APG Flaring in Egypt: Addressing Regulatory Barriers

Location:

Egypt

Business sector:

Natural resources

Project number:

49812

Funding source:

EBRD Shareholder Special Fund

Contract type:

Consultancy Services

Notice type:

Invitation for expressions of interest (CSU)

Issue date:

12 Nov 2015

Closing date:

10 Dec 2015   at  23:59   London

Access eSelection

Project Description:

The European Bank for Reconstruction and Development (the “EBRD” or the “Bank”) is strongly committed to reducing the flaring and venting of associated petroleum gas (“APG”) in its countries of operation. The EBRD is part of the World Bank led initiative “Zero Routine Flaring by 2030”.

The EBRD has identified gas flaring as a significant issue in Egypt. It has undertaken prior work to identify the scale of APG flaring and commercial opportunities to use APG. The scale of gas flaring in Egypt is estimated to be around 2 bcm per annum (or 4% of the country's total gas consumption in 2014). In its prior work, the Bank has identified regulatory barriers as being important for inhibiting investments to reduce gas flaring. Examples of regulatory barriers include the structure of Production Sharing Contracts (“PSCs”) under which operators have limited ownership over any APG produced, or well-specific limits on APG flaring that offer poor incentives to companies.

Assignment Description

The Bank now intends to engage a consulting company (the “Consultant”) to: (i) comprehensively identify regulatory barriers inhibiting APG flaring reduction in Egypt; (ii) provide recommendations for addressing these barriers; and (iii) present these recommendations to Egyptian policy makers (for example, the Ministry of Petroleum and its state-owned subsidiaries).

The Bank will use the Consultant’s findings to continue its dialogue with Egyptian authorities with a view to securing their support to implement the Consultant’s recommendations.

The selected Consultant is expected to provide the following services:

1. Identification and review of regulatory barriers inhibiting investments to reduce APG flaring.

The types of barriers that the Consultant will review include (but are not limited to):

a. Provisions of PSCs with a view to identifying specific aspects that act as barriers (for example, the lack of a so-called “gas clause”, allowing the operator to produce and commercialise both the crude oil production and the associated gas).

b. Provisions (for example, standards and penalties) for APG in regulatory rules, and primary and secondary legislation applying to the oil industry (for example, current restrictions on flaring from individual wells provide poor incentives).

c. Broader incentives for investments in the oil and gas sector with a particular focus on the use of APG – for example, the pricing of APG (relative to the regulation of prices of different hydrocarbons in Egypt).

d. The lack of regulatory rules needed for implementing flaring reduction options (for example, provisions for access to existing gas transport infrastructure).

e. Clarity over the institutional framework for addressing APG, with regulatory responsibilities split across different bodies that face different incentives.

The outcome of this task will be a comprehensive review of barriers. The Consultant will also assess the relative importance of individual barriers with a view to identifying the most critical ones.

2. Development and assessment of options for overcoming regulatory barriers.

This will involve:

a. Developing options for addressing a selection of the most critical barriers (to be agreed in advance with the Bank), drawing on successful approaches in other jurisdictions (particularly those that share similar characteristics to Egypt), as well as desk-based research and analysis.

b. Assessing options (primarily qualitatively) based on criteria developed by the Consultant and reflecting factors such as the potential impact, feasibility of implementation, or the cost of implementation. In particular, the Consultant’s assessment should provide an indication of the potential scale of the impact of implementing different measures.

c. Preparing recommendations that consider the interactions between options for addressing different types of barriers, as well as different degrees of changes that can be considered for addressing a particular barrier. In addition, the Consultant’s recommendations should consider how different options may be grouped together, and how these groups of options may be implemented at different stages.

d. Finalising recommendations based on consultation with key stakeholders. These consultations will include workshops and small meetings with key stakeholder groups (investors and developers, other international organisations, government and regulatory officials). The Consultant will have responsibility for all activities related to the workshops/meetings.

3. Presenting and disseminating the recommendations to Egyptian policy makers and regulatory authorities.

This will involve small workshops/meetings along with the preparation of concise summary notes on individual recommendations. It is anticipated that participants at the workshops/meetings will include (but not be limited to) the Egyptian Ministry of Petroleum and its state-owned subsidiaries. Participants in the workshop(s) will be agreed in advance with the Bank, and the Consultant will be responsible for making all logistical arrangements.

Status of Selection Process: Interested firms or groups of firms are hereby invited to submit expressions of interest.

Assignment Start Date and Duration: The Assignment is expected to start in January 2016 and has an estimated overall duration of 10 months.

Cost Estimate for the Assignment: EUR 175,000 (exclusive of VAT). An extension to the Assignment is envisaged, subject to the needs of the Project, availability of funding and the performance of the Consultant,

The Consultant must determine whether any VAT would be chargeable on the services and the basis for that determination, without taking into consideration the special status of the Bank as an IFI and state this to the Bank in their response to the Invitation for Expressions of Interest. To the extent that a Consultant incurs input VAT on goods and services purchased in connection with the provision of services (e.g. VAT on airline ticket) which is not otherwise recoverable by the consultant from the local tax authority, the gross cost to the consultant of such expenses shall be treated as a reimbursable expense.

Funding Source: It is expected that the Assignment will be funded by the EBRD Shareholder Special Fund. Please note selection and contracting will be subject to the availability of funding.

Eligibility: There are no eligibility restrictions.

Consultant Profile: Corporate services are required. The Consultant will be a firm or a group of firms preferably with previous project experience related to:

1. The economics of the oil and gas sector, including incentives associated with different contractual arrangements, arrangements for access to networks, and institutional arrangements for regulation;

2. Reviewing and amending oil and gas contracts, primary and secondary legislation, and regulatory rules applying to the oil and gas sector;

3. The technical issues surrounding APG use, including the development of different technical solutions for the commercial utilisation of APG; and

4. Preparation and delivery of workshops with stakeholders such as investors and developers, other international organisations, government and regulatory officials.

The Consultant’s expert team is expected to include key experts as follows:

Key Expert No 1 Oil and gas economics expert (Team Leader)

Key Expert No 2 Oil and gas legal expert (with experience in Egypt)

Key Expert No 3 Oil and gas technical expert with experience in APG utilisation technologies

Key Experts No 4 Local experts with relevant experience in the Egyptian oil and gas sector and Arabic language skills

Submission Requirements: In order to determine the capability and experience of Consultants seeking to be shortlisted for this Assignment, the information submitted should include the following:

1. Company/group of firms’ profile, organisation and staffing (max. 2-4 pages).

2. Details of previous project experience or similar assignments particularly undertaken in the previous five years, including information on contract value, contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided (if different from duration) , main activities, objectives.

3. CVs of key experts who could carry out the Assignment detailing qualifications, experience in similar assignments, particularly assignments undertaken in the previous five years, including information on contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided, assignment budget, main activities, objectives.

4. Completed Consultant Declaration Form and Contact Sheet, the template for which is available from the following web-link:

http://www.ebrd.com/pages/workingwithus/procurement/notices/csu/contact_sheet.doc.

The above information should not exceed 25 pages excluding CVs and contact sheet.

The complete expression of interest (including CVs, Consultant Declaration and Contact Sheet) should be submitted, in English electronically through e-Selection, to reach the Bank not later than the closing date. The expression of interest shall be one file (pdf). The EBRD reserves the right to reject applications of firms submitting more than one file. Only if the permissible file size is exceeded (4MB), the Consultant may split the expression of interest into further files.

Bank Contact Person:

Georgia Vasiliadis (Ms)

Principal Advisor

Technical Co-operation

European Bank for Reconstruction and Development

One Exchange Square

London EC2A 2JN

Tel: + 44 20 7338 7750

e-mail: vasiliag@ebrd.com (submissions should be sent through eSelection and NOT to this email address)

Notes:

1. The selection will normally be made from responses to this notification only. Consultants will not be asked to submit a proposal. The highest-ranked Consultant will be selected from a shortlist and be invited to negotiate the contract, subject to availability of funding.

2. The shortlist criteria are:

(a) Firm’s experience of the economics of the oil and gas sector, including incentives associated with different contractual arrangements, arrangements for access to networks, and institutional arrangements for regulation – 20%

(b) Firm’s understanding and knowledge of the technical issues surrounding APG use, including development of different technical solutions for its commercial utilisation – 15%

(c) Firm’s experience of amending and reviewing oil and gas contracts, legislation and regulatory rules – 15%

(d) Firm’s experience of preparing and conducting workshops and stakeholder engagement – 15%

(e) CVs of Key Experts for Positions 1-3 – 20%

(f) CVs of Key Experts for Position 4 – 15%