A new mindsetJune 20, 2019
TOGY talks to Khaled Kamel, vice-president Power Systems Business unit for Schneider Electric Egypt, North East Africa & Levant Cluster, about the company’s involvement in major projects such as the Zohr field development and LNG facilities, as well as Egypt’s progress towards becoming a regional energy hub. Schneider Electric is a multinational specialising in energy management and automation solutions.
Do you see the success of the Zohr field as a model to be replicated elsewhere?
If we speak about Noor for instance, then definitely. We will be the preferred supplier for Eni and Saipem to replicate what we did in Zohr, if they’re successful in Noor, which has not materialised yet. It’s still a work in progress, but we’ve already heard from Eni about replicating what we did in Zohr in Noor. I think this could be done. We have six concessions under tender in the Red Sea right now, plus the area near Zohr, where the tender was already launched.
I believe that oil and gas – mainly gas – will be the future of this country, and definitely with the experience that we’ve gained from the last two projects (Zohr and West Nile Delta), it will be a target for us. That is not only true for Schneider Electric Egypt; it’s true for Schneider Electric worldwide. We have support from our colleagues in France and Italy, from the process automation team. I think this will be a target that everyone is looking at from this day onward. We’ve even started to be a part of the oil and gas community, which was not the case before. Now there’s a totally different mindset.
What are the most attractive investment areas for the private sector?
The government has recently started to repay arrears, so IOCs decided to return to Egypt. I think the private sector will be mainly focused on petrochemicals. For exploration, it will take some time. Maybe service or drilling companies will increase activities, but under the umbrella of international companies such as ExxonMobil or Shell.
What is the potential for Egypt to be a regional energy hub?
Egypt is not only in the spotlight for discoveries or gas production; we are now considered the hub for power. We have two big LNG plants. We are the only country that has these facilities already available in the region. With recent political developments with Cyprus, Greece, Israel or Lebanon, all their production will come in and be liquefied in Egypt, and then they’ll ship it to Europe. We already started to export from here in April. This is the future of Egypt.
We reached an agreement with Israel so that the Leviathan field’s production will be liquefied in Egypt. There already exists a pipeline, which we used to export gas to Israel. Now they will use it in the other direction to send the gas here to be liquefied, and then send it to Europe. This is done through private companies. It’s not always the government in front.
International companies have now started to look at Egypt not only as an exploration or production country; it’s more than that. It became the hub for the liquefaction of gas and sending it to Europe. Even Eni is changing their main facilities to be in Egypt. They have stated that 60% of their international business comes from Egypt right now.
Most of the big companies have started to think of Egypt as the energy hub for Europe. This is a new era. It’s not only that production is going well – we’ll be one of the biggest gas producers very soon. The issue is how to liquefy this gas.
To build what we already have in Egypt, you need four years and USD 10 billion. We have the infrastructure, but for the last four years, it was empty. They have started to build a storage area beside it to acquire all the gas from Israel, Cyprus, Greece and so on. We started working with them on the storage facility. These two LNG facilities were done by Schneider Electric a long time ago, and we were the suppliers.
What is your forecast for the refining sector?
Now we even have some agreements with Iraq and Kuwait to refine part of their oil here. As the refineries in Iraq were damaged, they need assistance.
We will probably have another agreement with Libya. They will use Egypt as a hub until they return to their normal speed, which will take time. All the refineries there need to be renovated, and some need to be demolished and built from scratch. Many different countries are looking to Egypt to become a hub.
What are your latest engagements in oil and gas digitalisation?
We’re now working in virtual reality, controlling the refinery through the main office and all that. This is led by our colleagues from AVEVA, since they are one of the best in the world in virtual reality.
We’re working with several projects (Sidpec and many other projects). We try to use virtual reality and this type of remote control where we can control everything from offices. This is a new thing in Egypt. It may not be new for Europe, but in Egypt it’s not familiar yet.
How open is Egypt to embracing these new technologies?
The country is pushing for smart cities and the president and all the ministers have the same message: They’re looking for digitisation and smart cities. It’s a trend. As soon as we succeed in one oilfield or in one company, I think it will propagate.
Minister Tarek El Molla is very smart. He will take it as an example and he will start to propagate it inside the oil companies. We hope that we can materialise one [project] and make it successful. It will help push the rest.
The push started a long time ago, but it hasn’t materialised because nobody was buying. In the beginning, they said they weren’t trained on it, but now the whole government is pushing for digitisation. This push has to come from the top and now we have the support from the top, with all the ministers working on this.
For example, electricity companies have been talking about this for many years. It started to materialise with the recent tender to control the whole country through DCCs [digital command controls]. It’s part of digitisation. If you do it in electricity, why not in oil and gas? You need it because you have scattered rigs everywhere and you need to digitise all this to control everything without having to send anybody [to the site]. All this data is coming to the hub and you can control everything.
It will take some time, but it will come. We are moving in this direction.
What role will gas play in Egypt’s transformative industries?
The government will not export any gas without added value. What they are exporting now is the foreign share of production. There’s an agreement with Eni to export from their share. They allow foreign companies that have an agreement with the government to export from their share. Egypt’s share, if there’s an excess, is to be used locally with added value, but not to export raw. This is a trend in the country. The gas will be very valuable, and burning it in substations is crazy. It’s better to use it in other ways.
What is your outlook on the Egyptian energy industry for the coming years?
I’m very optimistic. The Red Sea, for instance, is virgin territory. After the agreement with Saudi Arabia about the border, we’re now able to explore more in the Red Sea. And the Gulf of Suez is definitely a very rich area. We can see very encouraging gas production on Saudi Arabia’s side. In the Mediterranean area, besides Zohr, all the concessions there are very rich.
As I mentioned, the future is gas. I’m very optimistic about this area. Not only about gas itself, but the petrochemicals industry. It has become very attractive for investors.
Egypt is one of the most stable countries in the region. Many Arab countries are trying to come to Egypt to invest in petrochemicals, to use our facilities and enjoy the stability to export their products. You can see people from the Emirates, Saudi Arabia, Kuwait or Libya coming to Egypt to invest in petrochemicals.
Regarding gas liquefaction, I believe the two LNG facilities will be renovated soon, since they were built 20 years ago. They will invest to expand and modernise them, as they have very old technology. I think we’ll be a part of this, as we were the supplier 20 years ago.
As Schneider Electric, we will continue to invest in the oil sector by participating more in exploration and related areas. We will continue to engage with this sector and will definitely keep up our relations with all big firms in this sector.
We are a one-stop shop. Whatever you need in the oil and gas portfolio, we have it in-house; we take advantage of internal synergies. For example, we did Zohr – the biggest project ever for Egypt – in less than six months, which is something that had never happened before. Eni started to produce within 18 months. In any other country, they start to produce four to six years after discovery. We became a benchmark for other countries and other companies as well.
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