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Ferdinando Rigardo, Repsol
Ferdinando Rigardo, Regional Executive Director Europe, Asia & Africa, REPSOL talks to the North Africa Oil & Gas Summit about Repsol's involvement in the North Africa region.
Sladjana Franovic, Director, The North Africa Oil & Gas Summit: REPSOL has been dedicated to North Africa for many years, being one of the most important investors in Libya and Algeria. In your opinion what is the key to achieving sustainable growth in this region?
Ferdinando Rigardo, Regional Executive Director Europe, Asia & Africa, REPSOL: There are several factors responsible for Repsol achieving sustainable growth in North Africa, each factor supporting our short, medium and long term strategy in the Region. The main pillars of this strategy focus on:
In Algeria and Libya, countries Repsol has oil or gas production and development assets, our core strategy remains centered on:
Sladjana Franovic: Repsol was awarded three hydrocarbon exploration licenses in Ras Raknan, Ras Raihan and al-Nathour in Northern Tunisia earlier this year, which was one of the first successful licensing deals an IOC completed with the state owned ETAP in post-revolution. What do you expect from this investment and how important is Tunisia for REPSOL’s portfolio?
Ferdinando Rigardo: The Prospecting Permit area acquired by Repsol is approximately 15000 km2 in a complex Thrust Belt zone where the geological risk is quite significant but the prize could be significant also. It is a frontier area which needs better seismic imaging through adequate acquisition and processing technology. The inclusion of these blocks in Repsol´s exploration plans has the importance of high exploration potential associated with proximity to markets in a country with a favorable and stable business environment.
Repsol will pursue further evaluation of new areas and opportunities in Tunisia in order to consolidate its presence and growth in the country.
Sladjana Franovic: When do you expect your workers to return to Libya, and what needs to be done before resuming production in this country?
Ferdinando Rigardo: Repsol has prepared a detailed action plan for the re-entry of employees to Libya and to resume operations. According to this plan, Repsol employees will return to Libya after all the Security and logistics issues are resolved. Issues such as, transportation (air and ground), accommodation, medical and emergency response plans and others, all needing to be addressed prior to.
In order to re-establish operations and production in El-Sharara field, a thorough assessment of the surface and subsurface facilities is needed. This assessment will deliver maintenance and repair plan that will prepare the operation for the production startup.
Sladjana Franovic: As one of the keynote speakers at the upcoming North Africa Oil and Gas Summit you will be presenting a paper on “North African Gas: Facing the European Market”. In your opinion what has changed in Europe-North Africa energy relations since the beginning of Arab spring and how will these changes affect the future of North African Gas export?
Ferdinando Rigardo: As a consequence of recent conflicts and issues with Russian Gas supply, Fukushima earthquake related incident and the current “Arab Spring”, European countries have dedicated a significant amount of effort to review their energy policies and dependencies. Currently, 27 E.U. member states import 85% of their oil needs and 65% of their natural gas, and is expected that by 2030 those figures will increase to 95% and 85% respectively. Alternative energy sources and securing current gas supplies becomes a primary issue. Even topics about the “Solar Summer” in North African countries after the “Arab Spring” have been brought back into the scenarios, even though it would be a complex and long term solution to be further analyzed.
Regarding natural gas, 26% of European consumption comes from Russia and about 15% from North African countries, mainly Algeria with 12%. This is an opportunity to build strong and win-win projects with North African countries.
On the other side, a notable part of the GDP of North Africa countries comes from hydrocarbon exports and we can see different realities depending on how the Arab Spring has affected each country individually.
Sladjana Franovic: Is North Africa still as competitive region for investment as it was before the Arab Spring?
Ferdinando Rigardo: For the moment being, contractually nothing has changed; both new (Libya) and already existing (Algeria) authorities are maintaining the same contracts with IOC’s.
Even though the contracts haven’t been modified, we have to consider the following aspects as part of the investment decision making process:
GENERAL
Pre Arab Spring
Considering the above mentioned aspects, the region, especially Libya and Algeria, maintain its competitive position; based primarily on its high resources prospectivity and unexploited oil & gas reserves.
Libya is been directly affected by the Arab spring, and will take time and resources for the O&G industry to recover. Security will be the main challenge to overcome, by which it will affect the competitiveness of the country if it is not handled appropriately.
In Algeria, the effects of the Arab spring are collateral, and for the moment are not affecting directly the investment scenarios in the country. As it was mentioned before, Algeria should review its fiscal, contractual and regulatory framework in order to attract more investors.
Sladjana Franovic, Director, The North Africa Oil & Gas Summit: REPSOL has been dedicated to North Africa for many years, being one of the most important investors in Libya and Algeria. In your opinion what is the key to achieving sustainable growth in this region?
Ferdinando Rigardo, Regional Executive Director Europe, Asia & Africa, REPSOL: There are several factors responsible for Repsol achieving sustainable growth in North Africa, each factor supporting our short, medium and long term strategy in the Region. The main pillars of this strategy focus on:
- Society
- Employees
- Government
- Health, Security and Environment
- Cultural and religious respect
- Financial efficiency
In Algeria and Libya, countries Repsol has oil or gas production and development assets, our core strategy remains centered on:
- operating efficiency, optimizing costs and value generation through investments
- maximize the use of technology
- Increase of Oil and gas production, based on subsurface and surface engineer
- Integrated Project Management for new developments
Sladjana Franovic: Repsol was awarded three hydrocarbon exploration licenses in Ras Raknan, Ras Raihan and al-Nathour in Northern Tunisia earlier this year, which was one of the first successful licensing deals an IOC completed with the state owned ETAP in post-revolution. What do you expect from this investment and how important is Tunisia for REPSOL’s portfolio?
Ferdinando Rigardo: The Prospecting Permit area acquired by Repsol is approximately 15000 km2 in a complex Thrust Belt zone where the geological risk is quite significant but the prize could be significant also. It is a frontier area which needs better seismic imaging through adequate acquisition and processing technology. The inclusion of these blocks in Repsol´s exploration plans has the importance of high exploration potential associated with proximity to markets in a country with a favorable and stable business environment.
Repsol will pursue further evaluation of new areas and opportunities in Tunisia in order to consolidate its presence and growth in the country.
Sladjana Franovic: When do you expect your workers to return to Libya, and what needs to be done before resuming production in this country?
Ferdinando Rigardo: Repsol has prepared a detailed action plan for the re-entry of employees to Libya and to resume operations. According to this plan, Repsol employees will return to Libya after all the Security and logistics issues are resolved. Issues such as, transportation (air and ground), accommodation, medical and emergency response plans and others, all needing to be addressed prior to.
In order to re-establish operations and production in El-Sharara field, a thorough assessment of the surface and subsurface facilities is needed. This assessment will deliver maintenance and repair plan that will prepare the operation for the production startup.
Sladjana Franovic: As one of the keynote speakers at the upcoming North Africa Oil and Gas Summit you will be presenting a paper on “North African Gas: Facing the European Market”. In your opinion what has changed in Europe-North Africa energy relations since the beginning of Arab spring and how will these changes affect the future of North African Gas export?
Ferdinando Rigardo: As a consequence of recent conflicts and issues with Russian Gas supply, Fukushima earthquake related incident and the current “Arab Spring”, European countries have dedicated a significant amount of effort to review their energy policies and dependencies. Currently, 27 E.U. member states import 85% of their oil needs and 65% of their natural gas, and is expected that by 2030 those figures will increase to 95% and 85% respectively. Alternative energy sources and securing current gas supplies becomes a primary issue. Even topics about the “Solar Summer” in North African countries after the “Arab Spring” have been brought back into the scenarios, even though it would be a complex and long term solution to be further analyzed.
Regarding natural gas, 26% of European consumption comes from Russia and about 15% from North African countries, mainly Algeria with 12%. This is an opportunity to build strong and win-win projects with North African countries.
On the other side, a notable part of the GDP of North Africa countries comes from hydrocarbon exports and we can see different realities depending on how the Arab Spring has affected each country individually.
- In Libya, current relations have strongly developed politically after the uprising: from a previously supply only position, relations are moving towards being more collaborative.
- In Algeria, the political situation has not significantly changed. Whereby for Algeria, with Medgaz on stream and the upcoming Galsi, energy relations with Europe should strengthen.
- Egypt, more focused on LNG exportation, energy relations are not such a focused issue (unlike the case of oil: 35% of the 2.2Mbopd oil transported through the Suez Canal goes to Europe, and the 2.4Mbopd piped from the Red Sea to the Mediterranean Sea via SUMED) whereby LNG can be supplied to Europe through international alternatives.
Sladjana Franovic: Is North Africa still as competitive region for investment as it was before the Arab Spring?
Ferdinando Rigardo: For the moment being, contractually nothing has changed; both new (Libya) and already existing (Algeria) authorities are maintaining the same contracts with IOC’s.
Even though the contracts haven’t been modified, we have to consider the following aspects as part of the investment decision making process:
GENERAL
- Due to the current high oil price scenario, world competition between oil companies on average has increased
- However, due to unrest in North Africa at the moment, investment is perceived as riskier
- Has not been directly affected by the North African uprisings
- Tough fiscal and contractual terms are not attracting much foreign investment; nevertheless Repsol has a long term commitment with Algeria in exploration, development and production.
- Recent internal problems in Sonatrach, affected the normal execution and operative of O&G projects
Pre Arab Spring
- Considered under explored and under developed, with decades long Sanctions
- Contracts were renegotiated in 2008, increasing government take
- No licenses awarded in 2009 or 2010. (no license rounds since EPSA IV in 2007)
- Currently needs ample investment to re-start the Oil/Gas infrastructure for existing resources and production
- Existing contracts seem they will be honored and secured
- There is a race at the moment for re-entry
- Re-establish communication with new government
- Security issues in Tripoli and fields
Considering the above mentioned aspects, the region, especially Libya and Algeria, maintain its competitive position; based primarily on its high resources prospectivity and unexploited oil & gas reserves.
Libya is been directly affected by the Arab spring, and will take time and resources for the O&G industry to recover. Security will be the main challenge to overcome, by which it will affect the competitiveness of the country if it is not handled appropriately.
In Algeria, the effects of the Arab spring are collateral, and for the moment are not affecting directly the investment scenarios in the country. As it was mentioned before, Algeria should review its fiscal, contractual and regulatory framework in order to attract more investors.
