EGYPT - Profile - Sameh Fahmi.

Made Petroleum Minister on Oct. 9, 1999, Fahmi is relatively young and has the energy needed by the Mubarak regime to implement Egypt's integrated petroleum strategy to the year 2020. He was one of the experts behind the previous strategy for natural gas to 2017.

Immediately as he became minister, Fahmi got the government to endorse plans to export gas in LNG form and by pipeline. In January 2000, he submitted to President Mubarak a new programme to 2020 which was much bolder and focused on natural gas exports (see Oil & 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 fourth term in September 2005. On Sept. 7, 2005, Mubarak won a fifth six-year term in Egypt's first experiment with contested multi-candidate presidential elections as he got 88.57% on a turn out of 23% of the registered voters. In one of his victory speeches, Mubarak promised that 4.5 million new jobs would be created over the next six years.

Fahmi got the Egyptian Natural Gas Holding Co. (Egas) to be established in August 2001, with Mohammed Tawila appointed as its chairman. The Egyptian Petrochemicals Holding Co. (Echem) was created in 2002 and really took off in 2003 with a list of new projects (see DT No. 3). Ganope was established in the first half of 2003. All are functioning in parallel with EGPC, under the supervision of the Petroleum Ministry.

Fahmi is a chemical engineer brought to the cabinet by the then 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. His twin brother Hady had also joined EGPC in 1973. Hady eventually became in charge of the Egyptian General Petroleum Authority

At EGPC from late 1973, Sameh and Hady were promoted quickly because of their dedication and efficiency. In November 1985, Sameh 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, Sameh 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 of directors on production and distribution of natural 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 (In early April 1996 Hammad 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, Fahmi was among the top EGPC and Petroleum Ministry experts preparing the integrated natural gas upstream/downstream strategy and Master Plan to the Year 2017. The emphasis then was to speed up Egypt's shift from oil to natural gas for domestic energy and industrial feedstocks. But Fahmi was among the first Egyptian experts to warn in 1994 that heavily subsidised gas prices for domestic consumption would soon become a major burden on the state.

In 1994-95, Fahmi took part with World Bank representatives in a joint report assessing Egypt's oil refineries and plans to modernise 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. 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. His twin brother Hady was also climbing the EGPC ladder.

In January 1997, Sameh 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, then Prime Minister Obeid chose Sameh 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 a frequent keynote speakers at major conferences held to promote Egypt's petroleum or petrochemicals sectors. He addressed the 2nd Egyptian Petrochemicals Conference held in Cairo on Jan. 10-11, 2005. He outlined his ministry's short-, medium- and long-term strategies at major conference held on May 12, 2005, by the Alexandria Chamber of Commerce.

Hahmi has been encouraging private Egyptian companies to invest in the upstream/downstream oil and gas and petrochemicals industries. 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. The most prominent among the tycoons playing a key role in the petroleum sector is Hussein Salem, a powerful ally of President Mubarak who once served as chief of the intelligence and now has a business empire including al-Sharq Gas Co.

Al-Sharq buys natural gas from Egas and sells it to Jordan and soon to Syria as well. From Syria the pipeline will run to Turkey. Thus al-Sharq is spearheading the Arab Gas Pipeline project which will be supplying gas all the way to East and Central Europe through Syria and Turkey, with a spur line to supply Lebanon (see Gas Market Trends No. 3). It is said that it was thanks to Salem's recommendation and support that the Fahmi twins were promoted, with emphasis on Sameh becoming a minister.

Fahmi is an enthusiastic promoter of gas export projects, notably including the two LNG export ventures. It was mainly thanks to special executive powers Fahmi gas to the various departments at his ministry, EGPC and Egas that the two LNG ventures' trains came on stream ahead of schedule (see the profiles of Segas and ELNG in Oil and Gas Market Trends No. 3).

Fahmi has been particularly eager to get Egyptian gas to reach several countries through the Arab pipeline system. He visited Turkey, Jordan, Syria, Lebanon, Cyprus and some of the European countries which will be purchasing Egyptian gas. In July 2005 he visited Nicosia and signed a memorandum of understanding (MoU) for the export of Egyptian LNG to the island. The MoU also covered joint efforts to explore for oil and gas in the island's territorial waters. Fahmi has offered similar co-operation to Lebanon, Syria and Turkey.

On June 30, 2005, Fahmi and Israel's National Infrastructure Minister Benjamin Ben Eliezer signed a long-delayed agreement for the sale of 1.7 BCM/year of Egyptian gas for a period of 15 years starting from October 2006. It was then understood that the gas will be pumped through a marine pipeline to be built. For this a $2.5 bn JV deal was to be signed by Israeli Electric and East Mediterranean Gas. EMG is a consortium of EGPC and the Israeli company Merhav. The latter firm was originally to be a main partner in the Midor refining venture in Alexandria. But Merhav had to sell its stake and leave the Egyptian venture due deteriorating relations between Israel and Egypt as a result of Likud's advent to power in the Jewish state. So far no progress about EMG's project has been reported and the fate of the June 30 agreement is not clear.

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 13 years. By 1995, about 95% of the gasoline 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, a unit of Egas, the ministry has helped speed up the creation of private franchises to market natural gas and CNG in Egypt (see DT 1).

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 backer of the organisation's price defence strategy, refused to cut its oil output because its production has been declining since the mid-1990s.

Egypt is no longer as eager for high oil prices as it was in recent years because it has become a net oil importer. Even though its earnings from high gas export prices have risen, Cairo is apprehensive about this subject because its economy depend on gas utilisation to a great extent, and the use of natural gas locally is to keep growing rapidly. Althogh Egas has put a cap on the price of gas it purchases from its local producers, the subject has become sensitive as foreign operators have begun to demand a revision to the pricing formula.

The value of Egyptian exports of oil, natural gas and petrochemicals in fiscal 2004/05 rose to E[pounds sterling]32 billion compared to E[pounds sterling]25.6 billion in the FY 2003/04, up 31%. This came in a report submitted by the Ministry of Petroleum's Under-Secretary Eng. Shamel Hamdi to Minister Fahmi. The report attributed the increase to the export of high-quality oil and natural gas, in addition to global oil price hikes. The report noted that Egypt had become a member of the liquefied natural gas (LNG) countries' club. LNG was exported, for the first time in Egypt's history, to Spain, the US, France and South Korea. The report said 14 European companies, 12 African countries and 12 Asian countries imported Egyptian polyethylene (PE) in FY 2004/05.