Interview with Aidan Murphy, Chairman & MD of Shell Egypt
I have worked for Shell since 1991 where I held a wide range of commercial leadership roles in both the Group’s upstream and downstream businesses including Vice President Portfolio & Growth, Unconventional Oil and Gas over the past two years.
During this time I lead new project development, negotiation and establishment of new ventures in many countries including Russia, Kazakhstan, U.S.A, Canada, China, Jordan, Morocco and Australia, serving on the boards of a number of these companies.
I obtained my BSc in Physics from the University of Manchester, and an MBA from the Manchester Business School.
Before joining Shell, I worked as a Wireline Field Engineer, working in North Sea and North America.
What positive signs are you witnessing in the steps being taken by government to revive the economy and boost investment?
The government is leading important reforms of both the economy and the energy market and I am proud to lead Shell in Egypt at such a significant moment. We recognise the significant challenges but are excited by the opportunities and Shell looks forward to playing an important part as a long term investor and partner of Egypt.
These efforts make me very proud and create a positive investors outlook for Egypt.
The recent Gas Market Reform work group created by Government is another manifestation of the commitment of the government to provide a new legal and regulatory framework to promote competition and facilitate additional gas supplies.
How do you view the gas pricing issue and how do you think it can be resolved?
Over the past decade Egypt has benefited from very low cost domestic supply of gas. However, the low cost gas is running out and new supplies in future will have a higher cost of production. At the same time, demand for electricity generation and domestic consumption is increasing dramatically. The good news for Egypt is that there remains substantial amounts of gas in the Western Desert and offshore, but higher prices are needed to develop these resources.
Shell is keen to bring additional gas on stream from its existing concessions as well as new exploration licenses in the Western Desert. Shell and its operating joint-venture, Badr El Din Petroleum Company (BAPETCO), have demonstrated a rapid hook up of new gas to the grid while development of difficult gas will require rapid implementation of Shell global technology to help unlock such challenging gas. We are looking for a win-win deal for the investor and the Government – discussions are ongoing – as the country will benefit from increased gas production.
What will be Shell’s priorities in Egypt over the next 5 years?
Shell and its operating joint-venture, Badr El Din Petroleum Company (BAPETCO), continue to invest to produce oil and gas from our existing assets to meet Egypt’s energy needs. In 2015 the Bapetco budget is around USD500mln, will produce over 120,000 barrels of oil equivalent per day, including approximately 10% of the gas consumed in Egypt. Although, we have operated many of these concessions for decades we believe more oil and gas can be extracted through application of advanced horizontal wells, waterflood technology, new completion technologies and also ongoing investment in the maintenance and development of the processing facilities such as Obaiyed and BED-3 as well as new plants such as Assil Karam as processing facility.
In addition, Shell has completed a large 3D seismic program in exploration blocks in Western Desert close to Matruh focused on identifying new mainly gas resources. The seismic will be processed using new advanced techniques to improve the understanding of the resources in place and improve the prospects for development.
We continue to work in partnership with the Government to deploy global technology to enable development of the more difficult oil and gas reserves that forms a significant part of Egypt’s potential whilst attaining operational efficiency such as the Apollonia pilot, which started this year.
How do you envisage the role of unconventional oil and gas in Egypt’s hydrocarbon future?
Egypt is in the very early stages of exploring its shale / tight oil and gas potential. We estimate a number of stranded gas assets in existing concessions in Egypt, and Shell with our partner Apache, are happy to have signed an agreement for the Apollonia / NEAG pilot project to test the potential of these stranded gas fields which require advanced technology. If this pilot is successful then it will help assess whether the very large gas resources in the Apollonia project can be developed economically.
Describe for us Shell’s current interest in unconventional resources in Egypt. What stage of development has the Apollonia pilot project reached?
Shell has been investigating “unconventional resources” in Egypt since the early 2000s, in both the Abu-Roash (shale, light tight oil) and Apollonia (tight gas).
In December 2014, Shell and Apache have reached an agreement with the Egyptian General Petroleum Corporation (EGPC) to begin a pilot project in the Apollonia formation of the Northeast Abu El Gharadig (NEAG) license area; a joint venture between Shell 52% and Apache 48% in the Western Desert. Apache is operating the pilot project, which is expected to take approximately two to three years and where we use state-of-the-art technology to test the future viability of shale / tight gas reserves within the NEAG concession area.
The project is currently in progress and we cannot speculate on anticipated reserves. Nevertheless, the agreement is a step forward in the development of Egypt’s domestic gas resources and in the long-term will contribute to meeting the country’s growing gas demand.
As Egypt makes the move from LNG exporter to importer, does Shell have any plans to supply LNG to Egypt?
Growing/diversifying natural gas supplies increase supply security, flexibility and long-term price stability. Liquefied Natural Gas (LNG) is the ultimate pipeline – greatly increasing flexibility, optionality, and mitigating security of supply and price volatility concerns. LNG bridges the distance between supply and demand, allowing markets to enjoy the benefits of growing gas supply (and unlocking stranded gas reserves). Seen through these lenses, we believe that LNG imports will help narrow the current gap between supply and demand in Egypt in the medium term and fuel the economic recovery plan.
The Government has taken a proactive step to ensure security of supply by procuring LNG imports. Shell is actively engaged with EGAS to support LNG for Egypt’s energy security.
Tell us about Shell’s social investment in Egypt and plans for the future.
Shell has an active social investment agenda in Egypt, among which is our flagship program Intilaaqah – running for ten years now – which provides entrepreneurship training for Egyptian youth. So far we have trained over 6,500 young entrepreneur and helped in the startup of around 700 small businesses across 14 Egyptian governorates cities.
Shell also supports human capital development through various programs with Egypt’s top universities such as Cairo, Ain Shams and Alexandria universities. We see a lot of potential in Egyptian youth and are committed to support them even further.
We also have an active road safety program, where we provide defensive driving training for school bus drivers. This program has been running since 2006 and we trained over 1,000 drivers.
What message would Shell like to send to the Government representatives and delegates at Intergas VII?
Shell is proud to take part at such prestigious event as Intergas as it is a great platform for key industry players to meet and exchange views on the latest market updates and trends. We see a great potential in Egypt and look forward to partner with the Egyptian government to meet the country’s energy needs.
Intergas takes place in Cairo on the 24-26 November 2015 and there are still tickets available. Find out more about this event here.
(CWC Group Press Release)