Production Sharing Agreements (PSAs) are one of the most common structures used to regulate exploration and production of oil and gas reserves. PSAs are often used across the developing world as they strike a balance between full nationalization of a country’s oil industry and other structures where royalties are assessed and taxes paid. In this issue of Egypt Oil & Gas, we will explore the subject in depth, giving particular attention to contracts’ length and benefits and limitations of cost recovery.
Cost recovery is considered a cornerstone of Production Sharing Agreements (PSAs); as operators of the concession or international oil companies (IOCs) bear all operation and capital expenditures in a new concession as well as the risks, cost recovery has become a main mechanism through which the contractors are to recover their costs and generate profits.
Production Sharing Agreements (PSAs) in Egypt govern the relationship between the government and international oil companies (IOCs) for the exploration and field development of oil and gas. The agreements seek to strike a balance between Egypt maintaining sovereignty of its natural resources and the IOCs interests to maximize profit.
Egypt Oil & Gas sits with Maurizio Coratella, Edison Egypt’s General Manager for an exclusive interview
There are thousands of politically alienated and radicalized militants joining its ranks. There is an army of its supporters active on social media spinning its messages. They are releasing videos as gruesome as they are stylistically and technically advanced. Most notably, the group is shocking the world with its ability to rapidly expand its territory. This is IS, the self-proclaimed Islamic State of Iraq and Levant, a terrorist organization born from the ashes of Al-Qaeda in Iraq that is seeking the establishment of a new caliphate.
Just a few years ago, it was inconceivable to think Egypt would ever look to Israel, or for that matter anyone, to import natural gas. Under a much criticized agreement with the Mubarak administration, Egypt, with copious amounts of natural gas reserves, exported gas to Israel via pipelines at a reduced market rate. Four years and two revolutions later, Egypt and Israel find themselves with reversed fortunes.
Egypt is the largest oil and natural gas consumer on the African continent. Its large population of 86 million –second only to Nigeria– consumed 20% of oil and 40% of natural gas in Africa in 2013. However, not all of the petroleum products used like gasoline, diesel, and jet fuel are refined domestically. According to OPEC’s annual statistical bulletin, Egypt imported 170,000 b/d of petroleum products in 2013. A ministry of petroleum official in a statement to Reuters last August confirmed that Egypt imports $1-1.3 billion worth of petroleum products per month. Despite recent agreements with gulf countries such as the UAE to provide Egypt with petroleum products at discounted rates, grants, and credit arrangements, the imports are still a great financial burden on the state and they further reduce its foreign reserves. If those products were refined locally, this would result in a significant price reduction and would provide some measure of relief for the state budget. The main question now becomes: Can Egypt produce those petroleum products in local refineries? If yes, then why resort to expensive imports? Answering that question requires understanding both the current technical and economic standing of Egypt’s refining industry.
PwC Egypt is pleased to announce its Global EU&M industry perspectives on the 18th Annual Global CEO Survey. As part of the Global CEO Survey research, PwC carried out 72 interviews with Oil & Gas CEOs from 39 countries, 73 P&U CEOs from 35 countries, and 25 Mining CEOs from 18 countries. PwC spoke face-to-face with the following CEOs:
Oil & Gas CEOs
Dr. Javier Genaro Gutiérrez Pemberthy, Chief Executive Officer, Ecopetrol, Colombia
Abdulrazaq Isa, CEO, Waltersmith Group, Nigeria
Power & Utilities CEO
H.E. Sim Sitha, Director General, Phnom Penh Water Supply Authority (PPWSA)
Andrew Mackenzie, Chief Executive Officer, BHP Billiton, Australia
Increasing power generation by using MPUs turbines (Mobile Power Units) with ISO power of 8.4 MW to cover the required power at karama fields.