online ahead of schedule, including North Alexandria and Zohr, which are expected to help Egypt become a net exporter of gas as early as 2019. The CBE data also showed that gas imports rose 19% in the second half of 2016, from $1.1bn to $1.3bn.

Meanwhile, oil product imports fell 19% to around $2.8bn from $3.5bn. Exports on the other hand increased by around 5%, from $871m to $912m. Crude oil exports fell by 12% in the second half of last year, down to $1.7bn from $2bn. Imports also went down 23%, from $698m to $860m. Bunker and jet fuel exports jumped by 46%, from $237m to $128m, while imports fell 15% year-on-year in the July-December period. The overall oil merchandise balance deficit was roughly flat year-on-year, at $2.18bn in the second half of FY2016/17 compared to $2.3bn a year earlier. EBRD tenders for Egypt gas transmission consultancy services The European Bank for Reconstruction and Development (EBRD) has invited expressions of interest from consultants to advise on the restructuring of Egypt's gas transmission and distribution infrastructure. Issued on 26 May, the note said that consultants will be required to undertake a gap analysis, review the current plans to move to a Transmission System Operator (TSO), provide guidelines on international best practice, and offer training. They will also be required to provide recommendations on how the new TSO should be operated and structured, what functions it should perform, and what Egypt is revamping the structure of its natural gas distribution market to allow private-sector companies to import and sell gas, ending the current state monopoly. The network is currently owned ultimately by the Ministry of Petroleum, with the Egyptian Gas Company (GASCO) to act as the TSO under the proposed future structure.




The EBRD is funding the consultancy work through its special shareholder fund, with the project scheduled to begin in Q3 this year and to last around seven months. Egypt's new gas liberalisation law is still thought to be under discussion in parliament. It will create the new Gas Regulatory Affairs (GRA) body, which is expected to come under the direct supervision of the prime minister, having originally been under the petroleum ministry. It is not clear how the EBRD project will affect the timeline or future shape of the gas market restructuring, but it suggests that the government requires further consultation on the plan before going ahead. The EBRD is becoming increasingly active in Egypt's energy and power sectors. It is currently assessing funding for around 16 solar PV projects in the second-round of the Feed-in Tariff scheme in Benban. Over the past year it has also provided loans to Carbon Holdings, a downstream petrochemicals firm, oil and gas services company Maridive and upstream E&P firm Kuwait Energy. Gas production up 12.5% in March Natural gas production increased by 12.5% on a yearly basis in March, up to 2.8 million tonnes from 2.5 million tonnes during the same period of 2016, according to the most recent CAPMAS figures. Production rose by 11.5% on a monthly basis, up from 2.5 million tonnes in February. Consumption increased by 9.4% y-o-y in March, up to 3.2 million tonnes compared to 2.9 million tonnes in March 2016. It also rose by 6.5% on a monthly basis, up from 3 million tonnes in February. Rising production has prompted the Egyptian Natural Gas Holding Company (EGAS) to scale back future LNG import schedules.

It was said to be in negotiations with a number of suppliers to defer dozens of cargoes that were contracted for this year.

Egypt has reportedly already deferred around 10 shipments this year. Negotiations on scaling back or deferring LNG orders are thought to have been taking place for several months. Domestic production has risen more quickly than expected this year, with a number of new offshore fields likely to come online earlier than projected later in 2017. These include BP's North Alexandria project, which started producing in May, and Eni's Zohr field. PMS 'finishes installing three pipelines' at Zohr Local firm Petroleum Marine Services (PMS) has reportedly completed the installation of an 8-inch diameter pipeline at the Zohr field. According to Power News, the firm had previously installed two other pipelines with diameters of 14 and 26 inches. The total length of the three pipelines is around 92km, said the report, which did not provide a source for the information. It is not clear whether the pipelines will connect the field to the onshore processing plant at Port Said, or will run between wells. A number of local firms are involved in work at Zohr, including Kahromika and Egyptian Global Logistics (EGL).



Gas data

Month Production Consumption

Mar-16 2,532 2,971

Feb-17 2,556 3,051

Mar-17 2,849 3,249


Earlier this month, local press reported that Italy’s Eni had completed drilling eight wells at the field, concluding the first phase of the project. Ultimately the field could produce up to 2.7 billion cubic feet of gas per day. Total investment required in the project is expected to be more than $12bn and potentially up to $16bn. PMS, established in 2001, is an Egyptian offshore construction and marine services company, which is owned by Petrojet, the Egyptian General Petroleum Corporation (EGPC), Enppi, and the Petroleum Housing and Social Services Fund. The firm provides a number of services, including pipeline pre-commissioning, pipes and pipe-handling equipment, marine equipment and services, and trenching. Dana Gas approves "limited" additional drilling in Egypt The Dana Gas Board of Directors (BoD) approved additional limited drilling activities in Egypt at a 24 May meeting, according to a company statement. It said the decision was taken thanks to the recent collection of $70m in outstanding receivables from the Egyptian government. The board also reviewed a progress report on the the firm's operations and production in the UAE, Egypt, and Kurdistan, as well as a report on the collection of receivables from Iraq and Egypt. In addition, the firm discussed an update report on its sukuk bond, which will mature in October this year. According to the statement, the board "took note of the continuing high balance of receivalbes owed to the Company and agreed that precautionary measures needed to be maintained in order to conserve cash on the balance sheet."

Lastly it reviewed a report on preparations for scheduled hearings on arbitration being brought by the firm and its partners and on "the best means of expediting collection of the amounts awarded to the Company and its partners by the London International Court of Arbitration." It is not clear if this any of this action relates to Egypt. Earlier this month, Dana Gas collected a total of $70m in outstanding receivables from the Egyptian government. The firm was paid wholly in Egyptian pounds. Together, the payments were worth 25% of the total $283m owed to the company as of the end of the first quarter of 2017. According to its Q1 results, it managed to collect just $13m, or 42%, of its outstanding receivables from Egypt added during the first three months of the year. Sharjah-based Dana Gas is an E&P company with interests in LPG infrastructure and several concessions in Egypt, including El Manzala, West El Qantara, and North El Arish (Block 6). The firm operates in the Nile Delta through WASCO, its joint venture with the Egyptian Natural Gas Holding Company (EGAS). Petroleum ministry hires energy consultants The Ministry of Petroleum has hired a consortium of three consulting firms to provide a strategy for transforming Egypt into a regional energy hub, according to Amira el-Mazni, deputy chairman of the Egyptian Natural Gas Holding Company (EGAS). El-Mazni told Youm7 that the companies involved in the consortium are: · Quality Energy Developments Consulting · Shan Risk Consulting · Metas Energy The strategy is expected to be completed with in six months.




There were no details on the value of the contract. Petroleum minister Tarek el-Molla is keen to turn Egypt into an energy hub, leveraging recent major gas discoveries such as Zohr, and existing infrastructure such as the Suez Canal and the SUMED pipeline. Misr Petroleum finishes 90% of Badr City warehouse State-owned fuel distribution and marketing firm Misr Petroleum has finished 90% of its new $32m warehouse in Badr City. Chairman Mohamed Shaaban told Amwal Al Ghad that Petrojet, which is building the facility, will finish work within the next five months. The new depot is set to start operations in October and will have a storage capacity of 26,000 tonnes of fuel. Shaaban also said that the firm is planning to build a number of other new warehouses in the near future as part of an expansion plan to meet market demand for fuel and petroleum products. In March, Shaaban said that Misr Petroleum was aiming to build 60 new petrol stations in 2017, with the total cost for the new outlets ranging from EGP180-240m. Misr Petroleum currently owns 1,300 petrol stations across Egypt. Active since 1964, the company distributes fuel through almost 900 outlets nationwide. It also offers aircraft fueling services, car care products, industrial chemicals and lubricants. In April, a consortium of state-controlled contractors Petrojet and Enppi won a project to build 11 storage tanks for the Arab Petroleum Pipelines Company (SUMED) facility at Ain Sokhna. It was announced that the project would expand fuel storage capacity by 270,000 cubic meters and be completed over a period of 21 months. Petrojet will carry out mechanical works, plus civil, electrical and mechanical works of the project.

Apache Egypt production stable in Q1 US-based Apache produced 88,351 barrels of oil equivalent per day (boepd) in Egypt in the first quarter of this year, on a net basis and excluding minority interest and tax barrels, according to quarterly results released earlier this month. This figure was down slightly by 2.3% compared to Q4 2016, when production averaged 90,445 boepd. Apache averaged 11 rigs in Egypt, as well as drilling and finishing 18 wells during the quarter, with a success rate of 72%. The firm posted a Q1 operating cash margin in Egypt of $33 per boe. It also began its first high-resolution 3D surveys in Egypt on existing land and on two new concessions, which are expected to enhance imaging of "deeper targets in the high-potential Jurassic and Paleozoic." The Herunefer-3 development well had a "24-hour IP rate" of 3,112 boepd, while the Herunefer West 1X exploration well had a "basin-high pay count of up to 400 ft." Last month, Apache appointed two new Midstream and Marketing executives: Brian W. Freed as senior vice president and Robert W. ("Bob") Bourne as vice president, Business Development. In February it said that it was planning $900m of total capital investment in Egypt and the North Sea in 2017, up from $300m spent last year, according to its full 2016 financial and operational results. That same month, Apache's production with Egyptian partners was about 340,000-350,000 barrels per day of oil equivalent (boepd), including 200,000 barrels per day (bpd) of oil. The firm produces most of its oil from the Khalda field south of Marsa Matruh, which exports by pipeline to El Hamra port, near El-Alamein.




AMIG said to win Petrojet insurance tender Arab Misr Insurance Group (AMIG) has won a tender to insure Petrojet's assets and properties for the second year in a row, unnamed sources told Amwal Al Ghad. The $194m annual policy will cover damages from fire and burglary, as well as liabilities resulting from employee accidents and equipment breakdown. AMIG, established in 1994, is an Egyptian insurance company that is 94.9% owned by the Gulf Insurance Company in Kuwait. It offers risk management and claims services, including fire, oil and gas, and marine insurance. Petrojet is a state-controlled construction and engineering firm that is involved in work on the Eni-led offshore Zohr gas field. Its core activities include the construction of industrial plants, oil refineries, oil and gas production facilities, gas processing and liquefaction, onshore field development and onshore pipelines. The company also operates coating plants, marine yards, and workshops for pipelines, platforms, and other equipment. The Egyptian General Petroleum Company (EGPC) owns a 97% stake in the company, with the rest held by Enppi (2%) and the EGPC Workers Social Services & Buildings Fund (1%). Cabinet approves six exploration agreements Egypt’s cabinet has approved six exploration agreements between the Egyptian General Petroleum Company (EGPC) and unnamed international companies, according to an official statement.

The agreements involve the following areas: • North West al-Razaq • South Alam el-Shaweish • West Badr El-din • South-East Maleeha • North Om Baraka • Fayoum These are the six onshore areas that were part of the 11-block tender issued by the petroleum ministry last year. The winners included Apache, Apex and Shell. New entrant Apex was awarded Blocks 8 and 9, located in the Abu Gharadig Basin in the Western Desert and covering 6,714 sq km. Block 8 is in West Badr El-din, and covers 4,180 sq km, while Block 9 is in South-East Maleeha, and covers 2,535 sq km. Apex said that it would invest $27.4m in the first phase of exploration, which will include the acquisition and processing of 3D seismic data and the drilling of six exploration wells. Apache's bid for drilling 10 wells at the North West al-Razaq concession involves investments of a minimum of $61m and a signing bonus worth $30m. Another bid by Apache was accepted for the Alam el-Shaweish concession, involving drilling four wells with minimum investments worth $12m and a signing bonus of $10m. Shell's approved offer involved $35.5m of minimum investments for drilling seven wells at the North Om Baraka concession, in addition to a signing bonus worth $18m. In October, an unnamed EGPC source told local press that Shell and BP had bid for three areas offered in the tender, adding that Shell had submitted an offer for two concessions in the Western Desert and BP for one area in the Gulf of Suez.




The tender for 11 blocks also featured five in the Gulf of Suez: North-East October, North-East Al Hamd, North-East Ramadan, East Badri, and North Maritime Esran The bidding deadline was 31 August. El-Molla meets Total VP Petroleum minister Tarek el-Molla met Total E&P’s Vice President for North Africa Elias Kassis and Egypt Managing Director Jean-Pascal Clemencon, according to a ministry statement. The meeting was also attended by the ministry’s first undersecretary for gas affairs and the undersecretary for exploration and agreements. It covered exploration and drilling works being carried out by Total at the North El Mahala and North El Hammad concessions. The statement added that the firm, in partnership with BP, is currently carrying out drilling at the Tarif well in North El Mahala. No further details were provided. In April, reports indicated that Total was planning to drill the first exploration well at its Block 2, North El Mahala onshore concession, located in the Nile Delta. An unnamed source told local press at the time that seismic survey results from the concession were positive and showed significant gas reserves from three to five trillion cubic feet (tcf). Total had been aiming to begin drilling this year at North El Mahala and at its offshore Cyprus concession, which is located near the Zohr field. Stephane Michel, Total's President for Exploration and Production in the Middle East and North Africa (MENA), said in January that the latter would start as soon as BP, which also has interests in the concession, made a rig available. Total signed the concession agreement for the North El Mahala concession in 2015.

North El Hammad is operated by Eni, which has a 37.5% stake, while BP and Total have 37.5% and 25% stakes respectively. Total’s activities in Egypt are focused on fuel marketing and distribution, and to a lesser extent exploration and production. It operates some 230 services stations, holds an exploration license for the North El Mahala concession, and markets polymer products from its European plants. Total Egypt was established in 1998 as a subsidiary of its French mother company. It is also involved in developing a 50MW solar plant near El Gouna, on the Red Sea, in a consortium with Beltone Capital. Social solidarity, petroleum ministries sign mains gas agreement The Ministry of Social Solidarity and the Ministry of Petroleum have signed an agreement to fund mains gas connections to lower-income households, according to a cabinet statement. It will involve funding through the Nasser Social Bank (NSB), which will provide support to the Egyptian Natural Gas Holding Company (EGAS), which is leading the overall mains gas project in the country. There were no details on the values or number of connections involved. Separately, a report in Al Shorouk said that the petroleum ministry is aiming to connect a further one million households in 26 governorates in the 2016/17 fiscal year, at a cost of EGP4.2bn. It plans to bring this fiscal year's total to 720,000 units, with about 305,000 households having reportedly been connected by December. The total connected to date is thought to be well over 8 million. It was also reported in December that the cost of connecting gas to each household had risen to EGP4,200 following the currency flotation.




A total of 7.8 million households were connected by December, compared to 7.6 million in September. In FY2015/16, the ministry connected 715,000 households for EGP1.5bn under the same scheme, funded by the Ministry of Finance. In July 2016, EGAS said that it had achieved 87% of its annual target to connect mains gas for FY 2015/16. EGAS had aimed to supply gas to 829,000 residential households, but had only achieved 715,000 units. El-Molla meets Dow regional head Petroleum minister Tarek el-Molla met US-based Dow Chemical Company's India, Middle East, Africa and Turkey President, Jim McIlvenny, according to a petroleum ministry statement. McIlvenny said that his firm is looking into opportunities in Egypt's petrochemical sector. They discussed the MOPCO complex expansion and the Egyptian Ethylene and Derivatives Company (ETHYDCO) project in Alexandria, as well as the sector's potential. Dow is a multinational chemical corporation, active in Egypt for nearly 40 years, that provides technology-based products and services to a range of sectors, including infrastructure, transportation, and energy. The firm runs the Dow Mideast Systems SAE, located in 10th of Ramadan City, which manufactures full Polyurethane Systems for a wide range of purposes. Earlier this month, el-Molla met a delegation from the German-Arab Chamber of Industry and Commerce (GACIC), to discuss the energy sector and opportunities for German involvement. The German side specifically expressed an interest in fertiliser production and providing equipment to improve energy efficiency.

Also this month, el-Molla met a delegation from Germany's DEA Group, including CEO Thomas Rabon, operations director Derrick Warzetche, and Egypt general director Thomas Radowitz. The meeting covered the company’s oil & gas activities and future plans in the Nile Delta, Mediterranean, and Gulf of Suez. Butane imports up 27% in March Butane imports increased by 27% y-o-y in March, to 278,700 tonnes from 219,100 tonnes during the same period of 2016, according to the latest data released by CAPMAS. On a monthly basis, imports rose by 16% from 241,100 tonnes in February. Production fell by 6.4% y-o-y, down to 153,100 tonnes in March from 163,600 tonnes during the same period the year before. However, production rose by 11% m-o-m, up from 138,400 in February.

Consumption remained mostly stable on a yearly basis, rising only slightly from 384,200 tonnes. On a monthly basis, consumption increased by 6% in March, up to 387,900 tonnes from 364,900 tonnes in February. Earlier this month, the petroleum ministry announced that it would supply one million LPG cylinders per day during Ramadan, with 90,000 tonnes of butane in storage. The Egyptian Company for Transporting and Connecting Gas (Butagasco), in cooperation with Petrogas, will distribute 320,000 LPG cylinders per day during Ramadan.



Butane data

Month Production Consumption

Mar-16 163.6 384.2

Feb-17 138.4 364.9

Mar-17 153.1 387.9


LPG distribution in Egypt is relatively fragmented and disorganized, one of several factors prompting the government to push towards expanding the mains gas network. Egypt is estimated to produce around 50% of its LPG needs domestically, with the remainder imported. El-Molla meets Norwegian, Belgian ambassadors Petroleum minister Tarek el-Molla met with Belgian Ambassador Sibille de Cartier and Norwegian Ambassador Sten Arne Rosnes this week, according to ministry statements. El-Molla and de Cartier, along with her accompanying delegation, discussed possibilities for joint technical cooperation, enhancing energy efficiency, and renewable energy spending. Separately, El-Molla and Rosnes discussed cooperation in the oil and gas sector and the potential for Egypt to benefit from Norwegian experience. Their meeting also touched on Norwegian firms that are already active in Egypt, such as Statoil and Petroleum Geo-Services (PGS), which is carrying out seismic surveys in the Mediterranean. Other Norwegian interests in Egypt's energy sector include the lease of two Floating Storage and Regasification Units (FSRUs) at Ain Sokhna. Last June, Norway's Aker Solutions won a contract to deliver an umbilical system for the offshore Zohr field.

EGX Updates (Maridive & Oil, KIMA, NDRL and others) • Maridive & Oil Services issued a statement

about decisions taken during its 25 May Annual General and Extraordinary General Meetings.

• The EGX announced that it would suspend

trading on the Egyptian Chemical Industries Company (KIMA) until the firm responds to enquiries regarding a report that it posted EGP252m profits in 10 months; KIMA responded with a clarification on the report; and the EGX resumed trading in its shares

• National Egyptian for Drilling & Petroleum

Services (NDRL) issued a statement on the effect of the currency flotation, a statement on budget decisions taken by its Board of Directors, and a statement on its Q1 results.

• The Ferchem Misr Company for Fertilisers

and Chemicals (Ferchem) released a statement on its BoD and executive managers.

• The International Company for Fertilisers

and Chemicals (El-Dawlia for Fertilisers and Chemicals) released a statement on its BoD and executive managers.






ABOUT US

CALENDAR

The Egypt Energy Brief is included in subscriptions to the Egypt Energy Monitor service, which are available on either six-month or annual terms. The Egypt Energy Monitor features a full range of industry information, including a database of 400+ company profiles, a project tracker with 130+ power plant profiles, upstream oil and gas projects, refineries, plus data, tenders and more. For more information about subscription options and prices, or to place an order, please visit our Subscribe page online or use the contacts opposite.

Subscription enquiries Ahmed Atta [email protected] +20 (0)100 992 8952 Cairo office address Greek Campus Greek Building Bab el-Louq Cairo Egypt www.frontieregypt.com energy.frontieregypt.com

Egypt Downstream Summit & Exhibition, 2017 25-27 September, Cairo www.egypt.wraconferences.com




energy.frontieregypt.com/subscribe

http://www.frontiermyanmar.com


Egypt Energy rief NEWS ANALYSIS Issue 71 DATA...

Documents

Transcript of Egypt Energy rief NEWS ANALYSIS Issue 71 DATA...