October 2020, Vol. 247, No. 10


Boost Comes for Egypt’s Crude Pipeline Market

By Shem Oirere, P&GJ Africa Correspondent

Egypt is in the race to achieve its ambitious yet much needed revamped crude oil and natural gas pipeline network. With the construction of new lines or upgrading and expanding existing ones, the country is prioritizing midstream infrastructure in the drive toward transforming itself into a regional energy hub, which will be capable of meeting increasing demand for hydrocarbon products in both Africa and Europe. 

A crew of pipeline workers at a staging area in Egypt.

New oil and gas discoveries by international oil companies (IOCs) in the country and modernization and expansion of specialized ports, such as El Hamra port on the Mediterranean coastline, are key factors likely creating demand for additional pipeline capacity. Additional production is coming from areas especially in the Western Desert oil fields of Abu Gharadig, Badr El Din and Meleiha. The fields’ exploration and production is dominated by IOCs such as Shell, Eni and Apache.

At the El Hamra port, which is operated by Western Desert Operating Petroleum Company (WEPCO), the Minister for Petroleum and Mineral Resources Tarek el Molla commissioned in August 2020 a 5-mile (8-km) crude oil loading pipeline considered critical in the port’s crude oil exporting business.

The new 36-inch (914-mm) Hamra-Shamandoura loading pipeline, constructed at a cost of US$100 million, links the Hamra port with an additional offshore tanker loading facility. WEPCO operates the El Hamra oil terminal at the Hamra port with six floating roof storage tanks, with a capacity of 1.5 million barrels.

WEPCO also has a single buoy mooring as one of its key offshore facilities, with capacity to accommodate oil tankers of up 100,000 dead weight tons. The company also operates a 4.3-mile (7-km), 30-inch marine loading pipeline at the port.

Further, WEPCO has an existing oil pipeline network that includes three transporting crude from oil fields in the Western Desert to the port and one conveying unrefined oil to crude processing plants at the city of Alexandria nearly 75 miles (120 km) away.

According to Minister Tarek, the Hamra-Shamandoura loading pipeline now pushes up Hamra port’s daily shipping capacity to 1 million barrels.

The port’s crude storage warehouse capacity has also been increased from 250,000 barrels to 1.5 million, with WEPCO expected to spend $66 million on its crude storage expansion scheme at the port.

An additional two storage tanks, valued at $64 million, are in the works promising to achieve the port’s total storage capacity of 2.8 million barrels. Hamra is striving to leverage its strategic location on the Mediterranean coastline to become a refining and petrochemical hub in the New Alamein city, which was inaugurated by Egypt’s President Abdel-Fattah al-Sisi in early 2018.

With IOCs such as Eni and Apache planning to expand crude production at their concessions and blocks in the Western Desert area, which produces nearly 50% of Egypt’s crude production, it is likely demand for an efficient crude oil and natural gas pipeline network would persist.

For now, WEPCO operates the 103-mile (167-km) Meleiha-El Hamra pipeline to evacuate crude from the Meleiha production fields to the port. The pipeline has a capacity of 90,000 bpd.

WEPCO, which handles all crude oil produced in the Western Desert, also operates the 80-mile (128-km) Badr El Din 1-El Hamra pipeline to transport crude from the Badr production wells. The 12-inch (305-mm) pipeline also terminates at the Hamra port.

The third pipeline serving the Abu Gharadig crude producing fields is the 87-mile (140-km) Abu Gharadig-El Hamra line that has a diameter varying between 12 inches and 16 inches (406 mm).

From the Hamra port, WEPCO transports the crude via 16-inch El Hamra-Sidi-Kerir-Alexandria pipelines that run for 56 miles (90 km). At Alexandria, the crude oil is refined before it is loaded to export tankers via WEPCO’s loading facilities.

Additionally, the completion and commissioning of the new Hamra-Shamandoura loading pipeline adds to what has been Egypt’s ongoing strengthening of the country’s hydrocarbon transportation plan. It has gained momentum with the completion and operation of the 96-mile (155-km) Ras Bakr pipeline in Assiut that will boost supply of butane to Upper Egypt from the current 2,600 tons per day to 4,000 tons per day.

During 2017 through 2018, the Ministry of Petroleum and Mineral Resources said Egypt achieved the “establishment and operating Tebeen/South Helwan isolated pipeline with a length of 87 km and a diameter of 16 inches, which is linked to the Tebeen/Beni Suef 16-inch pipeline.

Further, the Ministry announced during the same period the ongoing construction of the Sokhna/Tebeen pipeline [24-inch diameter, 71 miles (115-km)] for transporting fuel oil from Sokhna Port to the Al-Tebeen area, to supply power stations of South Helwan, Kurimat and Beni Suef with fuel and meet the needs of Upper Egypt petroleum products.

In 2019, the two-phase 78-mile (126-km) Nooros-Abu Madi-El Gamil pipeline was completed at a cost of $300 million and now transports 700 MMcf/d of natural gas from Nooros field to the gas treatment plant in Abu Madi a distance of 35 km.

This stretch of the pipeline is 24 inches. The second 32-inch pipeline section that runs 56 miles (91 km) connects Abu Madi Plant to El Gamil Plant, where the gas is treated before it is fed to the national grid.

With an already strong laid out oil and gas pipeline network, Egypt looks forward to increasing the current production of petroleum and other liquids, estimated at 660,000 bpd, to meet domestic demand and for export, hence creating more investment in the midstream petroleum industry infrastructure, particularly pipelines for transporting both raw and processed hydrocarbons products.

However, Egypt has in the recent past experienced a decline in hydrocarbon production with the Ministry of Petroleum and Mineral Resources, indicating a surge in the number of maturing fields that can no longer yield crude oil amid a slow pace of new discoveries. But, there has been progress noted in the natural gas discoveries.

The good news for Egypt’s oil and gas pipeline market is that there is increasing demand for fuel products in the country with consumption reported to have outstripped production.

The trend is not only calling for additional oil and gas discoveries in Egypt but is likely to influence future investment decisions by leading upstream and midstream players in the country, especially on how to transport the crude oil and natural gas with minimal emission levels and losses along the way.

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