PETROLEUM AND MINING SECTOR IN EGYPT“Unlocking Egypt’s Energy Potential”

Minister of Petroleum and Mineral ResourcesEng. Sherif Ismail

I. SECTOR STRENGTHS & CHALLENGES

II. STRATEGY FOR THE SECTOR

III. INVESTMENT OPPORTUNITIES

IV. KEY MESSAGES

Egyptian Aspirations

3

Enhance living standards and alleviate

poverty

Improve public services

Increase job opportunities

Restore Egypt’s Regional and

International Leading role

Realize Significant Growth Rate

A Clear Vision to Achieve Egyptian Aspirations

4

Strategic ObjectivesStrategic Objectives

Ensure energy Security and satisfy domestic demand

Maximize Added Value of Egypt’s natural resources

Build National Capacities with high efficiency

The Vision The Vision

Secure local energy demand within reasonable prices to fuel sustainable economic development & realize Egyptians’ aspirations for better life

Energy Security

5

2730

34 3841

4652

6067

72 73

0

10

20

30

40

50

60

70

80

Million Tons

Petroleum Products Natural Gas

605 Million Tons

348 Million Tons

Almost double the previous period

Supply demand deficit and financing Current supply deficit of 700

MMSCF/day for gas IOC Arears

Rising Consumption driven by Population growth, high energy intensity and subsidies

6

Energy Security

Infrastructure DevelopmentMarket Structure

Oil and gas96%

Coal1%

Hydro3%

Egypt

And Increasing

9.5

8.2

6.5

5.28

3.85

USA

Canada

Europe

Levant

Egypt

Average Refinery Complexity

Primary Energy Mix

Unbalanced Energy Mix

Financial Sustainability And Governance

7

7

22

3.6

12

1.4

4.8

0 10 20 30

% of GDP

% of Budget

Health Education Fuel subsidies

Comparison of energy (including electricity) subsidies with social spending

Overview of energy subsidies

327

128

27

64

SocialSecurity

FoodSubsidy

PetroleumSubsidy

Health Education

51timesSocial

Security

2 times Education

Budget

5 timesHealthBudget

5 timesFood

Subsidy

Energy Subsidy Sector Governance

The Egyptian Oil & Gas sector: A Unique Position

8

In Global Gas Production

Gas Producer in Africa

Non-Opec Oil Producer in Africa

Worldwide in Gas Reserves -~ 1% of global reserves

1

2

15

16

Significant development potential with a robust, multi-decade track-record of success

Substantial Exploration Potential – Increase focus on Upstream Activities

Continuous Upgrade and Expansion of Infrastructure

Leverage Egypt’s Location to potentially become a regional Energy Hub and a vibrant ecosystem for Petroleum investments

I. SECTOR STRENGTHS & CHALLENGES

II. STRATEGY FOR THE SECTOR

III. INVESTMENT OPPORTUNITIES

IV. KEY MESSAGES

The strategy for the sector comprises 3 strategic pillars and 8 action areas, supported by 23 separate policy measures

EnergySecurity

Boost energy supply

Diversify energy supply

Manage energy demand

FinancialSustainabilityAddress historic debts (arrears)

Reform energy subsidies

Address internal debts

SectorGovernance

Modernize sector governance

Boost private sector investment

10

Petroleum Sector Strategic Pillars and Action Areas

23 policy measures

5 action areas and supporting policy measures have particular relevance for investors

EnergySecurity

Boost energy supply

Diversify energy supply

Manage energy demand

FinancialSustainabilityAddress historic debts (arrears)

Reform energy subsidies

Address circular internal debts

SectorGovernance

Modernize sector governance

Boost private sector investment

11

Petroleum Sector Strategic Pillars and Action Areas

23 policy measures

1

2

3

4

5

Boost Energy Supply

12

Policy measures

Encourage new gas expl. & development

Secure new LNG import contracts

Expand & upgrade infrastructure

Progress to date

$13 billion of ongoing and planned gas developments

56 upstream agreements signed, $12 billion minimum expenditure

Ports Refineries

Port Shipments

Accelerate existing gas field developments

1

FSRU Pipeline

Pipelines & Storage Marketing

13

Boost Energy Supply 1

Boost Energy Supply

14

Policy measures

Encourage new gas expl. & development

Secure new LNG import contracts

Expand & upgrade infrastructure

Progress to date

$13 billion of ongoing and planned gas developments

56 upstream agreements signed, $12 billion minimum expenditure

Accelerate existing gas field developments

1

Ports Refineries

Port Shipments

FSRU Pipeline

Pipelines & Storage Marketing

Diversify Energy

15

2

Primary Energy Mix

Policy measures Progress to date

Launched Discussion to Introduce New Sources of Energy

Develop Cyprus Gas Utilizing Egypt LNG Facilities

Diversify Energy Mix

Strengthen Regional Energy Trade

Oil and gas61%

Coal20%

Nuclear10%

Other9%

Global Energy

Oil and gas96%

Coal1%

Hydro3%

Egypt

And Increasing

Address Historical Debts

1609

/10

08/0

9

1.1

07/0

8

1.31.6

06/0

7

0.5

05/0

5

0.6

05/0

6

0.5

4.8-47%

Jun.

14

3.1

5.9

Dec

. 14

5.4

11/1

2

12/1

3

10/1

1

Dec

. 13

3.2

6.3

Arrears to IOCs ($ billion)

3

5.0

10.7

7.9

Jul. 14 - Dec. 14Jul. 13 - Jun. 14

IOC Receipts & Payments($ billion)

Receipts Payments

Policy measures Progress to date

Restore EGPC Financial Balance $7.9 billion in arrears paid from July –December 2014

11.2

Reform Subsidies: A 5-Year Plan

17

4

Policy measures Progress to date

Adjust energy prices to cost recovery levels by 2019

Improve subsidy Administration

July 2014 announcement on comprehensive subsidy reform

3.0 million smart cards issues

71.184

90.214

128.2

140.00

0

20

40

60

80

100

120

140

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15

Billion LEInitial budget

70bn

100bnRevised budget

Expected Value

Modernize Sector Governance

18

5

Policy

Regulation

Market

Ministry

EGPC, EGAS

Ministry

Regulator

EGPC, EGAS,Other

Suppliers

Ministry

EGPC, EGAS,

Past Current Future

Shadow Regulator

Policy measures Progress to date

Modernize Gas Sector Shadow Regulator Established

Moving Towards Free Market

Mining Sector Plan

19

Increase Mineral Resources contribution to Egypt GPD to more than 5% in 10 years

New Mining Law

Restructuring of Mineral Resources Sector and capacity building

Reduce Exports of Raw Materials to maximize added value

Regularly issue new bid rounds

Develop A Master Plan to include integrated industrial complexes to maximize added value – Example The Golden Triangle Project

The Golden Triangle project in Upper Egypt aims at establishing a World Class Economic Zone including Mineral Extraction, Industrial Facilities, Commercial Hub, and Touristic Zones.

New Mining Law Highlights

20

Generating decent revenues to the state

Maximizing added value

A special law to govern the exploration and concession agreements for areas exceeding 16 km2 through international tenders

Allocation of 1% of the output for social development within the relevant governorate for the area being developed

Allows different models of exploration agreements

I. SECTOR STRENGTHS & CHALLENGES

II. STRATEGY FOR THE SECTOR

III. INVESTMENT OPPORTUNITIES

IV. KEY MESSAGES

Significant Investment Potential

22

Minerals

3.4

Transmission

1.4

Petrochemicals 16.9

Refining

8.7

Exploration

17.5

Gas Devt.

21.5

Investment by Sub-Sector to 2022

The Strategy requires investment of $70 billion through 2022, including $25bn of new investment

(Ongoing – Awarded – Open for Investment)

$ billion Investments

MIDORRefinery Expansion$1.4 billion

0.5 MMT/Y Ethylene

0.4 MMT/Y Poly-Ethylene

ANRPCCatalytic Reforming$250 million

Gasoline / LPG / Hydrogen-rich gas

Major Downstream Projects Recently Awarded/Ongoing

24

PPCSokhna-Tebeen Pipeline$174 million

ERCHydrocracker Complex$3.7 billion

4.2 MMT/Year

LPG / Jet Fuel / Gasoline/Gas Oil/ Coke / Sulphur

170km Fuel Oil / Gas

Oil

ETHYDCOEthylene & Poly Ethylene$1.9 billion

0.5 MMT/ Year

Gasoline / Diesel

ASORCCCR$250 billion

PPCBeni Sweif-Menia Pipeline$60 million

0.8 MMT/Y

Gasoline

145km Fuel Oil / Gas Oil

Upstream Investment Opportunities

25

EGAS 2015 Bidding Round GANOPE 2015 Bidding Round

8 shallow-water blocks 10 onshore blocks (W. Nile, E. Nile, S of Gulf of Suez) Data available from EGAS and GANOPE Closing date 31st May, 2015

A total of 18 new blocks are offered for exploration in two recent bid rounds

Ready Now

Short-Term

Medium-Term

Downstream Investment Opportunities: $18 billion

26

Downstream Investment Opportunities$ billion

Assiut - Sohag LPG Pipeline

0.2

New Atmospheric Distillation Unit

Propylene and Derivatives

CCR & IsomerizationRe- Habilitation Coking complex

Full Conversion Hydrocraker Complex

Aromatics & Fertilizers Complex

Gold Mining Round

Bio-Ethanol from Molasses

Formaldehyde and Derivatives

Mineral Resources Bid Round

Minia-Assiut Product Pipeline

Sohag - Aswan Product Pipeline

0.30.3

2.1

0.3

0.1

0.20.1

Glass Sand

2.1

El Hamra Petro-Refinery Hub Project

0.5

0.10.1

0.02.5

New Lubrication Oil Complex

8.00.0

Bio-Ethanol from Rice Straw

0.9

0.2

Phosphate Misr

Petr. Basin, Bunkering and Solar

1.2

Refining Trans. / Rec.Petchm. Minerals

Unlocking Egypt’s Energy Potential

27

Valu

e of

Inve

stm

ent

Assiut - Sohag LPG Pipeline

Mineral Resources Bid Round

Bio-Ethanol from MolassesSohag - Aswan Product PipelineBio-Ethanol from Rice Straw

Ganope 2015 Bid RoundNew Lubrication Oil Complex EGPC 2015 Bid Round

EGAS 2015 Bid Round

Phosphate Misr

Full Conversion Hydrocracker Complex

Readiness for Implementation

Petr. Basin, Trade and Solar Energy

2017 Bid Rounds

El Hamra Petro-Refinery Hub Project

Glass Sand

Minia-Assiut Product Pipeline

Formaldehyde and Derivatives

Gold Mining Round

New Atmospheric Distillation Unit

CCR & IsomerizationRe- Habilitation Coking complex

2016 Bid Rounds

Aromatics & Fertilizers Complex

Propylene and Derivatives

Strong Investment Landscape

Medium-Term Short-Term Ready Now

Trans./Rec.PetchemUpstream

MineralRefining

I. SECTOR STRENGTHS & CHALLENGES

II. STRATEGY FOR THE SECTOR

III. INVESTMENT OPPORTUNITIES

IV. KEY MESSAGES

Strategic Objectives: Major Progress

29

EnergySecurity

56 upstream - $12bn concessions awarded2 current bid rounds

New gas terms, prices & investments

LNG imports finalized

FinancialSustainability

IOC arrears reduced($6.3bn to $3.1bn)

Energy subsidy reform ongoing(1st Phase Completed –July 2014)

SectorGovernance

New mining law ratified

Shadow gas regulator established

$45 billion in oil, gas and mining investment currently ongoing $25 billion new investment opportunities available for private sector participation