Egypt Oil & Gas recently sat down with Maqsood Sher, head of Gaz De France Suez Egypt (GDF Suez) to speak to him about the upstream activities the company is involved in, as well as a bit of his own personal history. The interview is too detailed to print in full, but selected highlights are featured below.
GDF SUEZ History in Egypt
GDF Suez has a long history of working in the country, being present in Egypt since 1947. The company’s main activities can be separated into four categories: Global Gas and LNG, Energy International, Energy Services, and Environment Services. Sher stated that currently, GDF Suez’s most active business units and subsidiaries are in Exploration, Global LNG, GDF Energy South Asia, Middle East and Africa (SAMEA), Tractebel Engineering, and the company’s water treatment division (Suez Degremont).
The Group’s business units have scored a series of accomplishments in Egypt. In 2008, GDF Tractebel engineering carried out a study alongside the Egyptian Electricity Holding Company (EEHC) to develop a master plan for the Egyptian Power Transmission Network over the period of 2008-2030. Energy SAMEA is present in Egypt through the development of new power and water projects. The group is one of the largest importers of LNG in Europe and the United States, as well as the second largest LNG terminal operator in Europe. According to a study released by the group In 2009, GDF Suez purchased 55TW hours of LNG from Egypt. However, since EGAS stopped pumping gas to the Idku liquefaction plant in 2014, no more cargoes have been lifted by GDF Suez.
Yet, “GDF Suez is still present in IDKU, and in the long term GDF Suez has still interest to tap the vast reserves in the West Nile Delta,” said Sher.
Sher went on to say, “Degrémont has been active in Egypt since the 1940s and they have designed and built more than 60 water production and treatment plants in the country.” Degremont built its first drinking water production in the Nile Delta in 1948 and since then has continued to provide Egypt with safe water. Today, Degremont has three major water treatment plants in Egypt: Gabal El Asfar Waste Water Treatment Plant (WWTP), Gabal Optimization WWTP in Cairo, and the Alexandria East WWTP.
Egypt Oil & Gas asked Sher about his own history, and what brought him to the position he is in today. With a career spanning over 30 years in the E&P industry, Sher took over as GDF Suez Egypt´s President and Managing Director in November 2008. Before this posting he was Senior Vice President of Operations and Development for GDF Suez in Paris, and before that he spent 25 years with Total. “I held a series of positions in various countries in the Middle East, South America, Europe, and Asia,” Sher said. He also served as Total UK´s operations manager before joining GDF SUEZ.
Sher said that GDF Suez’s E&P division has been active in Egypt since 2002. “Currently, GDF Suez E&P holds shares in four concessions: West El Burullus, Wadi Dib, and East Wadi Dib—where we are operators, as well as Ashrafi, and Alam El Shawish—where we are non-operators.”
“We have made three discoveries in Egypt, all in the Offshore Nile Delta through our concession in West El Brullus.” The three discoveries were through discovery wells, WEB-1X in 2008, Papyrus-1X in 2010, and Badr-1X in 2013.
Sher went on to say that the total reserves in West El-Burullus are around 300 bcf of gas and 3.5m barrels of condensate. “Reserves in the Offshore Nile Delta are heavier more on gas with less condensate. Our concession in the Western Desert has similar amounts of oil versus gas as the Offshore Nile Delta concession,” Sher said. “We are not the operator in the Western Desert, Shell is the operator.”
Asked to speak further about the Western Desert concession, Sher stated that Suez’s concession there, Alam El-Shawish, contains both oil and gas fields, and that they are both in the production phase. “We have 25% interest in this concession and Shell, with 40% interest, acts as the operator.” Sher continued, “These fields came into production in 2008 and they are a good contributor to Egypt´s gas production. Their gas production is 160 mcf per day and their liquid production—which is condensate and black oil—is around 10,000 b/d. It is a medium size concession.”
“In the Gulf of Suez, we also have the Ashrafi concession. It is operated by ENI and we are non-operative partners. We have the financial participation, we have a certain percentage in the joint venture.”
Sher finished speaking about current operations in Egypt by saying that GDF Suez is attempting to enter the power business. With the new focus on power generation, their future plans for further oil and gas development remain to be seen.
As many companies have been greatly affected by the current prices for oil worldwide, Egypt Oil & Gas asked Sher about whether the current price has affected GDF Suez’s E&P activities in the country. “Our operations have not been affected by the oil prices and will not be affected. GDF Suez operations in Egypt will continue as they are,” Sher said. “GDF Suez activities are more gas related in the Western desert hence, the oil price has less impact and less of a slowdown,” he said.
“We have been moving ahead and sanctioning what is required, along with our partners such as Shell and Eni. Despite difficult times, GDF Suez has always been cooperative and has found the same willingness from our partners.”
As GDF Suez does not face the same problems in terms of E&P, Egypt Oil & Gas asked Sher what major challenges they do face. “The biggest challenges are the timely payment of receivables and payment in dollars.” The Egyptian government has had a difficult time recently in maintaining adequate amounts of foreign currency for payments. This problem has been particularly acute for access to US dollars, as the Egyptian pound keeps dropping in value and putting upward pressure on the demand for dollars in private markets.
Sher added that a related issue for the company is getting paid for receivables on time, “The intention is there from the authorities to pay receivables.” Many companies beyond GDF Suez currently face the same problem. While government agencies have been helpful, they simply do not have the cash to pay companies on time.
Egypt Oil & Gas also tried to tackle the issue of gas pricing, as we have done with several other interviews recently conducted, by asking Sher if the Egyptian government has been more flexible with their pricing terms lately. “The government is prepared to negotiate and there is definitely willingness,” Sher responded.
Our newspaper also asked Sher if he believes the current level of investment in Egypt is sufficient. “With the signing of 56 concessions for $12b in exploration investment since 2013, Egypt will definitely increase its production of energy. However, in order to stop importing gas because of the country’s increasing demand, the sector is in need of significant additional investment.”
When asked about the company’s future plans, Sher said that GDF Suez will continue exploration to meet its commitments, adding that they are rationalizing the company’s portfolio to make sure the company is as focused and efficient as possible.