Osama Abdel Halim, Egypt and Libya Area Manger for Halliburton talks about the growing importance of the Egypt market and why collaboration is key to its growth strategy.
How important is the Egyptian market for Halliburton?
Egypt is a member of OAPEC (Organisation of Arab Petroleum Exporting Countries), which includes 11 different Arabian countries of the Middle East and it has one of the region’s oldest upstream sectors. With low operating costs – at less than US$10 per barrel for onshore production – and a favourable exchange rate, the country has managed to attract new interest, with a spate of recently-announced or expected deals.
Halliburton Egypt was founded in 1968 to provide oilfield services in the region. With more than 1,000 employees the company maintains a strong regional footprint to collaborate with our customers around solutions that maximise their asset value. We’re engaged with almost all the E&P operators in Egypt and continue to strengthen our investments in the country as a result of the positive outlook and demand for new technologies.
Did you see increased activity in Egypt last year?
Generally activity levels in 2017 have slightly improved. Compared to 2015 and 2016, production output has already been on the rise this year and the government released figures show 5.1 billion cubic feet per day of production, a 0.7 billion cubic increase from last year, thanks to the opening of new major projects. The Zohr field completed development procedures last February and began production before the end of the year, a critical step toward Egypt’s goal of natural gas self-sufficiency by the end of 2018.
What is your outlook for the Egyptian oil and gas sector in 2018?
After a decade of regulatory and energy policy changes, Egypt is on track as the largest and fastest growing natural gas market in Africa and is enjoying a re-invigorated upstream gas sector based on the giant Zohr discovery, approval for West Nile Delta (WND) and a range of other gas developments tied back to spare gas process plant capacity.
Future competitiveness and efficient functioning of the Egyptian gas market, both domestically and within the increasingly integrated global gas and LNG markets, relies on aligning of several stars. In summary, significant gas demand growth is likely to be driven by growth in gas-fired power generation, growing industrial and chemical sector demand and an increased requirement for gas for LNG exports. Longer term, if the upstream sector in Egypt and the wider region is able to capitalise on cost efficiencies and better use of regional gas infrastructure, LNG exports from Egypt may become more attractive, especially if done on positive marginal cash flow rather than based on new capital.
What projects are you focusing on in Egypt?
Halliburton is focused on strategic offshore deep water projects such as the Zohr development, West Nile Delta and others. Additionally, we are also engaged with major onshore operations in the Western Desert for a number of operators.
How will Halliburton be able to take advantage of the returning optimism to the industry?
Halliburton’s key factor for success is adhering to and implementing our unique value proposition which is continuous engagement and collaboration with the customer to provide solutions that maximise their asset value. Collaboration is what makes Halliburton unique as we understand our customer’s drivers in much greater detail than other service companies. We provide explicit information that can help increase production and lower costs. This is Halliburton at its best, and it shows customers the clear difference between our approach and our competitors.
How can you help the Egypt oil and gas industry expand?
The Egypt market is diversified operationally and covers a wide array of areas such as deepwater, mature fields and unconventionals. Several challenging applications are currently taking place including high pressure and high temperature wells which require specific technologies to withstand harsh environments and are vital to successful and efficient operations. By providing customers with the right solution that aligns with their drivers, we are able to help increase production and lower costs, to ensure the development and production of Egypt reservoirs are profitable and grow long-term.
How did you manage to deal with the downturn?
The oilfield services sector in Egypt was affected by the downturn in global oil prices and the impact was more substantial than previous downturns.
Many companies changed their operation strategies, reduced budget spending and directed investments to low cost onshore projects that can deliver quick cash flow and have low risk end exposure. Halliburton focused on efficiency by removing waste from our processes, doing more with less and implementing a continuous improvement strategy across the company to drive new ideas that reduce costs while enhancing service quality. We believe that the company is strongly positioned to provide customers with solutions that drive greater returns.
Are you seeing an improved drilling market in Egypt?
International investment institutions and other companies are watching the developments in Egypt with a hopeful eye. Egypt is expected to experience significant economic improvement and a decrease in inflation rates thanks to increased foreign spending, mostly in oil and gas, and substantial interest rate cut by the Central Bank of Egypt.
According to a report on the Egyptian economy more than half of the foreign $4.1billion in direct investment in the fourth quarter of 2016 went to the oil and gas sector. Halliburton is optimistic in the long-term viability of Egypt’s reserves, but the short-term drilling market is expected to remain flat during 2018 unless a major oil price improvement occurs which might have a quick impact on onshore drilling activities in Western Desert Area.
What new technology are you looking to introduce this year?
Halliburton is planning to introduce several key technologies for the deepwater, unconventional and mature fields market. They include:
• DecisionSpace – Virtual Reality
• JetPulse High-Speed Telemetry Service
• SmartPlex Downhole Control System
• SPECTRUM FUSION Hybrid Coiled Tubing System
• Turbopower Turbodrills
How important is Egyps for the Egyptian oil and gas market?
It’s extremely important as EGYPS is North Africa’s most important oil and gas exhibition and conference. It is the gateway to new opportunities within the country and presents an all-inclusive platform where buyers meet suppliers, visitors meet industry trade professionals and delegates learn from leaders within the global oil and gas industry. Halliburton is proud to be a sponsor of the event and share how our technologies can help operators increase production and lower costs.