Cyprus must redirect its energy policy - CYPRUS MAIL

May 10, 2020

Charles Ellinas

The international oil and gas companies (IOCs) have finally confirmed postponement of planned drilling in Cyprus’ EEZ into 2021. It is understood that the energy minister is looking into extending Eni/Total’s contracts to facilitate this.

The press coverage that followed, stated that it is “important to note that the oil companies are not pulling out”, but “they have merely postponed their planned drilling in response to the many problems currently being faced.”

But is such a complacent view justified? Where is this going? Let’s look at the evolving facts.

International oil companies begin submitting offers for Shell’s Egypt assets - ENTERPRISE

Awarded Concessions 2018 Licensing Round

Tuesday, 4 February 2020

M&A WATCH- IOCs bidding for Shell’s Egypt assets: Royal Dutch Shell has begun receiving offers from international companies for the upcoming sale of its onshore upstream assets in Egypt’s Western Desert, the local press reports, citing an unnamed industry source. The source did not say how many offers have been submitted so far, or which companies have expressed their interest in Shell’s Egypt portfolio. Shell is looking to close the sale, which could net as much as USD 1 bn for the company, by the end of the year.

Background: Shell had said back in October it is planning the divestment “in order to fully concentrate on growing its Egyptian offshore exploration and integrated gas business.” The company’s portfolio in the Western Desert includes stakes in 19 oil and gas assets including the Badr El Din and Obaiyed area, as well as the North East Abu El Gharadig, West Sitra, Bed 1 gas, and West Alam El Shawish concessions, according to the company website. Shell is not divesting from its offshore assets, downstream lubricants, or its share in Egyptian LNG.

EGAS to sign 7 new gas exploration agreements with int’l companies in 4Q2019 - ENTERPRISE

Sunday, 22 September 2019

State-owned EGAS expects to sign seven new gas exploration agreements with international companies worth at least USD 712 mn during 4Q2019, Chairman Osama El Bakly said, according to a ministry statement. 

Companies will drill 23 exploratory wells under the terms of the agreement, he said, without naming the concessions or companies involved. 

El Bakly also said that Egypt’s natural gas production hit a record 7.2 bcf/d in September, up from 7 bcf/d at the end of June.

Egypt’s arrears to foreign oil firms fall $900m - MIDDLE EAST MONITOR

July 12, 2019 at 4:04 pm

The total arrears that Egypt owed to foreign oil companies dropped to $900 million at the end of June, down from $1.2 billion a year earlier, the country’s Minister of Petroleum and Mineral Resources Tarek El-Molla told Reuters yesterday.

The minister added that Egypt would pay the remaining dues “soon, God willing”, but did not set a specific date for payment.

The monthly bill of arrears paid to foreign companies amounts to $700 million,” he said.

Arrears have fallen by 25 per cent from their level at the end of the 2017/2018 fiscal year when they stood at $1.2 billion. In June 2017, Egypt owed $2.4 billion to foreign companies, a sum which has now fallen by 62.5 per cent.

Eni, BP, Shell and Edison have dominated Egypt’s oil and gas exploration and production activities in recent years.

Foreign oil companies’ arrears had accumulated after the January 2011 uprising that ousted President Hosni Mubarak to reach $6.3 billion in the 2011/2012 fiscal year.

Egypt pays Dana Gas USD 111 mn in arrears in 9M2018 - ENTERPRISE

Thursday, 15 November 2018

Egypt paid Dana Gas USD 111 mn in arrears owed in its Financial Results For 9M & Q3 2018, the company said in its earnings release on Wednesday. 

The story comes as Egypt has been stepping up payments to international oil companies (IOCs), with arrears to oil producers have fallen to their lowest levels yet, coming in at USD 1.2 bn at the end of FY2017-18. 

The company noted that its production output in Egypt fell to 34,500 boepd in 9M2018, from 39,600 boepd in 9M2017.

The Company's 9M 2018 revenue increased 6% to $351 million (AED1,287 mm) from $330 million (AED1,210 mm) over the same period last year. Correspondingly, Q3 2018 revenue increased 6% to $115 million (AED422 mm) from $108 million (AED396 mm). The increase in revenue, driven by higher realised hydrocarbon prices, helped offset production decreases in Egypt and the UAE.

Oil Ministry expects USD 10 bn in new oil and gas investment during current fiscal year - ENTERPRISE

Sunday, 11 November 2018

INVESTMENT WATCH- Oil Ministry expects USD 10 bn in new oil and gas investment during current fiscal year. 

Oil Minister Tarek El Molla said on Saturday that his ministry expects some USD 10 bn in new investment in the sector in 2018-19. The figure includes both funding for both exploration and production activities. 

The minister said high appetite among international oil companies (IOCs) for Egyptian opportunities underscores their confidence in Egypt’s improved investment climate. 

The minister expects IOCs to bid in an upcoming sale of exploration blocks in the Red Sea region, saying it would be the first time blocks would be on offer in that region.

Egypt plans to pay USD 200-500 mn in arrears to oil producers by end-September. Will small players get any of it? - ENTERPRISE

Tuesday, 3 July 2018

Egypt to pay USD 200-500 mn in arrears to oil companies by the end of September: EGPC plans on paying USD 200-500 mn in arrears to oil producers by the end of September, EGPC sources say. EGPC is in talks with the government to arrange the financing, according to the sources. The Finance Ministry had reportedly agreed back in May to issue letters of assurance for two loans to the EGPC worth a combined USD 850 mn to repay IOCs. Sources had also previously said that a USD 200 mn payment would be made to IOCs in June. Egypt’s total arrears had been brought down to USD 2.1 bn as of February.

Will smaller players get any of it? Our friends in the industry noted that while the state’s backlog of payments to the industry is declining, that’s because large players including the global majors have been paid out at the expense of smaller local and regional fish.

First private sector LNG import license to be issued at the end of Feb -sources - ENTERPRISE

Tarek El Molla interviewed by CNBC - Feb 2018 Egypt

Thursday, 15 February 2018

New natgas regulator to issue first LNG import license before the end of Feb? The newly-established natural gas market regulator is expected to issue the first LNG import license to the private sector before the end of February, when its board meets for the first time, sources close to the matter tell Al Shorouk. While it remains unclear which company will make the first draw, we had heard last year that EGAS gave BB Energy, Fleet Energy, and Qalaa Holdings’ TAQA Arabia preliminary approval on natural gas import licenses, following the issuance of the Natural Gas Act, which reduces the state’s role to regulator and opens the market to the private sector. Four other unnamed companies are reportedly also seeking import licenses.

Fees for using state infrastructure also to be announced: The board, whose full lineup will be announced next week, will also discuss the fees private sector players will have to pay to use the state’s natural gas grid under the act, the sources also said. News of the meeting comes one day after Ismail Cabinet issued the executive regulations to the Natural Gas Act, officially bringing it into effect. Oil Minister Tarek El Molla, who will chair the board, had previously said that the state will fully exit the market by 2022.

Egypt inks 83 oil, gas deals with foreign firms in 4 yrs: Molla - EGYPT TODAY

Mon, Sep. 25, 2017

CAIRO – 25 September 2017: Foreign firms have entered in 83 agreements for oil and gas exploration and production with the Ministry of Petroleum since the June 30 Revolution of 2013, Minister of Petroleum Tarek el-Mola said.

During the minister’s meeting with the French Chamber of Commerce in Egypt, Mola highlighted that this number is a record in the history of the petroleum industry in Egypt.

The confidence of foreign investors in the Egyptian economy increased after seeing the economic reforms carried out by the government, the minister said.

Mola added that the new strategy for developing mineral resources was prepared by the Ministry of Petroleum with the aim of benefitting the Egyptian economy as much as possible from these resources.

IOCs raise investments in Egypt to USD 10 bn this year – El Molla - ENTERPRISE

Sunday, 17 September 2017

International oil companies have raised their investments in Egypt to USD 10 bn this year on the back of payments the government have been making to arrears it owes them, Oil Minister Tarek El Molla tells Al Borsa on Saturday. 

Arrears had fallen to USD 2.3 bn, the lowest it has been since 2013, El Molla stated. The ministry plans to issue new tenders and auctions for concessions, he added.

Nuclear next for Egypt - PETROLEUM ECONOMIST

6 September 2017Gerald Butt

The country's expanding energy mix is aimed at ensuring steady electricity supply, thus minimising the risk of social unrest

Egypt is going energy mad. The country is on course soon to be self-sufficient once more in natural gas, with the mega-giant Zohr offshore gasfield due onstream in December. It's also pressing ahead with a number of renewables ventures. Now, Egypt has committed itself as well to nuclear power.

Like several other Arab countries, Egypt has been toying with the idea of a nuclear project for years without a clear notion of when and if it might proceed. In November 2015, the idea began to take shape when Egypt and Russia signed an intergovernmental agreement to work together on a nuclear scheme. That was the signal for the start of negotiations between the two sides. Almost two years later the documents are all ready.

Israel needs a plan B for gas - IN CYPRUS / CYPRUS WEEKLY

July 23, 2017
Gina Cohen

Israel’s Ministry of National Infrastructure, Energy, and Water Resources postponed the oil and gas licence exploration tender for a second time in June, giving a new deadline of November 15. The Ministry of Energy is not at fault. It gets an ‘A’ for having the courage of its convictions, for holding the tender under very difficult circumstances, and for the work, effort and professionalism put into the marketing process. Yet despite the fact that some of the world’s major companies have bid in the tenders held this year in Cyprus, Egypt and Lebanon, they decided to give Israel a wider berth. We must therefore conclude that, under the current circumstances, nothing is about to change that will entice companies to bid by the new deadline of November 15. We need to adopt a new path, as postponing the tender and adopting a ‘more of the same’ approach is unlikely to lead to different results. There are around seven pertinent reasons behind the ongoing postponements of the tender.

El Molla: Five IOC’s are carrying out $750 million Seismic Survey of Red Sea - ENERGY EGYPT / EGYPT OIL & GAS / AL MAL

June 22, 2017

Egypt’s Minister of Petroleum and Mineral Resources, Tarek El Molla, stated that Ganoub El Wadi Petroleum Holding Company (GANOPE) had agreed with five International Oil Companies (IOC’s) six months ago to conduct a $750m seismic survey in the Red Sea to prepare reports on the reserves of oil and gas in the territorial waters after the re-demarcation of the border With Saudi Arabia, according to Al Mal.

Moreover, El Molla highlighted, during the annual Iftar at the Ministry, that the IOC’s will submit the reports by the end of the year. Then, the surveyed areas will be offered through a general tender for exploration. He also pointed out that the re-demarcation process will be beneficial like the previous re-demarcation with Cyprus, which was followed by discovering Zohr field.

In related news, El Molla attended the 9th meeting of the Higher Committee for following up on the development of Zohr field project and reviewed the construction work in Zohr as 71% of the project was completed in May 2017.

Oil Minister meets with IOC delegations - ENTERPRISE / AL SHOROUK

Sunday, 19 February 2017

Oil Minister Tarek El Molla met with delegations from several international oil companies, including France’s Total and the French Institute of Petroleum (IFP Energies nouvelles, IFPEN), to discuss increasing the scope of their Egyptian investments, Al Shorouk says.

Total are looking to increase investments at their North El Hammad concession, he said, while the French Institute of Petroleum are interested in entering the Egyptian market. Additionally, Halliburton confirmed they are committed to their operations in technology, training, and increasing machinery efficiency.

Oil companies bullish on Egypt, eyeing more investment, discoveries - REUTERS

The logo of oil company Eni-Saipem is pictured on a barrel in
Rome, Italy, March 5 2016 - REUTERS/Alessandro Bianchi

Tue Feb 14, 2017 | 5:58pm GMT
Lin Noueihed, Eric Knecht, CAIRO; Writing by Asma Alsharif; Editing by Susan Fenton, Greg Mahlich

Major international oil companies say they plan to step up their investments in Egypt, expecting to find more oil and gas now that ENI's (ENI.MI) giant Zohr gas discovery has put its Mediterranean waters on the map.

Once a net gas exporter, Egypt has turned into a major importer in recent years as growing domestic demand outstripped production, but the discovery of the 850 billion-cubic metre Zohr field in 2015 is expected to change that.

The field is expected to come into production by the end of the year and will save Egypt billions of dollars in hard currency that would otherwise be spent on imports.

IOC receivables down to EGP 3.5 bn by 2016’s end -El Molla - ENTERPRISE / AL SHOROUK

Wednesday, 4 January 2017

Receivables due from EGPC to IOCs have dropped to USD 3.5 bn in 2016’s end, down from USD 3.6 bn at the end of September, Oil Minister Tarek El Molla said. The government bought USD 5.4 bn worth of crude and natural gas from IOCs last year and paid USD 5.5 bn, El Molla clarified, according to Al Shorouk. He said the Ministry is gearing up to make another round of payments to IOCs in order to encourage them to increase investments in Egypt.

Oil Ministry makes USD 100 mn payment to smaller IOC - ENTERPRISE

Sunday, 18 December 2016

The Oil Ministry made a USD 100 mn payment to IOCs for overdue receivables, Al Mal reported. The payment was not made to major operators, but to smaller companies, including Circle Oil, TransGlobe Energy, and SDX, a source said. The source noted specifically that Circle Oil got 30% of its total receivables with a payment of USD 12-15 mn. Major players BP, Shell, Eni, and Apache are due a payment soon, the source added. EGPC said it will begin making monthly payments to the IOCs starting from 2017.

Israel to offer 24 blocks in first offshore round - INTERFAX

The 24 blocks on offer in Israel’s offshore licensing round.

By Verity Ratcliffe 24 August 2016 11:28 GMT

Israel is hoping to build on the hype surrounding exploration in the East Mediterranean with its first offshore licensing round. The Ministry of National Infrastructures, Energy and Water Resources (MIEWR), the government agency responsible for overseeing all petroleum-related activities in the country, intends to approach IOCs in September before the official launch of the round in November.

The areas in the licensing round offer high gas prospectivity, but IOCs may need convincing because of the geopolitical situation and the uncertainty surrounding possible routes to market for gas exports.

A total of 24 blocks, each covering up to 40,000 hectares, will be on offer. Israel’s Petroleum Council approved the delineation of the exploration blocks on 10 August. The government hopes the round will draw more IOCs to the country’s oil and gas sector while promoting competition and transparency.

IOCs have been invited to meet the Israeli minister of energy, Yuval Steinitz, at roadshows in London on 1 September and Singapore on 6 September. The ministry will hold an information session in Houston after that. Other dates may be added, according to IHS Energy, which is advising the government on the round. Public holidays are likely to stymie progress in October so the round will officially open in November.

"Significant" interest in Cyprus 3rd Round - Minister Lakkotrypis - NATURAL GAS EUROPE

Minister Lakkotrypis and Vice-President Sefcovic

May 26th, 2016

Yiorgos Lakkotrypis, the Republic of Cyprus Minister of Energy, Commerce, Industry and Tourism, told an event hosted by Natural Gas Europe in Brussels on May 25 that he sees strong interest from international oil companies (IOCs) in the country's recently launched offshore licensing round. The event was also addressed by the EU's energy union commissioner Maros Sefcovic.

Eni's discovery of the giant Zohr field offshore Egypt was significant for nearby Cyprus, the minister said. Zohr was based on carbonate structures and ancient reefs, and similar key structures had been identified around the Eratosthenes Seamount in Cyprus's exclusive economic zone.

Medserv seeks bond, equity funding expansion strategy | The Times of Malta

Thursday, December 31, 2015, 00:01 by Edward Rizzo

Medserv’s need for further funding was first disclosed to the market on October 8 when the company announced that it entered into a conditional share purchase agreement for the acquisition of the three METS companies for a total of $46 million. In this detailed announcement, providing information on METS and the terms of the proposed transaction, Medserv had clearly indicated that it aims to finance the acquisition through a mix of debt and equity financing.

The announcement did not provide details on the debt already within METS and how the $46 million will be split between an equity injection by existing or new shareholders and total debt funding. In the circular to shareholders, sent in anticipation of the extraordinary general meeting that took place on December 3, it was mentioned that the minimum amount of the additional equity would be of €15 million.

Finally on December 21, Medserv announced the terms of the rights issue and the bond issue after obtaining approval from the MFSA.

I will not go into the details of the bond and rights issues, the pricing of these issues or the merits behind the decision taken by the executive directors. Instead, my article is intended to shed light on Medserv’s ambitious growth strategy.

Shortly after the MFSA approval of the Dual Issue Prospectus, Medserv held an information meeting for financial intermediaries and chairman Anthony Diacono provided a detailed overview of the intended plans going forward.

Diacono started off the presentation by explaining the current services portfolio of Medserv. The core business to date has always been the support services provided to international oil and gas companies via the logistics bases. Currently, Medserv operates from its base in Malta supporting two International Oil Companies (IOCs) and other subcontractors; it provides support to ENI Cyprus via a three-year agreement (extendable for a further two years) from its base in Larnaca, Cyprus; and in 2015 it provided port facilities in Greece, mainly to assist a client in the safe anchorage of vessels.

Another service which was always provided to international oil and gas companies was the manufacture of drilling fluids which are required during exploration and/or production programmes. This ‘mud-mixing’ facility is available at the bases in Malta and Cyprus.

Recently, Medserv branched out into the provision of maintenance and engineering services. Over the past two years Medserv was awarded a number of contracts to provide maintenance services to platforms being used offshore Libya. Another contract awarded to Medserv some months ago via the Tripoli office will extend into 2016.

In 2014, Medserv also invested a sizeable sum into Malta’s largest solar farm as it installed 8,000 PV panels across its Malta base generating annual revenue of circa €520,000.

The long-term plan of Medserv is to increase its geographic presence, strengthen its portfolio of services and expand its customer base further with additional international oil and gas companies and subcontractors.

The strategy therefore continues to focus on strengthening the core business, i.e. the support services provided to international oil and gas companies via the logistics bases. Apart from the present facilties in Malta, Cyprus and Greece, Medserv is seeking expansion into other regions. During the meeting, the chairman confirmed that Medserv is currently seeking a strategic partner to set up a base in Egypt after it was approached by two major IOC’s ahead of some important tenders being issued. This coincides with the announcement made by ENI a few months ago that it discovered the “largest ever” natural gas field in the Mediterranean Sea offshore Egypt.

The ‘supergiant’ well (the Zohr field) is the largest gas discovery ever found in Egypt, as well as in the Mediterranean Sea, and could become one of the world’s largest natural gas finds. It was also reported in the international press that the Egyptian General Petroleum Corporation agreed with ENI to start producing from the Zohr gas field by 2017.

Earlier this year, Medserv had also mentioned the possibility of works in Portugal. The chairman stated that a tender was submitted and if it is awarded to Medserv, a temporary ‘pop-up’ base will be set up to assist the IOC in the exploration of one well. Although this may not be a sizeable contract at the outset, it could become more beneficial should the exploration prove successful.

A possible expansion of another support base, this time in the Caribbean, would be more sigfnicant in terms of geographic expansion. The chairman claimed in the recent meeting that a tender for the setting up of a logictics support base in Trinidad & Tobago had been submitted to support the large operation of BP involving several offshore platforms and drilling activities. Medserv is reportedly now also on the global list of approved logistics contractors of BP. This will also help to reduce Medserv’s current dependency on ENI given the significant work by this IOC in the Mediterranean. The prospectus also indicates that earlier this year Medserv made a proposal to the National Energy Corporation of Trinidad to provide and operate a mud plant and bulk silos/brine plant within one of their ports.

Meanwhile, the imminent acquisition of METS fits in perfectly with Medserv’s long-term plans since it helps in widening its geographic presence and achieves diversification in its service portfolio, given the focus on precision engineering. It also extends the client base given the various blue-chip clients utilising the services of METS.

Medserv also aims to explore a number of cross-selling opportunities via the METS acquisition. One of the main attractions of the acquisition is the ownership of the VAM licence in two of its locations allowing METS to provide pipe threading services. This is reportedly a very highly specialised offering and the licence is difficult to obtain given stringent criteria including expertise and volumes of pipes to be serviced. Following the acquisition of METS, Medserv are confident that they will be able to obtain such a licence also for the Malta base within 18 months. This will enable Medserv to introduce this service across the Mediterranean region thus opening a new line of business in a region where exploration and production activity in the oil and gas sector is expected to boom in the next couple of years.

Another cross-selling opportunity is the manufacture of drilling fluids, which is a core competence of Medserv and which is currently not provided by METS.

Additionally, via the METS acquisition, Medserv also intends to explore the possibility of providing services to the major IOCs seeking to work on new projects in Iran. Iran is the world’s fourth-largest holder of crude oil reserves and some very significant exploration/ production contracts (both onshore and offshore) will be available to the IOCs once economic sanctions are lifted in early 2016.

During the EGM held on December 3, which was convened to approve among other resolutions the METS acquisition, a number of shareholders present questioned the financial benefits expected from this imminent acquisition in the Middle East, especially given the business downturn experienced over the past two years. Unfortunately, no additional information on the current trading performance was provided in the Dual Issue Prospectus published last week.

In the coming months Medserv’s shareholders will be eagerly awaiting the publication of the company’s 2015 financial results to get to know the extent of the superior financial performance achieved compared to earlier forecasts for the year and more importantly the publication of the Financial Analysis Summary due by June 30, 2016 providing the financial projections of the Medserv Group for 2016. This should also include the initial contribution from METS. Moreover, shareholders will be expecting news on developments related to the company’s ambitious growth strategy as well as further updates with respect to possible strategic investors following the EGM held on October 12 which authorised the directors of Medserv to divulge confidential information to such investors.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.

© 2015 Rizzo, Farrugia & Co. (Stockbrokers)Ltd. All rights reserved.
Edward Rizzo is a director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.

SOURCE