Oil and gas firm BHGE has been operating in Egypt for a century and today is playing a vital role in the development of newly discovered oil fields that are set to make the nation and important energy hub within the next five years. In this interview, Tameer Nasser discusses the company’s operations in Egypt, as well as its potential to become not just an oil and gas hub, but also a hub for manufacturing, logistics and services.
Two years after the implementation of the first major reform, what is your current view of the Egyptian economy?
Supported by the IMF, Egypt started a major economic reform program in 2016 which included various initiatives such as amendments to current laws and regulations. After almost two years since the reform program started, regulations have impacted the Egyptian economy positively; today, we can see availability of foreign currency to address the importation needs and repatriation, more-than-doubled foreign currency reserves and improved sovereign credit rating with stable and positive outlooks. We’re also seeing a lot of investment by the government in building the right infrastructure across sectors, especially oil & gas, power and transportation. Egypt is on the right track towards a stronger economy. The reforms create a more attractive environment for FDIs and increased confidence in the economy.
How would you describe the attitude of the government towards the private sector?
As mentioned above, the changes the government is taking reflect their seriousness and willingness to facilitate operations for the private sector. I would say the attitude is very positive. We’re working with different ministries and government entities on key projects in the country and we’re seeing a lot of cooperation. Investors’ interests are top priority to the government. I was impressed by the government attitude when we, amongst other American investors, were invited by the Minister of Investment to meet the Prime Minister and other ministers in the cabinet to discuss challenges precluding us from achieving our growth plans – a very pragmatic and focused approach.
What has been the impact of the reforms on your business operation and investment outlook in the country?
As mentioned, all the reforms facilitate the operations of the private sector. Today, government entities and authorities are keen on hearing the challenges we face sometimes and are working on finding solutions for them. As BHGE, we have been operating in Egypt for more than 100 years; and we have always had strong presence in the market and we have always been a partner to Egypt, both before and after the reforms. However, I have to say, with the reforms taking place, the vision the government has for the oil and gas sector, as this is the core of our business, the investment outlook for the country is very positive. We’re optimistic that with the vision put in place, Egypt will become a gas hub to serve the region in the future and we consider ourselves to be one of the leading partners to Egypt in achieving their vision to make the Mediterranean a hub for gas. We see strong growth potential and are glad to have a role in this success story given our current activities in the Zohr and Nour gas discoveries and ability to engage in future discoveries with our full-stream capabilities.
What are the key fundamentals that made you choose Egypt as a destination, and to what extent can it play the role of ‘gateway to Africa’?
Egypt has always been a key market for BHGE; we started our journey drilling the first well in the Mediterranean in 1909 using our drill bits and today we’re supporting the development of the Zohr gas field. Today, the country has the potential to be a hub for services – not just for the oil & gas industry, but also for logistics and for manufacturing across sector. Egypt has an abundant and strong pool of talented human resources here. The market is attractive from a cost perspective, not to mention the location and the natural resources. This encouraged us to increase local content. For example BHGE signed a 1 billion EGP contract with Petrojet to provide manufacturing and fabrication services for BHGE’s upstream oil and gas operations in Egypt. If we look at the oil and gas sector, Egypt today has the biggest gas explorations in the Mediterranean – that alone drives the markets attractiveness.
Additionally, Egypt’s Modernization Program for the O&G industry is a unique, overhaul transformation plan that the Ministry of Petroleum & Mineral Resources designed to unlock the country’s potential to boost development and enhance the economy. The plan to rationalize the energy sector bears within itself an ambition for Egypt to become a regional oil and gas hub within the next five years.