Gas Competence SeminarMaputo, Mozambique – Septembre 2015
FUNDAMENTALREQUIREMENTSFOR MARKETDEVELOPMENT
Akmal M Zaghloul, MBABusiness Development Director
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Energy Dimensions in Market Development
Engine for Economic Growth (High Correlation: Energy Consumption & GNP)
Facilitator of Social Progress
Key to Poverty Reduction
Employment Generation
Promotes Gender Equality
Vital Input in Production (All Sectors of Economy)
Increasingly Becoming a Need Rather than a Luxury
Key Element for Attracting Foreign Investment
Foreign Exchange Earner
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Market development challenges
Energy Mix
Energy Pricing Crisis
Supply / Demand
Infrastructure
Legal, Governance & Regulatory framework
Social Impacts
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Stages of Gas Market Development
Market Creation Market Development Mature Market (0-15 years) (15-40 years) (after ~40 years)
Undeveloped gas reserves; More supply options; Abundant supplies;Small market; Rapid demand growth; Demand saturation;Limited infrastructure; Heavy investments in
infrastructure;Developed infrastructure;
Integrated Structure; Producers sell some gas directly to buyers;
Unbundled supply chain;
monopoly-monopsony operations;
Third party access; Gas spot market;
Large market competition; Retail competition;
Heavy regulation or state participation
Regulation manages competition;
Minimal government intervention to sustain competition
Assists entry of new players
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Factors affecting level of development
Political differences
Different levels of economic development
Non-existance of own natural gas resources
Unavailability of foreign natural gas resourcescaused by their distance or a distance of supplygas pipelines
Availability of other own / imported energyresources
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Egypt’s Gas Industry Milestones
In 2014, Natural Gas share in Egypt total Energy Consumption: 52.5%
1st gasDiscovery
1967 1976 1981 1992 1996 2003 2012
1st
Industrialcustomer
1st
Residentialcustomer
1st CNG Vehicle
Private LDC
1st Gas Export
1st FSRUTender
2015
1st LNG import
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New Exploration Concession Agreements
56 new upstream Exploration agreements signed$12 billion minimum commitment
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Accelerate Existing Gas Development
Total Investment: $21.8 bn Total Production: 3,600 MMSCFD Total Condensate Production: 86.7 MBBL/D
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Abu sir
West Abu Qir
North Idku
RavenScrab/safron
LNGDamietta
Arish &El masaid
Baltem
Port said
Hap’y
Theka
North Bardwell
Akhen
Naf
Roseta
El Sheikh Zowayed
East Port Said P.S & Ind. Area
East Gas
Flower
North SinaiHelm
Temsah
Talkha
Shabshir
Abu MadiAbu Qir
Abu Hommos South El Mansoura
Mahmudiya
Qara
Tanta
SouthBelquas
Abu sultan6 October
QusinaBanhaSadat
Suez
A’youn Moussa
Mostorud I-ATebbin
Koraymat
Ras BakrBeni Suef
Za’frana
October
Unit 103El Menia
Assuit
Unit 104
Unit 108
Zeit bay
Abu Rudis
Morgan
Ramadan
Esma 8
AgibaSea bird
Shoab Ali
Badri
Esma 2
Sinai Cement & industrial Area
Sedi Krier
Ameriya
King
El-Max
Intergene
BorgElarab
Ameriya Cement
12“- 14 Km
El obyed
Salam
South Aum Barkah
El Qasr
Tarek
Bed - 2
Abu Sannan
South Dab’aaMeleha Deep
Bed - 3Bed - 1 265 Km 24“-
Qena
LuxorAswan
Kima
Hurgada
Safaga
Cairo
Neag
A/GHKaroun
SouthEl-Tina
WestEl Tena
Jordan
DeniseTaurt
El GamilUGDC
South El Manzala
Shams
Saffaire
Simian/ sienna
Fayroz
Robi
Tarouse
Theth Med. South East Fields
Vegas fields
Desouk
A/RSuco
Belayim
Wastani
Fayoum
El Sokhna
• Existing . PL• Under cons. PL• Future. PL (5 Years)• Gas fields• Future Gas Fields• Facilities• Distribution Stations• Power stations• Industrial Areas• Consumer• Distribution Co.• Export
Ameriya
24“- 26 Km
18“- 12 Km
16“- 9 Km
24“- 26 Km
24“- 26 Km
32“- 160 Km
24“- 14 Km
30“- 26 Km
22“- 87 Km
24“- 25 Km
32“- 75 Km
24“- 215 Km
32“- 85 Km
28“- 86 Km
42“- 40 Km
30“- 28 Km
16“- 256 Km
16“- 192 Km
24“- 10 Km
22“- 40 Km
24“- 50 Km
36“- 196 Km
36“- 264 Km10 BCMY
20“- 660 Km
20“- 40 Km
12“- 40 Km
National Oil, Gas Grid & Facilities
Dahshour
Nubariya
North Port Said
Port Fouad
Sharm El Shikh
Suco
West Aswan
Ras Shukir
El Fayoum Offtake
Deshna
Quos
New Assuit
Upper Egypt P/L930 km, 1 Billon $
Total Length is 18000 Km with Capacity of 190 MM meter3/D In June 2012
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Abu Madi
El Qara
Abu qir
Sedi Kreir
Ameriya 1
TarekEL-ObayiedSalamSouth Om Barka
Abu ElGhradikأ
Bed 2,3Ayoun Moussa
tebbin
suez
Zafrana
Ras bakr
Ras shoukier
المنیا
LTSLPGLTS & LPGNGLLNG
N. Abu Madi
Port said
Port fouadDamiatte
Production 2011/2012LPG : 1475 MTCond : 39.8 MMBBL Propane: 605 MT Ethane/ propane : 437 MT
Gas Treatment Facilities
Added Valuebillion $
Abu qirLPG& LTS
Design capacity:480 mmscf/d
sales Gas: 238 mmscf/dCond: 5530 bbl/d
Lpg: 220 Ton/d
SalamLTS
Design Capacity:400 mmscf/d
Sales Gas: 427 mmscf/dCond: 24000 bbl/d
TAREKLTS
Capacity: 100 mmscf/dsales gas: 111 mmscf/d
Cond: 12000 bbl/d
ObayiedLTS
Design capacity:420 mmscf/d
sales gas: 376 mmscf/dcond: 9500 bbl/d
Abu sanan / s. dabaaDesign capacity: 85 mmscf/d
Sales Gas: 38 mmscf/dCond: 980 bbl/d
Abu sanan
Bed 2,3LTS
Design capacity: 315 mmscf/dSales Gas: 275 mmscf/d
Cond: 5930 bbl/d
Abu ElghradigDesign capacity: 160 mmscf/d
Sales Gas: 72mmscf/d Cond: 1360 bbl/d
S.MansouraLTS
Design capacity:15 mmscf/d
Cond: 178 bbl/d
RosettaDesign capacity:
400 mmscf/d Sales Gas: 393mmscf/d
Cond: 340 bbl/d
BurullesFeed : 1328 mmscf/d
Cond: 6850 bbl/d
El GamilDesign capacity:1650 mmcsf/d
Sales Gas: 1368 mmscf/d Cond : 21685 bbl/d
WASCOSales Gas: 160 mmscf/d
Cond: 3920 bbl/dLPG: 190 Ton/d
W/ KHELALASales Gas:73 mmscf/d
Cond: 85 BBL/D
DahshourDesign capacity: 140 mmscf/d
Sales Gas: 0 mmscf/dLPG: 0 ton/d
Trans Gulf Design capacity : 130mmscf/d
Saled Gas : 1.8 mmscf/dCond : 1085 bbl/d LPG : 232 Ton/d
Ras ShoukierDesign capacity:
220 mmscf/dSales Gas: 24 mmscf/d
Cond: 555 bbl/d LPG: 185 Ton/d
Zeit BayDesign capacity : 90 mmscf/d
Sales Gas : 17 mmscf/dCond: 510 bbl/dLPG: 103 Ton/d
Abu RudiesDesign capacity: 50 mmscf/d
Sales Gas : 0.5 mmscf/dCond :1075 bbl/dLPG : 242 Ton/d
IdkuTrain1 : 580 mmscf/d Train2 : 580 mmscf/d
UGDCFeed : 1100mmscf/dPropane : 839 Ton/d
Lpg : 755Ton/ dCond : 3365 bbl/d
W/D Gas ComplexNGL Unit
Design capacity : 900 mmscfdEthane/ Propane : 1195 Ton/d
Propane : 815 Ton/d LPG : 1255 Ton/dCond : 2155 bbl/d
AmeriyaDesign capacity :
300 mmscf/dCond : 440 bbl/dLPG : 520 Ton/d
Hapy & TaurtDesign capacity:
600mm`scf/dSales Gas: 513 mmscf/d
Cond: 305bbl/d
N. SinaiDesign capacity:
180 mmscf/dSales Gas: 128 mmscf/d
Damiatte LNG Feed : 750 mmscf/d
LNG : 30 mscm/d
W.Dikrnis (Ph.1) S.Batra &Sales Gas : 14mmscfd
Cond :240 bbl/dLPG : 40 Ton/d
Abu Madi &N. Abu adiLTS
Design capacity : 360 mmscf/dLPG
Design capacity : 540 mmscf/d Sales Gas : 352 mmscf/d
Cond: 6600 bbl/d LPG : 290 Ton/d
S manzlaDesign capacity:
35 mmscf/dSales Gas: 18 mmscf/d
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Gas Usages
Gas GridLocal Distribution
Gas Delivery
Fertilizers
Industry
CNG
Domestic
Power
Gas Value Chain in Egypt
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85
10
5
One LPG Bottle NG Equivalent
95 15Total Price
Average CustomerPrice
EGP
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Egypt’s Strategic Rationale – LPG Price Vs NG
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Gas to end users
• FactoriesMedium Heavy
- Chemical - Steel- Paint - Cement- Textile - Fertilizer- Food
Fuels substitution & conversionWater heating Space heating
Cooking Steam Generation
Furnaces Manufacturing Process Heat
Refrigeration Gas-fired Air-conditioning
Natural gas will replace:
• Diesel for water and central heating
• LPG for heating and cooking
• Fuel oil and diesel for industrial applications
• Gasoline in cars
Residential
Commercial
Industrial
• Apartments• Houses• Villas
• Hospitals• Schools and Universities• Offices• Restaurants• Bakeries etc.
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GASCO
Power Stations HouseholdsIndustrial
FactoriesCommercial
Establishments
EGAS20-25Y Concession Agreement to :Finance, design, execute, operate& maintain Gas Networks
Manage, operate andmaintain the EgyptianNational Gas Grid
Transportation Vehicles
Gas Supply Contract
Agreement for :Gas Delivery & Metering
Gas Midstream & Downstream Market Structure
Gov. guarantees 18%IRR for LDCs (+ O&Mcosts +5Y tax exemption)
Local DistributionCompanies
EPCs
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Gas Distribution – Deregulation Development
The Main National Grid / Trunk line is constructed & Operated by GASCO (on behalf of EGAS)Everything down stream of the Pressure Reduction Station is within the cost of the LDC connection rate. Payments made “per converted customer”
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From ONE state monopoly …
… to 14 private sectors & 5 state-owned LDCs/EPCs
Development of the Egyptian Gas Distribution Sector
Off Take
P.R.SRegulator
Regulator
Typical Downstream Gas Network
Ongoing Distribution ActivitiesApprox. 3.5 Million customers connected
Over 1 bn $ of Foreign & Local investment
16 Egyptian Governorates covered by Gas networks
600 MM $ /Year Saved in subsidies
Enhanced HSE Standards
Introducing new technologies
Attracting the Multi-Nationals
Social Investment – Jobs/Employment - Environmental
Provide a better quality of life for Egypt’s citizens
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Market based Incentives: CNG Smart Card
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Mechanism
Financing 100% of cost of conversion throughcommercial lending on a debit card to bepresented at fueling stations by convertedvehicles’ drivers
Increase
No. of Vehicles Converted
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Scope:• Using absorption chillers / heater units• BOO District cooling projects• 250 000 Ton
Clients Benefits:• Saving of 30-40% of operating cost
compared to electricity driven chillers• Less building Capex & Opex• Less Power • Less maintenance & staffing• Economical operating costs• No chillers noise & vibration• Space saving in the buildings
District cooling consists of 3 main parts:
Plant
Gas District Cooling
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Synthetic Natural Gas (LPG+Air) Distribution Network
R
R
R
R
SNG StationLPG Tank
SNG =
LPG + Air
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Egypt’s Strategic Investment/Development Rationale
Government Solutions Creating Market Opportunities
Egypt’s Economic Growth Vs. Energy Challenges
• Large increase in energy demand to 13 % annually• Economy growing at 7.2% before 2008 Global crisis• Energy subsidy increased from 30 B EGP in 2004 to 100 B in 2014-2015 budget.• National plan to convert additional 4 million customers to natural gas, to the existing 3
million• Government need to increase Power Generation capacity from 25 GW to 75 GW by 2030
• Egypt’s government is taking bold steps to liberalize the energy sector gradual phasingout of subsidies which is currently a burden on the budget, gradual market deregulation
• Implement and activate strong regulatory bodies• Encourage strong involvement of private sector investment and foreign direct investment
• Driven by rapidly rising domestic energy consumption on the back of population anddemographic dynamics, rising per capita income levels and a heightened level ofindustrialization, urbanization, real estate and tourism related investments, Egypt's primaryenergy demand continues to outpace energy supply infrastructure;
• From 2002 to 2012, oil products and natural gas consumption levels increased by 37%while electricity consumption increased by 30%. According to the Government's guidance,the former is expected to increase by 30-35% by 2015 and the latter is forecasted toincrease by 37-40% over the same period after incorporating the dragging effect of thecurrent economic slowdown.
Growing Energy Demand
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Egypt Energy Challenges & Policy Options
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Pricing Reform: Tariffs Subsidies
Institutional Restructure: Integrated Energy Regulator Market Liberalization (unbundling)
Legislation Modifications: New Electricity Law Hydrocarbon / Petroleum Law
Assessment & Prioritization of Energy DemandSecurity & Affordability of Energy Supply LNG import New & Renewable Energy Development
Energy Infrastructure DevelopmentAttraction of FDI in most of the Egyptian Energy Value ChainHuman Capacity Building & Best Practices Development
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Lessons from international experience
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The best practice cases are thought to have benefited from:
Long term political commitment at a high government level.
Creation of a proper (and specialized ) institutional set up.
Creation of incentives including appropriate energy pricing schemes.
Mobilization of sustained financial resources.
Monitoring and measurement of results.
Effective communication with the public