Unlocking regional potentialNovember 23, 2021
Nicolas Katcharov, Energean’s Egypt country manager, talks to The Energy Year about the company’s development plans in Egypt and the challenges North Africa faces in harnessing its energy potential. Energean is a gas-focused energy company with operations in the Mediterranean and UK North Sea.
Could you tell us about your Abu Qir field development plans?
The Abu Qir concession is the oldest gas production area in the Mediterranean Sea, operating for almost 50 years and located in the shallow waters of Abu Qir Bay in the West Nile Delta of Egypt. Despite its maturity, it remains one of the largest gas producing hubs in Egypt, and comprises three fields (Abu Qir, North Abu Qir and West Abu Qir) and a network of six production platforms interconnected by pipelines.
Energean has a 100% working interest in the concession and is in the process of evaluating the possibility of tying back nearby fields with proven or possible reserves into the existing Abu Qir infrastructure. This would not only bring economic benefit in terms of additional revenues to Energean, but also operational efficiencies and the extension of the field life the Abu Qir concession through to the expiry of its licence in 2023.
We are applying a similar strategy to our developments in the North El Amriya and North Idku concessions, tying in their proven reserves to Abu Qir infrastructure through four subsea wells. On a standalone basis, it’s likely that the individual developments would likely be uneconomic even with the higher gas prices that we’re currently experiencing. This reinforces the attractiveness of our tieback approach and we plan to take this approach with other reservoirs situated at reasonable distances around Abu Qir in collaboration with our Egyptian partners.
The final investment decision to invest USD 236 million in North El Amriya and North Idku project was taken immediately after Energean acquired the former Edison E&P portfolio back in December 2020, highlighting both Energean’s ambitions in Egypt and the quality of the proposed project. Following a tender for subsea development services, the EPCI contract was awarded to TechnipFMC in April 2021 and the project has been progressing on schedule towards our objective for first gas in H2 2022.
Our experiences with this project have provided us with a template for the successful implementation of similar processes in the future. Efficiency is at the heart of our approach and we streamlined the typical complex tender process by packaging the engineering and execution into a single EPCI contract with a competitive tender process. For further extensions around North El Amriya, North Idku and Abu Qir, economic and legal evaluations will determine whether an additional scope of work with TechnipFMC or a new tender is launched.
What recent developments have taken place at your other concessions?
From the three deepwater exploration concessions Edison previously held, North Port Fuad was released in 2018, with North Thekah released after drilling discovered only non-commercial quantities of hydrocarbons. Currently we hold a 30% interest in the second exploration phase of North East Hap’y concession alongside Eni. The targeted structure is comparable to Zohr’s carbonate reservoir and we expect a drill-or-drop decision to be taken by December 2022.
Generally, we prefer the use of partnerships during more complex projects, which reduces our financial exposure whilst still providing us with active interest in high-potential developments. We will adopt this approach in the Abu Qir deep horizon reservoir development, which we would also intend to tie into the Abu Qir infrastructure should there be a successful gas discovery.
Having become the first independent E&P company to commit to a net-zero-by-2050 target, Energean has undertaken various projects to accelerate the pursuit of this strategy. Specifically in Egypt, we see potential to develop carbon capture storage in depleted hydrocarbon reservoirs particularly as global trends around climate change continue to shift towards the attribution of economic value to carbon dioxide emissions.
We will also be benefitting from a similar pioneering project currently ongoing within the Prinos concession in Greece, where a maturing field could be transformed into a CCUS hub, acting as CO2 storage with the additional potential to utilise natural gas to produce commercial hydrogen or blue ammonia.
Can you give us an overview of Energean’s production strategy?
We currently produce approximately 160 mcf [4.53 mcm] per day of gas from Abu Qir with around 3,000 boepd of condensate, and the NEA/NI concession will bring approximately 90 mcf [2.55 mcm] more by the end of next year. There is potential for these numbers to increase further as we continue to explore and evaluate additional opportunities to develop reserves to extend the life of the concession.
What challenges does North Africa face in developing its energy potential?
Energean is focused not only on Egypt, but on the entire Mediterranean region. We partner on projects with several countries in North Africa and the Middle East and have a deep understanding of the local cultures, constraints and opportunities.
We believe that it is in the common interest of all stakeholders to join efforts to interconnect regional gas reserves and markets in the most economically efficient way. Through utilising our domestic resources and workforce and investing in the skills and competences of the local industries, we can unlock the potential of the region to become a leading energy producer and exporter.
The provision of mass electrification and affordable energy is crucial to stimulating the socioeconomic development of all countries and natural gas will play a fundamental role as a cleaner, low carbon transition fuel driving this growth.
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