The US’ Assistant Secretary of State for Energy Resources, Francis Fannon, expected the American energy companies to boost their investments in Egypt, adding, “My visit to Cairo is a part of a regional trip which included Israel as well as Cyprus. My impression is that the Egyptian government has been improving the investment conditions to attract more companies and that is why I fully expect increasing interest from US companies to invest here.” Daily News Egypt interviewed Fannon to unravel his perspective on investment and the economy, the transcript for which is below lightly edited for clarity:
There are many other nationalities heavily investing in Egypt’s energy sector, Italians are in gas fields and Russis is establishing the nuclear Dabaa station. How do you see this?
We don’t direct Us companies to invest in a certain area because of some political reasons. They can choose where they want to invest. The companies eye the best opportunity to make investments in an attractive investment climate. We aren’t in an investment race with any of the other nationalities.
Does the US plan to enter Egypt’s gas sector as German companies are in the lead now?
The US is here, we continue to be active and we are looking for that all the time. I think that the US has the best technology in both the oil and gas sectors and the renewable energy sector. We also have the best health and safety environment records, the best trainings and investment in local people programmes.
US companies have a longer-term commitment of investment. For example, General Electric (GE) is very interested to continue their investments and we also continue to talk to GE to encourage their plans here.
We would like to see more US companies in all of Egypt’s sectors particularly in the energy sectors. This is my first trip to Cairo and it won’t be my last as we look forward to deepening the relations.
There are many developments in the gas area, additionally, we know that Egypt targets to have 20% of its generally produced energy of renewable by 2022, and 37% by 2035, so we think that Egypt’s renewable energy sector development is very much beginning and there is a long way to go, and we expect US companies to help on that.
What is the current amount of US energy investments in Egypt?
For companies, actually I don’t have the figures, however, the Overseas Private Investment Corporation (OPIC) will be part of the International Finance & Development Corporation (IFDC) which will support the existing US investments in the Egyptian market as well as other markets. I think that OPIC has about 3 ongoing projects in Egypt now.
We view the Eastern Mediterranean as a region when it comes to energy. What we see are the interconnections that are happening between the three countries which are actual facts. We think that joint discussions about gas discoveries will allow the three countries to be winners.
The US has been involved in energy issues since the1800s when the US government opened markets for US oil exports. Energy was managed through a bureau affiliated to the economic and business affairs bureau of the US Department of State, but since 2010, the US government recognised that energy is critical to foreign policy and geopolitics so it established a standalone bureau.
Since 2010, there is an energy team working all over the world. I am pleased to be the first confirmed assistant secretary to lead the bureau, and to be part of the US energy revolution that has changed dynamics for our country as well as many other countries.
I worked for the government, then the private sector and now I am back to the government, I have been serving for the bureau for the past 6 months now. There is incredible energy transformation in the US and there is a similar level of promise here in the Eastern Mediterranean.
Energy is something that can create conflict among countries or can be a chance for cooperation and we see a chance for cooperation here in the region.
Would you please elaborate about your current regional trip?
My trip to Cairo is part of a regional trip as previously I was in Israel, Cyprus, to talk to the governments and private sector and other energy industry voices and stakeholders, for better understanding of the developments and to recognise where the US positively can engage and support this very significant reform in the Eastern Mediterranean region.
Egypt is very central to the entire Eastern Mediterranean region discoveries. Egypt has the domestic demand, it is developing its existing infrastructure and we see this as a positive development, as well as positive cooperation with Israel and Cyprus. This triple cooperation serves the development in Europe which is aiming at energy diversification.
Egypt is also implementing energy diversification plans and benefiting potential exports to other parts of the world. We also see that this is a very positive development.
US companies have a longstanding cooperation with Egypt as well as the region. Some companies have been working here for over 100 years in the region. Despite the challenges that the region has gone through, companies are here investing and cooperating with Egyptian partners and serving the region’s developmental goals. For example, we have here GE, ExxonMobil and Apache.
These long years of partnerships are an obvious indicator that our businesses have made a commitment to this country. We are very pleased to see some of the reforms. I met with many officials from the Egyptian government where all of them affirmed their welcoming of American businesses, encouraging increases of US investments.
The Egyptian government isn’t only wishing the businesses to come but they are also enacting many reforms including the gradual energy subsidy lifting and reimbursing foreign oil companies. These significant reforms are done and were critically important for attracting new investments to the market and to support the economy.
Lifting energy subsidy is the hardest thing to do around the world, but it’s critically important, we also realise that the government is enhancing the country’s regulations to attract investments in gas and the power sector. We see that the government is creating an enabling environment to attract more investments.
Reforms allow US officials to encourage US companies to come to Egypt. I used to work in the oil, gas and mining industry and would say that “everyplace has good rocks,” but what makes it worth investments is what is above the rocks; I mean the appropriate policies, procedures and reforms. It is not only about the availability of the natural resources, it is also about the suitable policies for good investments.
I know that there is a big focus on the gas and the discovery of the Zohr field in Egypt, but it is not the only focus, there is the renewable energy where Egypt is implementing major projects in Benban. We believe that the country plans for diversification makes the energy sector more resilient and encourages companies to make significant investments.
According to Egypt’s Ministry of Electricity, the Benban Solar Park is a photovoltaic power station under construction. Production capacity of the project might reach 2,000 MW. It is located in Benban in the western desert, approximately 650 km south of Cairo and 40 km northwest of Aswan. Benban’s solar power project is considered to be one of the largest solar generation facilities in the world. The project’s purpose is to contribute to Egypt’s energy self-sufficiency.
After your recent visit to Cyprus; how do you see Turkey’s attitude in the Eastern Mediterranean region’ discoveries?
Towards Cyprus, the US fully supports Cyprus’s rights to develop the resources in its economic areas. We believe that the natural resource wealth should be shared equally. We also believe that any use of military action is inappropriate to the peaceful commercial development of these resources.
Would you please tell me more about the US R&D’ activities?
US companies pay great attention to training people around the world, with special focus on Science, Technology, Engineering and Mathematics (STEM)’ programmes. We see further interest from US companies to invest in Egypt.
How do you see the future of the Eastern Mediterranean region, over the next 5years, in light of political conflicts?
As I mentioned, we have interconnectivity between the countries which can positively change the relations in other areas towards a type of agreement even if there are other political tensions.
I think that there is a shared understanding of the development of the region, as the region’s people want reasonable and affordable energy prices.
What is the message you will deliver back to the US after your regional visit?
My impression is that the region is open for businesses, good partnerships, with huge demand. For Egypt, there are many reforms that enable businesses to come. The region is in the very beginning but it is very promising.
Notably, Fannon serves as the Assistant Secretary for the Bureau of Energy Resources (ENR) at the US Department of State. He oversees US foreign policy in the critical intersection of energy and national security and promotes US interests to ensure energy resources are used to increase economic opportunity, stability, and prosperity around the world. Fannon advises the Secretary on strategies to promote universal access to affordable and reliable energy resources and to strengthen energy security through policies which advance diverse, transparent, and secure global markets for all energy types. Prior to this role, Fannon was the Managing Director of BHP’s Washington, D.C. Corporate Affairs office, where he developed a comprehensive US strategy for the world’s largest diversified resources company. Before BHP, Fannon was a Senior Director at Murphy Oil Corporation in Washington, D.C.
Fannon previously served as Counsel to the U.S. Senate Committee on Environment and Public Works.