High-tech potential

Egypt

Amr Farrag, chairman of Saknafta Petroleum Services, talks to TOGY about areas of potential for introducing new technologies in Egypt, the country’s strengths as a gas player and its mature and brownfield opportunities. Saknafta Petroleum Services is a provider of oilfield, pipeline and process services.

Where do you see the greatest potential to introduce new technologies?
In Egypt, technology might be focused on the downstream side and deepwater upstream activities. I don’t see very much technology on the onshore upstream side. This is because of prices; Egypt is very unique, as it is cheap. Concerning opportunities to try new technologies in the wells, the deepwater has potential for high technology because of the new gas projects in the Mediterranean. Land operations in Egypt have a very slim chance for implementing them, unless it is initiated from the operator side.
Regarding deepwater in the Mediterranean, the government is supporting this project. Other than that, I don’t see much opportunity for the introduction of new technology in upstream operations.

Do you see Egypt competing in the global gas market with all the major players?
Egypt is the only country in the area that can accommodate more gas. We can import more gas and process it here, it will be more attractive. We will be processing all the area’s gas. It doesn’t matter if it’s Egyptian gas or not. At the end of the day, the network can accommodate any gas in this part of the Middle East. It doesn’t matter where they find gas in the Mediterranean – Cyprus, Greece, Turkey, Lebanon – the infrastructure in Egypt is already available.
Unless those countries make a huge discovery, the cost for processing will be very expensive for them. The best bet for everyone is to process gas here with the existing infrastructure and then export it later.
There is definitely a good future for gas in Egypt, as we have a large volume of reserves.

Do you see the increase in upstream activities reflected in the demand for your services?
Yes, the production of gas is increasing now, so there’s greater demand for our pipeline and our process services. We are very busy. That’s our bread and butter, because all the related services are very cheap in Egypt. We have most of our staff in these departments.

What is your take on the mature and brownfield potential in Egypt?
It depends on where these fields are. I think the government is doing fine, because most of these fields are given away to small contractors. If you offer a mature field to the majors, they have no interest because of the overheads. However, if you give it to a small company that has no overhead, they can see potential in this.
If they offer one of these fields to us, I would love to go for servicing and development. This would be a good opportunity to implement new technology. It’s valuable for us as a small company, and at the end of the day the government will benefit. If they make a service agreement for the mature fields, there are a lot of people with quality who can provide for this kind of field and it is attractive for them, because they will directly benefit from it. This is happening in Oman, and it is very successful.
If they would do service agreements in Egypt for mature fields on an open tender, different smaller companies could come together and create a consortium. We have the coiled tubing stimulation services and TRS, for instance, so we may be able to join another company that has rigs or delivers other services. We could come together and operate for the benefit of the country.

What would you say are the key capabilities that Saknafta could bring to such a consortium?
We have the experience. I personally have 40 years of experience in the oil and gas industry, and our operation manager and consultants have the same. Egypt was the only country that provided people in this field in the Middle East until the mid-’90s. Egyptians were also the only nationality in the Middle East that were working outside Egypt. There were some Algerians, Lebanese and Iraqis, but the majority were Egyptians. Most of the people that were operating in the GCC other than Aramco were Egyptian. There is a lot of experience in Egypt in this business.

What other advantages would you say Egypt offers to oil and gas players?
You can drill a well onshore or offshore with a jackup rig for less than half the price of what you would pay anywhere else. It’s very attractive for EGPC to raise the signature bonus in the fields because the operation is cheap, while the oil price is the same. I’m sure the Ministry of Petroleum is enjoying higher signature bonuses in concessions because the service and labour are cheap. And the currency floatation makes it even cheaper.

Which area do you think has the greatest potential in Egypt?
The Mediterranean is still virgin, in spite of all the great discoveries and successes that have happened in the last five years. The potential is still high. Most of it has been done on Port Said’s east side and very little to its western side. I think the potential is very high in that area.

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