US oil producer Apache Corp is the largest oil producing company in Egypt. It started its operations in the country 25 years ago, where it seeks to carry out major investment plans during the coming years. In addition to its operations in the oil industry, the company has been exemplary for its key social role.
Recently, the company signed an agreement with Egypt’s Ministry of Petroleum and Mineral Resources to expand its operations in the country in the field of drilling and oil production, a move that will support Egypt’s efforts to become a regional energy hub.
Apache CEO John Christmann met Egypt’s President Abdel-Fattah El-Sisi during his recent visit to Cairo in mid-July. Christmann lauded El-Sisi’s ambitious vision that led Egypt to be a successful economic and development model, not only at the regional level, but also at the international level.
Christmann asserted Egypt is in the forefront of countries Apache has keen interest to boost investments in, in light of the positive investment climate as well as the promising opportunities the country’s energy sector can offer.
Al-Ahram interviewed Christmann during his brief visit to Cairo. He spoke about his meeting with President El-Sisi, his company’s plans during the coming period, his vision on the future of the oil sector in Egypt, the impact of the coronavirus pandemic on the company’s plans in Egypt and the world, his vision on Egypt’s future as a regional energy hub, his vision on the oil sector’s efforts for development and digital transformation, as well as the social responsibility of the company and its role in qualifying youth leaderships.
How was your meeting with President El-Sisi?
I was honored to meet with H.E. President Abdel-Fattah El-Sisi recently. During our meeting, he expressed support for the work the Ministry of Petroleum and Mineral Resources is doing to modernize the oil and gas industry and attract more investments, and he specifically shared his support for the modernization agreement with Apache, which is about to go through its final approval steps.
We also discussed the importance of the US– Egypt relationship and President El-Sisi’s commitment to nurturing Egypt's partnerships with international companies and increasing investments. He confirmed the value the government places on its partnership with Apache and his commitment to working together to bring value to the Egyptian people.
Apache has been an investor in the Egyptian petroleum industry for nearly three decades. What is your evaluation/assessment of this period?
For more than 25 years, Apache has been a committed partner to Egypt and Egyptians. We have relied on innovation and technology to improve efficiency as we explore for and develop oil and gas, maximize Egypt’s energy resources, and help modernize Egypt’s energy industry. Our 3-D seismic surveys enable our teams to consistently high-grade existing prospects and identify new targets.
We continue to see tremendous future opportunity in Egypt. The new agreement in principle we have been working on with the Ministry of Petroleum will enable increased investment and production. We have been readying supplies and equipment to ramp up work once the agreement is formalized.
In addition to Apache’s investments in oil and gas, we are committed to investing in Egypt’s future in other ways by supporting education, health care and orphans. Our education initiatives include:
We founded Springboard Girls Schools more than 15 years ago to provide educational opportunities to girls living in rural areas of Egypt – 201 schools that have helped approximately 15,000 girls learn to read and write.
We fund a teacher training program that aims to empower teachers with the essential knowledge and skills to provide quality education to students in community schools. The program has trained approximately 400 teachers and 200 supervisors in three governorates.
In the Matrouh area, we supported the construction of nine co-educational schools for the Bedouins providing education for 350 students.
How much is Apache's investments in the Egyptian oil and gas industry? And what is its contribution to the gross production of oil and gas resources?
Apache is the largest US investor and largest oil producer in Egypt. Since our operations began in Egypt, we have invested more than $20 billion in the country.
Al-Ahram's Eman El-Areef interviews John Christmann, the CEO of Apache Corp
Egypt implemented reforms in its economy and specifically in the energy sector. What is your evaluation of the steps taken in this field over the past seven years? What are your views on the current investment climate and what are aspirations for the future in this regard?
We believe that Egypt will continue to be a very attractive investment destination, not just for Apache but for companies around the world, thanks to the economic growth under the strong leadership of H.E. President Abdel-Fattah El Sisi.
Investors can choose to put their funds many places, so it is important for Egypt to maintain its competitive position on the global market. This is why the Ministry of Petroleum and Mineral Resources’ modernization effort is so critical and why we were excited to announce the agreement in principle with the Ministry and EGPC to modernize production sharing contracts. When final, the new production sharing contract will consolidate the majority of our concessions in the Western Desert of Egypt into a single new concession, which will account for more than 90% of our gross production volumes in Egypt on a barrel of oil equivalent (BOE) basis.
You currently have a large number of concession areas in Egypt and you are the largest American company producing oil and gas in Egypt... What is your evaluation of the potential of the petroleum sector in Egypt?
The oil and gas industry plays a critical role in the global economy and will for decades to come.Egypt is in a great place – in terms of resources, geographic location and business climate – to provide the energy that drives economies and elevates standard of living across the globe.
Egypt is continuing to develop into a regional energy hub and has successfully attracted investments from global companies thanks to the economic reforms implemented by the government.The oil and gas sector in Egypt contributed 24% of Egypt’s gross domestic product (GDP) in the fiscal year 2019/2020 and reached record average production rates of 1.9 million boe/day in 2020/21.We are optimistic for the future of the industry in Egypt.
For Apache, Egypt continues to be akey part of our portfolio with many opportunities ahead. We will continue to focuson high-grading existing prospects and identifying new targets through our state-of-the-art broadband 3-D seismic surveys.
How has the COVID-19 pandemicimpacted Apache's plans in Egypt and worldwide?
Of course, the economic impact of the COVID-19 pandemic was felt across the globe. Despite this, Egypt managed to achieve positive economic growth during the pandemic thanks to the strong leadership of the Egyptian government. For Apache, we were able to continue with our plans. We transitioned our office staff to work from home. For personnel in the field, we implemented a range of safety protocols and procedures including social distancing, face coverings and health screenings. I’m proud of our team for doing such an amazing job and staying safe during the pandemic.
During the pandemic, we looked to address the most critical needs in the communities where we operate.
In Egypt, Apache partnered with the Egyptian Ministry of Health and Population and local and international NGOs to address shortages of personal protective equipment (PPE) and critical medical supplies. The team coordinated the procurement and quality testing of more than 164,000 surgical masks, 328,000 pairs of latex gloves and 1,000 face shields that were distributed to frontline medical workers and hospitals dedicated to COVID-19 response.
We also worked with the American Chamber of Commerce in Egypt and UNICEF to purchase medical supplies, including ventilators and PPE, for 300 hospitals, 1,000 primary health care units and 50 quarantine and fever hospitals across the country.
Apache focuses its investment in Egypt’s Western Desert for oil and gas exploration. What about investing in the deep waters, with the latest success stories achieved at Eastern and Western Mediterranean as well as the Red Sea area, which attracted investments from major American companies?
Approximately 68% of Apache’sgross acreage in Egypt is undeveloped, which provides us with considerable exploration and development opportunities for the future. We have completed state-of-the-art broadband 3-D seismic surveys that allow us to high-grade existing prospects and identify new targets in our existing acreage.The Western Desert offers high quality short cycle exploration opportunities that compete very favorably compared to longer cycle offshore developments. In the future, deep-water opportunities may offer a natural next step for us in Egypt.At present, our focus is on the Western Desert.
Does Apache intend to invest in new concession areas in Egypt in light of the latest bid by the Egyptian petroleum sector?
We have many opportunities within our existing acreage and expect to increase investment once our modernization agreement becomes final.
What is the future vision of your investments in Egypt and on what basis did you adopt this vision?
Egypt is a key part of our portfolio. We continue to be one of the most active players in the oil and gas sector and averaged five drilling rigs from January through June 2021.
The new agreement in principle will enable increased investment and production.We have been readying supplies and equipment to ramp up work once the agreement is formalized.
What are your expectations for oil prices in the medium and long terms and how would this affect your investment plans?
Regardless of the oil price environment, we will continue to budget conservatively and operate safely and efficiently.The agreement in principle, when finalized, will result in increased activity, capital investment and oil-focused production growth over the next several years.
What are your views/opinions on Egypt as a regional center for oil and gas trading and its contribution as a source for securing supplies to Europe?
Apache has been a long-term investor in Egypt’s energy sector, and we support the country’s efforts to expand economic opportunity and become a regional energy hub.Egypt’s location and its leadership role in MENA and the Mediterranean region makes it well-suited to serve in the capacity of an energy hub and meet long-term demand in the Mediterranean, Africa and other markets such as Europe. And the benefit will go beyond economic. Egypt serving as an energy hub in the region will bring nations together and should provide greater political stability.
The East Mediterranean Gas Forum. What are your impressions of the step of establishing the forum and the US support for it through its membership as an observer... and what are your thoughts of the extent of its success in achieving its objectives?
The East Mediterranean Gas Forum is a testament to the Minister’s leadership and to Egypt’s strong position as a developing regional energy hub, particularly for the gas market in the Mediterranean region. Establishing this forumis a tremendous accomplishment and one not easy to achieve.
With the gas market becoming increasingly competitive, the forum will provide an opportunity to promote regional integration to unlock the full potential of Eastern Mediterranean offshore gas. The forum will also strengthen geopolitical stability and regional energy security.
What are your views on the efforts of the Petroleum Sector in Egypt in the field of digital transformation, particularly after launching the first Egyptian Upstream Gateway? How does this affect investments?
Apache supports the petroleum sector’s digital transformation. Innovation and digitization help provide more affordable energy by increasing efficiency in operations and exploration as well as development capability.
Through technological innovation, Apache has improved the efficiency of operations and driven down costs. We have introduced new tools and techniques to explore for and develop oil and gas maximize Egypt’s energy resources and help modernize Egypt’s energy industry. Our team consistently high-grades existing prospects and identifies new targets using 3-D seismic surveys.
With better subsurface pictures, we have achieved a drilling success rate of 93% and look forward to continued success. We also have recorded a Matoruh Basin Record of 555 feet net pay at Herunefer E-2, one of the bright spots in our subsurface efforts.
Apache is a major partner in the program of capacity building for qualifying young leaders at the Petroleum Sector Modernization Project. Could you elaborate more on Apache’s assessment for this project, the achieved results, and the direction for developing talent?
We recognize the importance of nurturing local talent in Egypt and have a talent nationalization strategy to source and train local talent to fill positions that are typically held by expats. Apache has helped traintalent by taking them to its businesses in the U.S. and the U.K. to experience firsthand some of the modern practices of various aspects of the oil and gas industry.
We invest significant financial resources in developing the capacity of employees in country, and today we have Egyptian employees making significant contributions beyond our assets in Egypt. One example is Sherif Mostafa, who is based in Cairo, and supports engineering efforts in Apache’s assets in the North Sea. Another example is Sharaf Eid, who was working as a drilling engineer for our unconventional operations in the US, until his recent transfer back to Cairo as our Apache-seconded drilling manager in our Khalda JV, bringing the latest drilling technology from the US to Egypt.
Our talent strategy also extends to university graduates including the “Al Amal” program for Egypt’s premier university graduates in Geosciences and provides full scholarships for Egyptian students majoring in petroleum engineeringhelping to prepare them to find employment opportunities in the industry.
We also support Petroleum Engineering at the American University in Cairo and Suez University by providing a summer training program in which students spend eight weeks in classroom and hands-on training at Apache and our JV companies.