The Rigzone Interview: EGME CEO Says Chad Output to Triple in Next Decade
Three-hundred new jobs will be generated in Chad by the end of 2016 as Essel Group Middle East (EGME) looks to increase oil production from the country, CEO Punkaj Gupta told Rigzone.
Chad’s oil output has fallen in nine of the last 10 years, according to BP’s latest statistical review of world energy, with production decreasing to 78,000 barrels per day (bpd) last year, compared to 173,000 bpd in 2005. Chad is currently one of the lowest producers in Africa, ranking above only a handful of countries in the region in terms of output in 2015.
A tripling of Chad’s 2015 output would see the country’s production rise to 234,000 bpd, which would take if off the bottom-end of the production list and place it firmly amidst more significant African oil producers such as Equatorial Guinea, Gabon and the Republic of Congo, assuming their output levels remain stable over the next 10 years.
In this interview, Gupta discusses EGME’s present and future activities in Chad, giving his predictions on what the future holds for the North African oil producing nation.
Rigzone: What is Essel Group Middle East currently doing in Chad, in terms of oil and gas exploration and production?
Gupta: Essel Group Middle East is currently negotiating [the commercial terms of] a production sharing contract [PSC] with the government and…we are expecting that we will come to terms with the government in the coming two months [by July]. The PSC is not cancelled or taken back, it is still there but we are discussing the commercial terms as per the current environment.
Rigzone: What plans are in place to develop the company’s assets in the country over the next few years, should the negotiations prove successful?
Gupta: We are ready with our funds that we have arranged from internal accruals. Funding is not an issue with Essel Group at all, and with our own internal funding system, we will fund [our] whole [Chad] project.
We will be investing $15 million this year. Immediately as we get the PSC in hand we will conduct a 2D seismic survey [over Chari Sub Block I, one of three blocks in Chad which EGME holds an interest in] and then go for drilling. As for drilling, I would like to mention that we are procuring our own rigs. We are not hiring any contractor for drilling purposes, we will have our own drilling crew and we will be doing all the exploration work in-house, with our own know-how and manpower. For this purpose we have already acquired a lot of manpower from very reputable oil companies like…Total, we have people from Tullow, we have people from Reliance Petroleum…Exxon Mobil…we have people from Petronas also with us.
Rigzone: How many oil and gas workers do you currently employ in Chad?
Gupta: Currently we have around 11 people, who are main technical people, sitting in Dubai, and they are controlling all the technical aspects of Chad property. Once the PSC is in place and active, our best people will all go on ground for the 2D seismic survey.
Rigzone: You’ll be employing hundreds of people in Chad by year-end. Will the employees be local or will you look at expats, too?
Gupta: If we find a local talent as a petrophycisist or a geologist, we are very keen to employ them because it will save me the cost of housing and other HR benefits that I can forward to them. So we are not very keen on bringing all the expats. Expats will be of course there, if needed, but our primary focus in, not only in Chad but other prospects also, is that we will employ the local people, like in Kenya [EGME is looking to employ around 400 people in Kenya this year to support its exploits in Block 2A]. We have only employed local people there. We have only one country head there, James Jenkins, who is Canadian. All the rest of the technical work is being done by Kenyan people.
Rigzone: What is the security situation in Chad?
Gupta: We have not heard of anything, any incident, within our [negotiated] PSC or in our neighbouring PSC, which is producing and belongs to Glencore. So we are quite positive about it, and if any small incidents were there, we are not that bothered about it. It’s a common thing everywhere.
Rigzone: Do you have any special procedures to ensure your staff in Chad remain safe?
Gupta: We have a standard operating procedure within our company, which is a security procedure we always conduct. We provide physical security to each and every person working in our company. So in Chad, we have already done our due diligence on the security part and we have our in-house team. We have our own security heads, which were ex-army officials of other various countries with experience working in Africa, in Afghanistan, in Iraq…We generally work in alliance with local governments, local armies, local police. We hire their personal security persons only and we secure each and every aspect of our employees. Even if they are working on-job or off-job, but living on-site.
Rigzone: Would you encourage other international oil and gas firms to operate within Chad?
Gupta: Yes. We need an environment there, we need a very positive environment. Alone we can’t do anything but if have more international companies participating in Chad, we can reduce the cost and bring in more manpower, more knowledge to Chad, and this will bring our operating cost down also, if other companies operate there.
Rigzone: How do you see Chad’s hydrocarbon sector evolving over the next decade?
Gupta: It is a very young prospect right now. Chad is one of the 17 oil producing countries in the African continent. A lot of work has to be done by international investors to support the government while achieving their targets of production. I believe the production [of Chad] in the next decade will go three times what they’ve achieved today, minimum. And we expect that new partners, new investors will definitely enter this region because this is the most secure and most significant oil producing prospect available currently in this region.
Rigzone: Will you be expanding your oil and gas interests in Chad in the future?
Gupta: Yes, of course. We are looking at other assets also, but currently our focus is to get our first PSC in place. Once this is in place, then we might look at other PSCs.
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