Egypt’s upstream future

Egypt

Ali Rashid Al Jarwan, CEO of Dragon Oil, talks to The Energy Year about the company’s activities and the future of the upstream sector in Egypt. Dragon Oil is an independent oil and gas exploration, development and production company.

What are Dragon Oil’s current upstream activities in Egypt?
In Egypt, we are a joint-venture operator with the Egyptian government represented by EGPC, our partners, operating through Gupco. In 2020, our operation took over BP’s stake in Gupco. We have aligned objectives of sustainable production in the concession areas in order to maximise the recovery of hydrocarbons, mainly oil. Our objective is to maintain production of 60,000 bopd and we have identified additional areas that are still in the assessment stage. We want to see if we can do 70,000 bopd in the concession areas we hold.

What technical challenges and opportunities does Dragon Oil encounter in the Gulf of Suez?
The challenges are that Gupco covers the entire Gulf of Suez, which is spread over an area measuring 130 kilometres by 30 kilometres. They are an old company with a lot of towers and pipelines and rotating machinery. However, there is a great opportunity to look at it comprehensively.
The opportunity lies in the technology that is being used. For example, we agreed with the government from the beginning to conduct OBN [ocean-bottom node] or high-resolution 3D seismic surveys. This technology is even more precise than the previous generation of 3D. This very advanced technology will give us more information and will help to guide us in our appraisal and exploration programmes within the concession. We are proud of this new technology and are now in the final interpretation phase.
Digitalisation, including the Egypt Upstream Gateway, is an excellent project to assess what is in Egypt’s subsurface, especially in the Red Sea. It is a potential game-changer for oil and gas.

How did Dragon Oil navigate the difficult environment Covid-19 posed for the upstream sector?
In 2020, we proved that we are resilient in performing by optimising costs and managing challenges. There were some difficulties in the logistics cycle, but we were able to overcome them with solutions. We are still here and business continues on all sides. We did not borrow from banks or take assistance from the governments.

What will be the role of independent E&P companies in the future of the Egyptian upstream sector?
Independent companies will eventually have to diversify. Due to concerns about the environment and the net-zero goal for 2050, we can see that a new energy mix will be required. This doesn’t mean that oil will disappear. It means that there should be more processing of it. This is the journey that everyone is on. However, oil will stay with us.
After that, we assume that hydrogen extraction as a source of energy will move from prototype or pilot to a more industry-wide application.

How important is Egyptian production for the company globally?
Currently, Dragon Oil is producing in three different areas. Our two principal areas are Turkmenistan and Egypt, with the third being Iraq, where we’ve started production. We are the sole operator in Turkmenistan.
Egypt has a very important contribution to the company, especially when it comes to talent and competency, investment and profitability. Egypt represents approximately 40% of our efforts. Another 40% is in Turkmenistan, which is equivalent in production and cost management. Iraq will gain importance in the future.
The coming five years are very promising as Egypt is emphasising gas, which is very interesting for our company. If we are going to expand, we will do it in gas, and perhaps brownfield oil developments if we can find something that fits our profile in the next 10-15 years.

What is the long-term strategy of Dragon Oil in Egypt?
Our company currently produces 165,000 bopd from our three locations. By 2026, Dragon Oil’s strategy is to produce 300,000 bopd. So Dragon Oil’s strategy is to almost double our production. This can only be achieved by acquiring mature brownfield areas.
Our goals are ambitious, but we have already doubled production in the last two years. We used to produce 75,000 bopd. This doubling of production was achieved by acquiring BP’s stake in Gupco. It is a milestone in our history.

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