HOUSTON - Houston-based Apache Corp. is one of the most active foreign oil and gas producers in Egypt, and Apache's production there last year was second only to what it pumps in the United States.
Despite political turmoil that has rocked Egypt for most of this decade - the 2011 revolution that overthrew longtime strongman Hosni Mubarak and last year's ouster of elected President Mohammed Morsi - Apache executives remain enthusiastic about their prospects there and say the political situation hasn't affected production.
Tom Maher, region vice president and general manager for Apache Egypt, was in Washington last week as part of a delegation from the American Chamber of Commerce in Egypt trying to encourage investment in the country.
He discussed the situation there in a telephone interview with FuelFix. These are excerpts from the interview, condensed and edited for clarity:
FuelFix: What message are you trying to promote about Egypt?
Maher: We're the oldest American Chamber of Commerce in the Middle East. We have a membership of 1,800, so we're by far the largest too. This year is kind of critical because of what's been going on in Egypt. We're two-thirds through the road map after the deposition of the former president (Morsi). We're visiting with senators, congressmen and policymakers. The message we're trying to leave them with is, Egypt's open for business. We feel very good about the current president (Abdel-Fattah el-Sissi, who took office in early June). He was elected by an overwhelming majority. We have a democratic constitution in place. It's an improvement over the previous one that had limited input from the public. I've only been back in Egypt for the last year and a half, but I'm probably more confident now then I have been in the last three years.
The message I'd offer is it's business as usual. We haven't really seen any major changes. It's kind of counterintuitive, but it would be a good thing if we had more oil and gas producers there. Our activity level is 50 drilling rigs. That's as much as the rest of the operations in Egypt combined. It would be good to see other companies come in. It's healthier for the industry. There would be more exploration. It would be healthier for the country.
FuelFix: What's it like to? operate in Egypt? This ?is really the only place outside of North America where Apache works onshore.
Maher: I was here for eight years before the revolution, and now a year and a half after. Our day-to-day operations haven't significantly changed over that time period. I was surprised when I came back in February 2013, after working as the country manager in Australia, and saw how in-sync operations were going compared to when I left. We haven't lost production. All of our producing properties are in the Western Desert. But some of it's not that far away from Cairo.
We still have a large presence of American expatriots. A lot of companies have moved their expats out. We've been able to maintain our presence there.
FuelFix: How has the change in presidential leadership affected your company?
Maher: I don't think it has. The folks we deal with at the lower levels of government have been pretty much the same. Some of the leaders have changed over the three years, but the people we deal with on the day-to-day basis have been the same. We've been there for 20 years. We worked hard at building effective relationships. The government isn't just the regulator but a 50 percent business partner. It's imperative that we get along.
FuelFix: What's your relationship with the Egyptian General Petroleum Corp., the national oil company?
Maher: We have a production-sharing contract. Apache is a business partner. We're taking the risk and fronting the capital, but once we find a field worthy of development, a joint venture is formed. Once we find exploration success, a development plan is approved.
We have about 10,000 jobs there, and those are mostly Egyptians. That includes direct and indirect, mainly with the joint ventures. We have about 85 expatriates in the country, and another 100 or so that rotate in and out, mainly field guys, on a 28-days-on, 28-days-off basis.
Maher: Part of it was that Egypt became so successful that it was out of balance with the? rest of the portfolio, particularly with the emphasis to move toward more North America production. Our investors ?were insisting on it. It was a better opportunity for us to monetize some of that and become more balanced on a portfolio basis, and spread that capital to other parts of the company.
FuelFix: Are you working with Sinopec in Egypt now, or is it just an investor?
Maher: They have people on the ground, and they're active in our day-to-day business. We welcome their input. We're trying to learn things they excel at, like enhanced oil recovery. They have their own shale gas play in southwest China. They're learning from us, and we're learning from them.
FuelFix: What role do you? see Egypt playing in Apache's portfolio in the future?
Maher: With the operations in place and a rig fleet of 50, we're going all out. We reached critical mass and have plateaued. Our goal, and what corporate would like to see, is to maintain that level of activity and production we're currently enjoying there. That's no easy task. And we're Apache, so we'd like to see things grow, but that's easier said than done.