A promising market in Egypt

Egypt

Tarek El Azhary, general manager of StratoChem Services, talks to The Energy Year about areas with the most upstream potential in Egypt and the company’s approach to providing geochemical analysis services in the market. StratoChem Services provides geochemical analysis to companies in the global oil and gas industry.

Which areas in Egypt have the most upstream potential?
The Mediterranean looks very promising. There are two main locations: the eastern and western parts. In the western part, 10 concessions were launched in the past few years, which are free now. There will be more work there compared to the eastern part, where they’re working mainly on development and some exploration.
In addition, there’s a lot of hype around the Red Sea at the moment. It entails one difficulty though: we’re talking about very salty waters, and salt will make it difficult to analyse what’s underneath the seabed, unless a new technology is developed. Moreover, there is no real drilling data, so it’s a frontier area. Schlumberger has performed some seismic surveys there, which are now for sale, but it’s still very difficult to interpret the data.

What is your view of the implementation of the East Mediterranean energy hub?
Cyprus looks like the most promising area in Europe – more than Greece, for example. Israel has some geopolitical issues with Lebanon, but they also own the Leviathan and Tamar gasfields. Though not a great discovery, we know everything about these fields and they provide Israel with solid gas reserves. The idea is to have Egypt as a hub where gas is received, liquefied into LNG and then shipped to Europe and elsewhere rather than using pipelines, which are expensive and hazardous.

How competitive is the oil and gas analysis and interpretation sector in Egypt?
We’re basically the only competitor. Some companies try to compete with us, but they don’t have our capabilities. We’ve invested in state-of-the-art equipment. Other companies may offer low prices, but they don’t have our know-how or our methodology. The required know-how and expertise are difficult to find in Egypt.

How is StratoChem leveraging digital capabilities?
We developed an excellent software suite in-house for conducting geochemical analysis and sold it to three big companies in America – Marathon, Pioneer and Oil India – which are now using it.
Moreover, all of our data is digitised and the system in the company is fully automated. We just have to input the data one time by hand once the sample is available. After this, everything is automated. The machines are connected to the quality control server. Data is generated from the machine and flows into the server.
We’re proud of having four levels in our quality control, which is very difficult to find in other labs. In quality control, you normally have two levels. The first two levels are for the analysis, which any lab has. But having two extra quality control levels, specifically relative to geology and to the results, is not common.

How do you stay on top of innovation?
We look for new available technologies and adapt them to our needs. We own the two largest isotope labs in Egypt and no other lab in the country offers isotope analysis. We own a ISO 17025-certified water lab where we perform ICP analysis for environmental and waste-related purposes. For example, when a factory is experiencing leaks and there is a risk of contamination, we check for cobalt, lead and other contaminating materials. We can determine that by part per billion. And that helps to design the reverse osmosis in order to clean the water to use it again.

Who do you work with in Egypt’s E&P sector?
We are working with companies both in the eastern part of the Mediterranean and in the western part. These include TotalEnergies, ExxonMobil and Eni. We participated in the Zohr project, performing analysis. Moreover, we have some data about the Mediterranean that could be useful for some companies. Chevron, ExxonMobil, Shell and Eni look interested, but we can’t start without the approval of the Ministry of Petroleum.
Similarly, we work with the University of Utah’s Energy & Geoscience Institute for geochemical analysis in the Red Sea. We did a few presentations for Ganope, and are waiting for their feedback. A lot of the big companies, such as ExxonMobil and Chevron, are about to apply for a concession.
All in all, in Egypt we work with almost every company, because other smaller service companies pass their work to us to do the analysis. We work with IOCs and all their JV companies. Some majors have just arrived in Egypt, such as ExxonMobil, Chevron and TotalEnergies, which have been operating here in the past but recently came back, and we are communicating with them.

What about in international E&P markets?
Outside of Egypt, we work in Saudi Arabia with Aramco; in Oman with PDO, Oman Oil and OOCEP; and with Mubadala in Abu Dhabi. In Kuwait we work with KOC, Kuwait Energy and some universities. In the Far East we work with Petronas and we do a lot with PTTEP in their branches in Thailand, Myanmar and Oman.
In North Africa, we work with a lot of companies in Tunisia, where we used to have a big office. In Libya we work with OiLibya, NOC, Waha Oil Company, Sonatrach and Agoco. We also have work with ConocoPhillips, which sends us samples from Morocco.
We have several projects in surface prospecting in Kenya, Somalia, Syria, Libya, Tunisia, Algeria and Kurdistan. Moreover, we work in Suriname, where one of our best projects is. We also worked in Russia in the past, on Sakhalin Island.

What is your vision for StratoChem in the coming years?
Our aim is to increase our capabilities, become more well-known, get into more projects and add new environmental aspects, such as wastewater management and cement analysis. We have to grow in the environmental business because we don’t want to be affected by the fluctuation in oil prices. Our main analysis scope was in exploration. Now, we have shifted to production and to HSE.
Also, we would like to improve our reservoir work. We recently added a new instrument to our system that will deliver sulphur XRD analysis. We want to expand the capabilities of our company by focusing on new areas that will help us open up the market.

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