Interviews

AN INTERVIEW WITH Dr. hou xiru Country Manager NORTH PETROLEUM INTERNATIONAL COMPANY S.A.

Published on : 2019-11-19

After having been appointed to lead operations here, what was your first impression of the situation in Egypt?


Since I joined NPIC and being in charge of the operations, comparing with my previous work environment in Kazakhstan, the talented employees and the government authorities support such as EGPC, Ganope have impressed me dramatically. I understand as we are joint venture and we are one team, we should work together through our joint efforts to benefits our shareholders and partners. The direct support from our employees was an encouragement to me and has given me more confidence to lead the company’s operating ship in right direction.

Can we highlight light on ZhenHua Oil inauguration, current activities & the geographical existence?


China ZhenHua Oil Co., Ltd. (hereinafter referred to as ZhenHua Oil) is a state-owned oil company, 100 % indirectly owned by the assets Supervision and Administration Commission of the State Council, a Chinese-government agency that supervise and manage over a hundred state-owned assets and enterprises in a variety of sectors, including telecommunications, oil and petrochemicals and transport. Since its incorporation in 2003, the company is specialized in oil and gas exploration & production, oil industry investment, international oil and gas trading, refining and storage and transportation of crude oil and oil products. ZhenHua Oil is also one of the major state-owned enterprises involved in implementation of China’s strategy of “Going Global” and energy security. ZhenHua Oil operates 12 oil and gas upstream projects in Egypt, Kazakhstan, Iraq, Myanmar, Pakistan, Syria and U.A.E. It is also in the fuel storage, transportation and refining business inside China, with a trading desk in Singapore.

What is the current ZhenHua Oil global proved reserves, & the daily production rates?


ZhenHua Oil is producing 158,000 bopd WI from 5 countries by the end of 2018, and a green field in Iraq will be put into production with 40,000 bopd in 2019 and ZhenHua Oil is holding 100% interest. Unfortunately, our Syria project was suspended for many years due to war which was producing 15,000BOPD in 2011. After successful acquiring 4% of ADNOC on Shore asset of U.A.E and inked the agreement of East Baghdad South development agreement, ZhenHua Oil asset portfolio significantly improved and the company is holding 2370MMboe proved reserves.

Referring to the China’s strategy of “Going Global” what is the story behind NPIC entering the Egyptian petroleum market?

Aside from expanding and diversify access to natural resources, as a development partner, China’s footprint has increased in Egypt & shifted the emphasis of development funding back to infrastructure development to facilitate economic growth, rather than the development of political institutions and social spending. ZhenHua Oil pay close attention to investment opportunities in 

Africa Oil and Gas industry, Egypt is a key producer in Africa with a plenty of opportunities which will provide great potential for our company to grow with. In 2014, by acquiring& merging Vegas Oil Egypt producing asset, NPIC became an operator in Egypt. NPIC has made significant investments into Egypt to date and we are planning to continue deploying capital into the country, providing employment and enhance mutual understanding between Egypt and China. We have invested approximately $210 million since 2014 and planning to invest $41 million in drilling and workover during 2019 to boost our asset potential.

What is the current position in Egypt’s oil and gas production map?


NPIC portfolio consists  two operating concession which is NorthWest Gemsa and East Ghazalat under JV PetroAmir and PetroSafwa respectively with EGPC, also NPIC hold 35% interest in Alam El Shawish West concession which Shell is the operator, delivering 16,000 bopd WI from Egypt assets. By the good understanding and relations with Egypt oil & gas industry players and government authorities, given the strong cash position, NPIC has more  confidence to seek more new opportunities and increasing our production rate in Egypt. 

As a subsidiary of an international oil company with acquisition of mature fields in Egypt, what are the technical difficulties did you face to exploit these fields & (how you tailored the know how of ZhenHua Oil? )


ZhenHua Oil has extensive experience in developing mature field both domestic and international, focusing on short and long term production delivery and new reserves discovery, capital efficiency evaluation and cost control. In Egypt, our concession with a complicated structure map full of plenty of cross faults in NorthWest Gamsa and small size of dome and not clear seismic data in East Ghazalat make this more difficult for oilfield development. With comprehensive geoscience study and simplest feasible production technology to supports fast production increasing in short term, by using least technic and understanding in the industry to re-evaluate the area to identify near-field appraisal well locations. By the efforts of NPIC team and our joint venture companies, using local and global experience to optimize the exploration and production cycle to find a fit for purpose and minimum cost solutions.                     

What is the current strategy for NPIC upstream assets in EGYPT?


As state-own company, sustainable development is always important, but like any ambitious company, we are always on the lookout for new opportunities and generally focus on MENA (Middle East North Africa) areas of operation, where we can add value by identifying synergies and/or using specific technical and operational expertise, that means we tend to gravitate towards onshore opportunities. We would not, though, rule out considering 

any farm-in or asset acquisition that has the potential to add value to the company. NPIC already has a local expert team operating in Egypt, after 5 years to understand the market and have a strong in-country relationships, NPIC feel grateful to the relevant authorities for those who provide sustained support to NPIC as a new player during low oil price time, with all of this, NPIC will develop with Egypt together by substantial and sustained investment.

Egypt rebranded itself as an underexplored country with huge potential and major opportunities after being region›s energy hub, how does your distinguished company make benefit of this especially you have geographical existence in the middle east region?


Egypt is a key country in MENA and West Mediterranean area with unique geographical advantages and natural conditions, ZhenHua Oil consider Egypt is our core asset to connect with China and bridgehead to expand opportunities in Africa. NPIC will in-depth cooperation with EGPC, EGAS and Ganope in current operational asset and new bid round, also expend our business in oil and gas trade.

The Ministry of Petroleum is implementing a new modernization program to optimize the sector unexplored capabilities yet. What are your hopes as a local operator? From the experience of China, which  has scored a notable achievements over the past 40 years since the reform and opening up and, China is now in a position to use its experience of development and growth since 1978 to share with others. NPIC strongly support that the Ministry of Petroleum is aiming to increase the performance efficiency, improve the economics of existing petroleum projects and activities, and develop the human resources. With respect to this program, NPIC is particularly concerned about the division of regulatory and partner responsibilities and, more liberty in field development technology selection and human resources management in JV to focus on the core business.

What about your CSR program in country? NPIC is very active in CSR activities, particularly in the regions where we operate oil and gas fields. We support the Beduin to provide the position in our oilfield in Eastern Desert and Western Desert and maintain good relationship to benefit each other. Our CSR program is in line with Egypt’s Vision 2030 and the Ministry of Petroleum’s Modernization Program, to contribute to the country’s missions and developments. NPIC places great importance in developing our young talent and their CSR awareness, and offer varieties opportunities for talents, no matter you›re an experienced professional or a student in university.


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