Lone ranger

As Egypt’s largest independent oil company PICO International Petroleum is rapidly building a name for itself as a small company, that dares to take on the global oil majors in the exploration field. O&G meets Head of Exploration Hamed Ibrahim to find out the power of PICO.

“Oil, to me, is always the industry of the new ideas. You have to be inventing a new way or a new idea to achieve a better result than in the future”
-Hamed Ibrahim

When it comes to PICO International Petroleum (PIP) size matters, according to the firm’s head of exploration Hamed Ibrahim, who says the company’s emergence as Egypt’s leading private oil company is proof that success can come in small packages. Despite only having been set up in 1989, today PIP has grown to become the third largest producer in Egypt’s Gulf of Suez region. Over the past decade it has focused on the development of mature oil and gas fields and between 2003 and 2008 its net production increased by 100 percent. During that time it has also maintained an average Reserve Replacement Ratio of 152 percent. The speed of its development has in large part been due to its independence and relatively small size which allows it greater agility in its decision making processes, according to Ibrahim. “It gives the advantage of being able to move faster and easier than the major companies. Definitely the decision-making is much easier. The process of this is much faster. You can tackle small and medium size opportunities. You don’t have a minimum size of work. So we are looking for whatever opportunities come up and they suit our business case they will be one of our targets.

Taking on the giants
PICO’s acquisition strategy has seen it take over mature wells from the likes of Shell, Total and British Gas. Its aim is to take over wells that have become too expensive for the companies’ to continue to work on, then explore deeper to maximise their potential, as Ibrahim explains. “PICO acquires mature fields from major companies such as Shell or ConocoPhilips. The operating criteria of those fields with majors becomes a little bit expensive for them. For us it’s not. We tackle these fields differently from what they are doing.” An example of a successful acquisition was that of the Gemsa field in Egypt, which was producing 6,500 barrels of oil a day when PICO took it over. Within six months it had increased capacity to 13,500 barrels a day. “Doubling oil production in a field like this is a great success. It’s all about looking for a new horizon in the same field that nobody else has yet discovered,” says Ibrahim.

Describing another successful acquisition, he says: “Two years ago we acquired a field from Total and Aramco and at the time it was only producing gas. We dug deeper and discovered it was possible to also produce oil from the field. Now it is producing 10,000 barrels a day and the plan now is to increase that production by almost three times.” It achieved this, he says, by increasing the “drillability” of the well. PICO now plans to drill three additional wells within the same field. The most challenging area it is working in, says Ibrahim, is the Gulf of Suez, which, because of the fact that it has been in production since the 1960s, is becoming increasingly difficult to extract from – defying even PICO Petroleum’s perseverance: “Maintaining productivity is a huge challenge for everybody working in the Gulf of Suez. Since the 1960s it has produced something like five million barrels of oil and there is around 1.5 billion barrels of oil left there. Everybody is struggling to get it out of the ground,” says Ibrahim.

The cutting edge
PICO Petroleum’s success in maximising the capacity of mature oil fields, means developing Enhanced Oil Recovery (EOR) and Intelligent Oil Recovery (IOR) techniques is an important part of its strategy.  Describing some of the methods it uses to bring to life wells that were previously thought to be redundant, Ibrahim says: “We try to maintain or stop the high decline rate by maintaining the pressure, by artificial lifting of the crude itself and by increasing the recovery factor. If you manage to achieve a good result in those three aspects you will definitely have the chance to increase your production.”

The most effective EOR techniques currently are, according to Ibrahim, artificial lifting, horizontal drilling and chemical or steam injections. In the future he believes companies will make more use of chemical injections: “From the point of view of increasing the porosity of the bore salt this technology will allow the oil to move easier and smoother through the reservoir itself and if you can help parts of the oil to move smoothly that will increase the recovery factor in the oil field.”

Ibrahim says he believes that companies are under greater pressure than ever before to develop and take advantage of IOR and EOR as they can no longer afford to take a short term view of the future of oil production or to accept the recovery factors of wells at their current levels.: “If you look at the average recovery factor you will find, all over the world, that the maximum is 40 percent. But what about the remaining 60 percent? If you even manage to increase your recovery factor by five percent then you are adding a lot, even to the international reserves.”

Forward thinking
PICO Petroleum’s ultimate aim is to increase its exploration activities in Egypt however, Ibrahim acknowledges that the current economic climate could make building up the funds needed to invest in new fields a challenge.

Because of this he says the company prefers take a gradual, not aggressive approach, to achieving its expansion strategy: “PICO is a small, independent company. We have managed to achieve a good rate of success in the last 10 to 15 years. Our target is to increase it but the ups and downs in the market recently make you very cautious in choosing your next step and very alert about what’s going on in the whole global system. Right now nobody is isolated from the influence of what is going on in the world so we have to be cautious about taking a decision and making the next step. We believe that moving slowly is much better than rapidly jumping to some conclusion because you don’t know what conclusion this will result in later.”
Despite taking a more low key towards its expansion strategy, PICO Petroleum has some lofty ambitions, including the expansion of its operations across the Middle East. Ibrahim says the company plans to target Syria and Yemen and outside the region, Indonesia.

“Our near future plan is to expand outside of Egypt. Last year we visited Indonesia to find a target outside our current location.”

Clearly this is a company that believes in thinking creatively about how best to maximise its resources as Ibrahim confirms: “Oil, to me, is always the industry of the new ideas. You have to be innovative. You have to be inventing a new way or a new idea to achieve a better result than in the future.”

About PIP
PICO International Petroleum was the first independent oil company in Egypt and become the leader Egyptian private sector producer of oil. It currently operates the Gemsa, Amal and Zaafarana fields and holds shares in Osoco and South Ramadan fields. Its success was built on reducing expenses and increasing production and the application of the latest technologies to maximising oil fields.

Biography: Hamed Ibrahim

Hamed Ibrahim joined PICO International Petroleum as Exploration General Manager and Deputy Business Development Manager in 2006. Prior to that he worked as Account Manager and Business Segment Manager for Egypt and Libya at BP. He started his career at the Gulf of Suez Petroleum Company (GUPCO) where he worked from 1980 to 1997 in various roles, including Well Site Geologist, then Production Geologist and in the Exploration Department as Exploration Geologist and Field Study Team Leader.

The big question
Hamed Ibrahim on oil prices

The oil price right now, because of this economic crisis, is not moving below US$40 a barrel. We have seen days when the oil price was almost US$7 a barrel and it was better days than today from the economical point of view.

But right now because of the demand and the amount of discovery and the reserve adding to the actual reserve in the world, definitely, the days of the cheap oil is already past.  I believe the oil price will never be less than US$30 by any means in the future.”