What can you tell our readers about Wintershall Dea’s portfolio in Egypt?
Egypt is a very important business unit in Wintershall Dea’s global portfolio. It’s one of our five established core countries, alongside Germany, Russia, Norway, and Argentina. We have been a reliable operator and strong partner to Egypt for more than 45 years, and during this time we have significantly contributed to Egypt’s security of supply. We currently produce gas at Disouq in the onshore Nile Delta, gas and oil in the Gulf of Suez, and are a partner to British Petroleum for the huge offshore West Nile Delta gas project.
We are also investing in the future with new exploration in 2021.
How will your latest agreement for the East Damanhour block impact your production levels?
In March, the Egyptian Minister of Petroleum and Mineral Resources Tarek El Molla has given his approval for joint exploration of the East Damanhour onshore exploration block. Wintershall Dea is the operator, with Egypt’s Cheiron and Croatia’s INA as partners. We will be starting exploration this year with the first three wells.
As for what it means for our future production, we will have to wait and see what we find. However, we know the area well, so we anticipate low geological risks. Additionally, with existing infrastructure nearby at Disouq, we are well placed to develop any commercial discoveries.
How does your current investment levels in Egypt compare to that of other regional countries?
Egypt is and will remain a major focus for our business. As a result, we have invested significantly in Egypt in recent years. One example is our investments to enhance production at our existing sites.
In 2020, our total capital expenditure for the Middle East and North Africa region, including Egypt was EUR 151 million ($180.5 million).
Generally speaking, what are the major challenges you see in the oil and gas industry? And what can be done to mitigate them?
Remaining competitive under difficult market conditions is a challenge for all players in our industry. Thankfully Wintershall Dea is a robust and resilient company, ready for whatever the future may hold. Our low-by-industry-standards production costs of EUR 3.5/barrels of oil equivalent, and our focus on operational excellence, are a strong basis for that.
The second major challenge we see is sustainability and adapting to the energy transition. But this is also an opportunity for us. Wintershall Dea wants to make an important contribution to the energy transition. One element of this is natural gas, which has a major role to play in supporting the energy transition. Our portfolio is gas-weighted, and in that respect, Egypt – with its major focus on natural gas – is a great fit for us. We are also going further and have set some tough climate targets, in an Energy Transition Pathway strategy.
How has the pandemic’s impact on the global oil industry translated to the Egyptian market?
Of course, nowhere is immune from the impacts of the pandemic and the price environment we have seen in the last year. But, Egypt has come through the pandemic well. You can see from ongoing investment, from Wintershall Dea and others, that there continues to be a positive mood about the sector in Egypt.
How have you amended its operations to maneuver the pandemic?
In light of the pandemic, it was our highest priority to safeguard our employees at the production sites and in the office. We swiftly implemented emergency prevention and response plans at our production sites and introduced a flexible home office system.
The ministry has been actively working to repay all foreign due. How has this impacted the dynamics of the industry? And what could be done on this front to enhance or speed up the process further?
Wintershall Dea appreciates the improvement in overdue payments which started in mid-2017 by EGPC and EGAS. It has substantially reduced the outstanding balance and we continue to discuss how to further reduce the current receivables balance.
In your opinion, what other steps the government should take to encourage or ease further investments in the oil and gas market?
Wintershall Dea fully supports the Egyptian government’s modernization program, and indeed we have played an active part in supporting it. We also welcome and encourage the ongoing efforts to position Egypt as the heart of a regional energy hub in the Eastern Mediterranean. Therefore, we have welcomed the establishment of the East Med Gas Forum as an international organization and we support it as an active member of the East Med Gas Forum’s Industry Committee. This will be a positive development and will help encourage further investments into the Egyptian market.
Wintershall Dea announced an ambitious climate change plan, what can you tell us about it?
Wintershall Dea is well set for the energy transition. Our emissions-per-barrel are low by industry standards and our portfolio is heavily weighted to natural gas. however, we recognize that there can be no more pure business-as-usual scenario for companies like ours so we have established some clear targets.
Significantly, we aim to achieve net-zero emissions for our upstream operations by 2030. That is for our own operated projects, and for our share of those projects where we are a partner, like for West Nile Delta. We will achieve that through portfolio optimization, strict energy efficiency and emissions management, nature-based offsetting, and the introduction of new technologies.
Looking beyond 2030, we want to dramatically reduce the so-called Scope 3 emissions, which are mainly generated through the combustion of our products. In practice, that means investing in and developing hydrogen and CCS, both of which we regard as key for the energy transition. We have recently established a Hydrogen and Carbon Management division, which is now pushing forward multiple projects in Northern Europe.
Given the volatility of crude prices, how do you see the outlook of the industry during the coming two years?
This year will continue to be shaped by the Covid-19 pandemic. Clearly, there will be some challenges ahead. The industry, in Egypt and worldwide, will need to respond with a relentless focus on efficiency and excellence. This can be achieved through optimizing projects, introducing digitalization, and other innovations; and that is what we are focused on.
We do believe that there is no more pure business as usual for the oil and gas industry, therefore, the whole industry, like Wintershall Dea, will need to take positive steps towards a sustainable future. Companies who take early action will strongly benefit.
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