EGYPT - Part 4 - The Decision Makers.

The decision makers in Egypt's petroleum sector are professionals with long experience in this business. Most of them are pragmatic and flexible, led by Sameh Fahmi who is the minister of petroleum.

There has been a shift of emphasis in favour of natural gas. This is not only for the state-owned Egyptian General Petroleum Corp. (EGPC) and the Egyptian Natural Gas Holding Co. (ENGHC), but also for the main foreign operators in the country. The political leadership, under President Hosni Mubarak, is not involved in the running of the petroleum sector (see who's who in the political leadership in Downstream & Gas Market Trends).

Sameh Fahmi: Made Petroleum Minister on Oct. 9, 1999, Fahmi is young and has the energy needed by the Mubarak regime to implement Egypt's petroleum strategy to the year 2017. He was one of the experts behind this strategy. Immediately as he became minister, he got the government to endorse plans to export gas in LNG form and by pipeline (see Gas Market Trends No. 3).

Fahmi is one the technocrats who convinced President Mubarak to take a great leap forward in quickly diversifying Egypt's economy, with the shift to natural gas being one of the drivers. On Oct. 5, 1999, as he took the oath of office for a fourth six-year term in the presidency of the republic, Mubarak pledged that he would "personally supervise a great project...to get Egypt to join the group of medium-income countries". He promised the results will be felt by all the Egyptians before the end of his current term in September 2005.

Fahmi got the Egyptian Natural Gas Holding Co. (ENGHC) to be established in August 2001, with Mohammed Tawila appointed as its chairman. Another holding company was to be created for the petrochemical sector. Both are functioning in parallel with the Egyptian National Petroleum Corp. (EGPC), under the supervision of the Petroleum Ministry.

Fahmi is a chemical engineer brought to the cabinet by the Prime Minister, Dr. Atef Obeid. Born in Cairo on August 14, 1949, Fahmi graduated in June 1973 with a degree in chemical engineering from the Engineering Faculty of Cairo University. He then joined EGPC. From January to end-1988, he pursued higher studies in national strategy and was a fellow at the Higher Nasser Military Academy. That widened his horizons.

At EGPC from late 1973, Fahmi was promoted quickly because of his dedication and efficiency. In November 1985, he became in charge of EGPC's programme investments. From November 1987 he worked as an expert in EGPC projects' economic feasibility studies.

In November 1988, Fahmi became director general for planning at EGPC, after proving clear thinking and far-sightedness. In 1990-91, he took part in a report to EGPC's board on production and distribution of gas in Egypt.

In May 1993, Fahmi was promoted to a board member and EGPC vice chairman for planning and projects - succeeding Hazem Hammad, who then became undersecretary at the Petroleum Ministry and in early April 1996 was made chairman of the Sumed crude oil pipeline venture.

From 1992 to 1995, Fahmi took part in various strategic tasks at specialised national councils at the presidency of the republic and participated in a report on a strategy for Egypt's oil and gas utilisation to the year 2020. In 1993-94, he participated in a report on investment plans for Egypt's oil refining industry, working in co-operation with the Canadian International Development Agency. At the same time, he was among the top EGPC and Petroleum Ministry experts preparing an integrated gas upstream/downstream strategy and Master Plan to the Year 2017.

In 1994-95, Fahmi took part with World Bank representatives in a joint report assessing Egypt's oil refineries and plans to develop and expand them. In the period between 1993 and January 1997 he was also a member of the executive committee for a proposed crude oil pipeline to be built from Tobruk (Libya) to Sidi Kerir. From 1994 he became a member of the board of EGPC's magazine Petroleum. From 1992 to 1997, he was a board member of Egyptian Valves Co. (Evaco).

From 1993 to 1997, Fahmi was a board member of Petroleum Projects & Technical Investments Co. (Petrojet), of the General Authority for Measurement Unification, of the Energy Planning Unit, of the general and permanent committees at the Ministries of Petroleum and Electricity, of the General Investment Authority, of the World Energy Council, and of other institutions.

In January 1997, Fahmi was made CEO and vice chairman of the Midor oil refining venture at a free zone near Alexandria. In 1997 he became a board member of the Petroleum and Mining Chamber and of the Federation of Egyptian Industries. In August 1998, he became a board member of Alexandria Co. for Petroleum Maintenance (PetroMaint).

On Oct. 9, 1999, Prime Minister Obeid chose Fahmi for the post of Petroleum Minister as Dr. Hamdi Al Banbi was due to retire. At Midor, Fahmi was succeeded by Eng. Maher Abaza, who from 1982 until then was minister of electricity and energy.

After becoming Petroleum Minister, Fahmi ordered a review of several major projects. He reappraised the financing options for the $550m Suez hydrocracker project carried out by Misr Oil Processing Co (MOPCo). MOPCo is a private enterprise in which EGPC has a stake (see DT No. 2).

Fahmi is encouraging private Egyptian companies to invest in the upstream/downstream oil and gas sectors. Private Egyptian E&P ventures now include Egypt Saam Co., owned by businessman Sami Al Ashram, which has a West Delta block; and Forum Exploration, grouping consultants turned entrepreneurs chaired by Wafiq Al Guindi, which has a block in the Gulf of Suez. These companies get the same incentives and profit splits as foreign firms.

Working within the government's privatisation policy, the Petroleum Ministry has supervised the sale of most EGPC petrol stations in Egypt to private franchise holders in the past nine years. By 1995, about 95% of the petrol stations had been handed over to the private sector, with foreign companies like Shell and ExxonMobil having become involved in a big way. The gasoline and lubricants retailers now include a unit of Oilinvest of Libya.

The Petroleum Ministry has also facilitated the transfer of LPG retailing units to the private sector. Through Gasco, the ministry and ENGHC have helped speed up the creation of private franchises to market natural gas in Egypt.

Fahmi is close to Hussain Salem, a prominent businessman who chairs the Midor refining venture and Al Sharq Gas Co. A former chief of the Egyptian intelligence, Salem has been close to President Mubarak for years. Al Sharq Gas Co., formed at the end of 2000, is in charge of a gas pipeline to supply Egyptian gas to Jordan, Syria, Lebanon and Turkey (see Gas Market Trends No. 3).

Salem is still trying to get Israel to buy Egyptian gas by pipeline, having been close to the Israeli company Merhav, although Cairo is no longer keen on a deal with the Jewish state. In 2001 Merhav sold its stake in Midor, as relations between Israel and Egypt became strained because of Premier Sharon's use of excessive force against the Palestinians.

Fahmi hosted OPEC's ministerial meeting in Cairo on Dec. 28, 2001, as the organisation decided to cut production by 1.5m b/d after Russia, Norway, Mexico, Oman and Angola pledged to reduce their output by 462,500 b/d. But Egypt, which used to be a key non-OPEC backers of the organisation's price defence strategy, refused to cut its oil output because it has been declining since the mid-1990s.