Strategic Management Plan: (A Strategic Pathfinder For Petroleum Company)

Strategic Management Plan

[A Strategic Pathfinder for Petroleum Company]
Submitted by Group (5) - Run 6

Ashraf Modrek
Mohamed Bahgat
Mohamed Elsayed Mohamed
Mohamed Mahmoud Eldarawi
Nagy Elrashidy
Submitted to:
Dr.Hussein El Behiry
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Contents
1. Executive Summary...........................................................................................................4
2. Introduction........................................................................................................................5
2.1 Company Profile..............................................................................................................5
2.2 Vision...............................................................................................................................8
2.3 Mission.............................................................................................................................8
3. Current Performance (Analysis of Current Situation)........................................................8
3.1 Quality, Health, Safety and Environment (QHSE)..........................................................8
3.2 Corporate Social Responsibility (CSR).........................................................................10
3.3 Human resource and company workforce......................................................................10
3.4 Production and financial position of the company.........................................................11
3.5 Cost Optimization..........................................................................................................12
3.6 Transparency and disclosure..........................................................................................12
4. Problem Definition...........................................................................................................13
5. Strategic Plan Objective...................................................................................................15
6. Analysis of External Environment...................................................................................16
6.1 Natural Environment:.....................................................................................................16
6.2 Societal Environment (PESTEL Analysis)....................................................................16
6.2.1 Political factors:......................................................................................................17
6.2.3 Sociocultural Factors:..............................................................................................19
6.2.4 Technological factors:.............................................................................................19
6.2.5 Environmental Factors:...........................................................................................20
6.2.6 Legal Factors:..........................................................................................................20
6.3 Task environment...........................................................................................................21
6.3.1 Porter's 5 Forces Industry analysis..........................................................................21
6.3.1.1 Competitive force: Entry of new competitors......................................................21
6.3.1.2 Competitive force: Bargaining power of suppliers..............................................21
6.3.1.3 Competitive Force: Substitutes............................................................................22
6.3.1.4 Competitive Force: Bargaining power of Buyers................................................22
6.3.1.5 Competitive Force: Industry competition............................................................22
6.3.2 Stakeholders............................................................................................................22
Types of Stakeholders......................................................................................................22
a) Government...........................................................................................................22
b) Suppliers: Company suppliers include:.................................................................23
c) Customers:.............................................................................................................23
d) Creditors:...............................................................................................................23
e) Communities:.........................................................................................................23
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f) Labor unions:.........................................................................................................23
g) Media:....................................................................................................................24
h) Internal stakeholders..............................................................................................24
7. Analysis of Internal Environment....................................................................................24
7.1 Organizational analysis..................................................................................................24
7.1.1 Resources................................................................................................................24
7.1.2 Competencies (competitive strategy)......................................................................28
7.2 Value Chain....................................................................................................................29
8. SWOT Analysis...............................................................................................................33
9. TOWS Matrix...................................................................................................................40
10. Grid Analysis................................................................................................................42
11. Strategic Selection.........................................................................................................43
11.1 Corporate strategy........................................................................................................43
12. Strategy Implementation...............................................................................................44
2.1 Implementation Plan......................................................................................................45
13. Anticipated problem......................................................................................................48
13.1 Problem Details:...........................................................................................................48
13.2 Problem solving methodology and analysis details:....................................................48
13.3 Recommendations for prevention of similar cases:.....................................................50
14. Drive Change................................................................................................................50
Our change particulars:........................................................................................................50
The process of change:.........................................................................................................51
15. Evaluation.....................................................................................................................52
Performance Evaluation:......................................................................................................52
The Balanced scorecard:......................................................................................................52
16. Pricing Strategy.............................................................................................................56
Pricing method:....................................................................................................................56
Pricing strategy:...................................................................................................................56
17. Distribution strategy......................................................................................................56
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4
2.1 Company Profile

3.4 Production and financial position of the company
The total available natural gas feed ready to be processed is fractionation plant is 1000
MMSCF/d which is representing around 75% of the NGL plant capacity, so the cumulative
processed gas during the year (2019) is 379179 MMSCF, and the cumulative production
quantity from each product as following:
Propane 182295 Tons with recovery 99.5%
LPG 105109 Tons with recovery 100.0%
Condensate 1190611 BBLs with recovery 100.0%
The export/import facilities is handle and received 4 imported propane shipments in 2019 in
the favor of EPPC with total cumulative quantity 50116 Tons.
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1. Problem Definition
Although the large quantity of natural gas are produced by different companies in the
Egyptian sector the company profit in the last few years is dramatically dropped (from 223
MM$ in 2006 to around 30 MM$ in 2019) for several reasons which can be summarized as
following; the quantity of the feed gas in the least three years reduce and didn’t reach the full
capacity of the plant and working by almost 75% of the available capacity (1000 MMSCFD/d
Vs. 1350 MMSCFD/d); in another words the company loss production of not availability of
350 MMSCFD/d natural gas to work in full capacity and in the same time the quality of that
feed gas become very lean; that’s mean the concentration of components that produce LPG
(butane) and Propane become low compared by before which reflect to decrease the extracted
amounts of these products in the first place and on the other hand the price of products
decrease by the decrease of the international price of the crude oil and its derivatives so the
company should looking for new opportunities and study these opportunities very well to
decide which will be gone ahead to keep its market position and stand out competitive which
consider a great challenge for the board of directors of the company.
Component Concentration Processed Natural Gas Feed
2008 2014 2019

N2 mole % 0.107 0.082 0.083
CO2 mole % 0.691 0.618 0.834
Methane mole % 89.823 93.641 94.262
Ethane mole % 5.245 3.672 3.135
Propane mole % 2.415 1.103 0.937
Butane mole % 1.080 0.524 0.440
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Pentane+ mole % 0.638 0.360 0.309

Summation 100.000 100.000 100.000
Gross Heating Value
BTU/SCFD 1123.8 1071.6 1059.2
Available NG
Quantity(MMSCF/d) 1550 1350 1100
Extracted Propane
Quantity(Tons/d)
1400 700 550
Extracted Butane
Quantity (Tons/d)
1100 450 300
Extracted Hexane Quantity
(BBL/d) 7500 4000 3500
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This report is formulated to be a strategic pathfinder with the objective to help (FNGCO)
better assess its current strategic position and propose a new strategic approach in the light of
the many opportunities, threats, strengths and weaknesses that surround the company.
2. Analysis of External Environment
6.1 Natural Environment:
a. Geographical Position:
The NGL fractionation plant and its export/import facilities adjacent to Zohr plant that
planned to be gas hub for receiving the natural gas from the different concessions in the
Mediterranean Sea for treatment and re-exporting to different European countries (O)
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2- it’s nearest to many of companies that produce the natural gas (O),
3- the region is willing for construction of new petrochemical companies either in port said
or in Damietta port.
4- easy access and flexible tie-in to the national grid and from other side the fixed cost for
construct any provision pipeline to receive natural gas from any new concession will be less
(O). Mediterranean region contributed 58% of total sales gas produced, Nile Delta 20%,
Western Desert 20%, and Suez Gulf, Sinai and Eastern Desert 2%.
6.2 Societal Environment (PESTEL Analysis)

6.2.1 Political factors:
▪ Stablish the Mediterranean Gas Forum on September 2020 (O).

▪ five-year modernization plan for the petroleum sector in 2016 (O).
▪ adopted a policy aimed at maximizing utilization and exploitation of Egypt's abundant
and valuable Natural Gas resources. (O)
▪ Tension between Egypt and Turkey from one side and Turkey and Greece from another
side on the maritime borders and Oil and Gas exploration rights in the Mediterranean (T).
▪ New acquisition and exploration in multiple areas in the Mediterranean, the Red Sea, and
regions in the Western desert and signed agreements for that issue for many of the
international companies as ENI, BP, SHELL, and others (O).
6.2.2 Economic Factors:
▪ The Global economic contraction and fears for the international companies to suspend
their new projects and start in new explorations. (T)
▪ Egypt plans to invest around $38 billion to develop its petrochemicals sector over the
next four years (O).
▪ Petrochemical Industry is planned to expand with 11 new projects with total
investments estimated at $19 billion (O).
▪ Decline in interest rate with stable currency exchange rates (O).
▪ Government encourages investments and construction of Megaprojects as a Zohr
project (O).
▪ Although the high production from Zohr concession (2500 MMSCFD/d) its consider
lean gas and contains a very high concentration of H2S. (T)
▪ Progressing new explorations and drilling in the Mediterranean, Nile delta and red sea
with international companies like Eni and BP (O).
▪ Expanding use of natural gas as a fuel for cars as a governmental approach. (O)
▪ West Nile delta project owned to BP:
▪ EGAS & EGPC have their upper hand and the power for re-pricing (T).
▪ The Government towards to make petroleum companies listed & credit rating (O).
▪ The debts of the Egyptian General Petroleum Authority EGPC to companies and the
foreign partner therein (T).
▪ The Gov. towards the expansion in using Natural Gas as car fuel (O).
6.2.3 Sociocultural Factors:
▪ Egypt boasts a large, young labor force (31% of the total population) (O).
▪ High population rate which reflects high consumption especially in fuel and LPG (O).
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6.2.4 Technological factors:
▪ Wide establishment of integrated EAMS to manage petroleum sector resources and

assets (O).
▪ Progressive support for Telecommunication and infrastructure systems (O).
▪ Egyptian Petroleum Sector willing to adopt and apply modern technology in the gas
industry, using international systems and standards (O).
▪ applying digital transformation in various activities of the sector (O).
▪ New technologies applied for extracting the valuable products in the NGL plant (O).
▪ New tech. in exploration and drilling to enhance the safety and productivity (O).
6.2.5 Environmental Factors:
▪ Performing EIA for new establishments or projects and for expansions according to
the Law for the Environment (O).
▪ Gov. towards to apply many of ISO Certification – ISO 50001Energy Management
Systems & ISO 14001 Environmental Management System (O).
▪ The ministry of Petroleum towards to implement the process safety management
system to protect people, assets and environment (O).
6.2.6 Legal Factors:
 liberalize the gas market in Egypt to further encourage private sector investments (O).
 resolving the complicated situation with Damietta LNG plant and it will turn back
operate after being idled in 2012 (O).
6.3 Task environment

6.3.1 Porter's 5 Forces Industry analysis
6.3.1.1 Competitive force: Entry of new competitors
 There is only one company in Egypt that extract ethane from natural gas (GASCO
Complex). (O)
 EGPC and EGAS didn’t give any new license for new companies to work in natural
gas derivatives (O).
 Government policies can play an important role in deciding the entry of competitors.
(O).
 High capital cost: to establish and make new facilities to treatment the natural gas and
extract different hydrocarbon liquids (O).
 the sudden decrease in the global demand of oil, natural gas and their derivatives that
lead to un-stability of the international prices (T).
6.3.1.2 Competitive force: Bargaining power of suppliers
▪ EGAS is the control of supply of natural gas to all the Egyptian companies (O).
▪ Reprice of natural gas supplied to (FNGCO) to 3.5 instead of 1.25 $/MMBTU (T).
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▪ (FNGCO) depends only on two sources of suppliers of natural gas PHPC and
PetroBel. (T).
▪ The feed gas to (FNGCO) is not sufficient to reach the max capacity of the plant (T).
▪ The quality of supplied natural gas decreases and becomes lean in regarding to C3,
C4. C5+ (T).
▪ Despite the feed gas is become lean but still the concentration of Ethane very high
(O).
▪ Most of the MRO suppliers do not exist locally and are located internationally in
many international countries and there are no local alternative suppliers (T).
6.3.1.3 Competitive Force: Substitutes
▪ No provision of completely substitute of the natural gas derivatives as its major

require in the petrochemical industry (O).
▪ The possible substitute of these products can be through the importing in case there
are deficient in the local production (O).
▪ LPG can be partially substituted if the government completed the supply of natural
gas to the houses all over the country (T).
6.3.1.4 Competitive Force: Bargaining power of Buyers
▪ The local market has shortage of LPG in production and very high demand (O).
▪ EPPC is the local sole customer for FNGCO propane production (T).
▪ EPP Company has a high capacity plant and shortage in propane supply as local
production of propane does not meet its needs forcing it to partially depend on the
imported propane to cover the gap (O).
▪ The local and the international market in high need of natural gas derivatives specially
ethane and propane (O).
▪ SIDPEEC makes expansion in their facility to receive more quantities of ethane and
to receive propane as a new line to convert it to polypropylene (O).
▪ SENMAR Company is an Indian petrochemical company in Port Said that needs
ethane as raw material (O).
▪ The local demand of LPG still very high and the local production doesn’t meet this
demand and EGPC need large amount to fill that deficit (O).
6.3.1.5 Competitive Force: Industry competition
▪ Petrochemical Industry growth is high (O).
6.3.2 Stakeholders (on one slide)
Types of Stakeholders
a) Government
The Ministry of petroleum plays the role of supervisor of all companies' production
activities through its related laws and regulations.
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The new Gas Law paves the way for a substantial reform of the gas sector.
 The law mandates the creation of a new independent gas regulator.
 Offering an opportunity to the private sector to enter and compete in wholesale
downstream market.
b) Suppliers: Company suppliers include:
1. Raw material suppliers: The Fractionation Natural Gas Company receives

the gas produced from North Port Said, Ras El Bar and Temsah concessions
through the gas treatment plants of El Gamil and Ha'py in order to extract the
NGL and produce propane, LPG and Condensates.
2. MRO suppliers: For the various types of equipment, the company deals with
local and foreign suppliers for maintenance repair and operations spare parts.
A service agreement is held with gas turbine manufacturer (Solar) to perform
engine exchange upon running hour’s schedule.
3. Logistics suppliers: providing food and camping services for employees.
c) Customers:
The liquid propane is stored in the refrigerated tank at Damietta to be exported to the
international market through marine vessels. While the LPG and the condensate are
pumped to the relevant pipeline network owned by EGPC for local consumption.
Currently, the liquid propane is transferred to the Egyptian Propylene &
Polypropylene Company (EPPC) for the petrochemical industry to maximize foreign
currencies returns and added value. EPP is producing Propylene and the (FNGCO)
existing Damietta facilities are modified to be utilized to import Propane. in addition
to export the excess commercial propane to the international market through marine
vessels.
d) Creditors:
The lenders of money to company businesses, they could also have a secured interest
in the company’s worth. That can include banks, and suppliers.
Their claims get paid back from the sale of products or services for the company. In
the event of a business shutdown, creditors get paid before stockholders.
e) Communities:
Community surrounding the company is affected by Job creation, Safety, Economic
development, Health from environmental development that the company extensions
would cause.
f) Labor unions:
Labor unions play a significant role in representing employees’ interest and protecting
employees ‘rights.
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The unions are impacted by and can impact the company as representatives of
laborers who are considered stakeholders. Trade unions or syndicates may be
informed and consulted about things like worker`s safety.
g) Media:
The company has a website to publish media publications and transparency data.
The company often needs to interact with the press to make an important
announcement or advertise their product or tenders.
h) Internal stakeholders
A company stakeholder is any person, group or entity affected by the way in which a
company does business.
 Shareholders
The company is an Egyptian joint stock company among the founder
shareholders:
GASCO, BP and Ieoc Eni Egypt.
 Directors and Managers:
Generally speaking, the board of directors of the company contains six directors
excluding the chairman; three of them are executive and three are non-
executive. They are directly nominated from the shareholder also there are
specific posts in the senior management are also hired and nominated from the
shareholders (GASCO, BP, IEOC Eni) that make them take long time to be
familiar with the internal culture (W).
Ironically, a manager is a stakeholder himself as he affects the company by his
decisions and is affected by:
1-Pay and Benefits: As a stakeholder, a manager wants to feel comfortable with
the amount of compensation he gets from his expertise and work relative to
other career or company options.
2- Job Satisfaction: Frustration with an inability to make decisions, extreme
pressure to perform, poor ethical guidance and negative coworkers and
colleagues can all negatively affect the manager.
3- Support and Stability: he needs to be supported from his heads and also from
other departments’ heads.
 Employees:
Employees or workers are the people who are working for the business and are
interested in earning the high wages.
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3. Analysis of Internal Environment
7.1 Organizational analysis

7.1.1 Resources
a) Tangible Resources
 Land:
 The NGL Plant: built on an area of 120 Fedans and located on the Mediterranean
Sea to the West of Port Said (S).
 Export/Import facilities are located within New Damietta Port with a dedicated area
900,000 M2 (S).
 A pipeline with a diameter of 10’’ and 51 Km long connects the NGL plant in PS
with DM facilities (S).
 Plants and equipment:

- The NGL Plant:
-The NGL plant with capacity design for processing 1350 MMSCFD/d and to handle
significant carryover of condensate and glycol and many other contaminants (S).
-the plant has a limited design for the treatment of other specific contaminants and
impurities such as H2S and methanol (W).
-Although the high capacity, the plant is running with 75% of the available design
and has not been fully utilized (W)
-the power generation turbine operates at a minimum for its production efficiency
(W)
-the plant design and equipment design should permit ease of retrofit for future
ethane extraction (S)
tie-in points will be included on headers and other key areas. (S)
- The Export/Import Facilities:

the design and construction considered to achieve the highest safety standards during
execution and operation (S).
The export/import facilities are not fully utilized. (W)
the power generation turbine operates at a minimum for its production capacity (W)
 Facility design:
The facilities designed to have an operational life time of at least 35 years. (W)
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 Current Resources: the company has current resources include:

 Cash & Cash equivalent: the company has a good financial position and
liquidity position as well. (S)
 Account receivable: The Egyptian General Petroleum Corporation has debts to
the company from LPG sales. (W)
 Inventory: the company owns a big inventory that serves the both sites contain
the MRO spare parts. (S)
 Staff:
 The human element is one of the key company assets, with their high accuracy
in performing their work in record time and with the great experiences they
have acquired through their years of work in the company (S).
 The company contains an excellent group of engineers, technicians, accounting
and assisting jobs who have been chosen with a great deal of competence (S).
 There are more than 40% of the employees of the company who started their
career with the establishment of the company and this built the spirit of
belonging to the place that gained them experience (S) and there are those who
moved from other companies after they gained some experience to work in the
company, but this made the average life of the employees in the company high,
reaching their mid-forties, and what made there was a need for new bloodshed
(W).
 In the last three years, due to the limited career path and the lack of adjustment
in the organization, this has resulted in the absence of an opportunity for
promotion for employees to occupy leadership positions (W) in particular for
those have long experience and high efficiency that increases the turnover rate
and they are looking for a new opportunity in other companies to satisfy their
need (W).
b) Intangible resources
● Knowledge:
The company has the sufficient knowledge and the know-how in natural and
petroleum gas liquefaction and processing (S). Utilizing world class technologies and
processes, the company has the ability to retrofit, operate, maintain and sustain profits
of a new Ethan extraction tower (S).
● Organizational culture:
Sound internal control system based on total quality management approach (S).
● Location: perfect geographical position of PS and DM facilities, the area is
surrounded by both supplier and customer companies (S).
● Trust: The company production quality, HSE and transparency gives both the
customers and employee a considerable feel of confidence that the management is
working for all parties’ benefits (S).
● Reputation: The Company has an internationally recognized good reputation as a
quality managed gas processor and also locally as a market reliable value-adding
company (S).
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7.1.2 Competencies (competitive strategy)

The company depends on two major competitive strategy types to design the supply
chain in order to get the required unique value proposal. These types are:
● Core Competencies:
 minimize the cost of product manufacturing using the newest energy
saving technologies of waste heat recovery systems (S).
 Quality, Health, Safety and Environment (QHSE) award (S).
● Distinctive Competencies
 Energy conservation & new technologies applied: (S).

 Gas turbines used in the plant (for re-compression of the residue gases) use the
energy conservation concept by exchanging the heat energy of the exhaust flue
gasses to raise the temperature of the heating media of the plant (S).
 Heat exchanging equipment named Cold Box used for pre-cooling of the feed
gas has the advantage of very large heat exchanging surface area using the
smallest possible volume of a heat exchange which results in an easier layout
for the plant (S).
7.2 Value Chain
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4. SWOT Analysis
Inbound Outbound Marketing
Logistics Operations Logistics &Sales
C
PTB PLANT
De-C3 Frac. Tower

Inlet Separator Filter Coalescer Dehydration Unit MRU Fractionation Unit
PHPC PLANT
L
P
G
De-C4 Frac. Tower

MRU Mercury Removal Unit
C3 Propane
C4 Butane or LPG
DNG Debutanized Natural Gasoline
De-C3 Frac . De - Propanizer fractionation
De-C4 Frac . De - Butanizer fractionation
DNG
The Value chain of the FNGCO
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Strengths Weaknesses
S1 The company owns a large area of land in the W1 Lack of promotion opportunities for employees.
fractionation NGL plant 510,000 M2 and the export
facilities 900,000 M2.
S2 Geographical Position of the NGL plant and its W2 The average age of workers increased to 45 years.
export/import facilities.
The company has a very high capacity NGL plant Relatively high turnover and migration to the other
capable of processing 1350 MMSCFD natural gas with companies for the middle-experienced staff.
S3 high efficiency of recovery that achieves over 96% for W3
propane and 100% for butane plus.
The company has its own export facilities with two High rotation of the top management posts.
loading arms and its own jetty, which can be diversified
S4 and used also in exporting or importing ethane or ethane W4
propane mixture or LPG.
Lack of succession plan, so that the top management posts

The company is one of only three companies in Egypt
starting from operation manager and above are hired and
as NGL plants, and it is the largest capacity one.
S5 W5 nominated from outside the company staff which slows
down the decision making process till become familiar with
the internal culture and production and company
considerations.
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The NGL plant is equipped with a high degree of The fractionation NGL plant is low utilized by 25% due to
capability to handle and treat different types of absence of natural feed gas.
S6 impurities and carry over contaminants with the natural W6
gas feed with high concentrations such as mercury,
carbon dioxide, oxygen, ethylene glycol, paraffin and
wax.
The company is designed and operated in such a way to The export/import facilities are not optimum utilized in
deliver exemplary safety and environmental either large land or the optimum maximum utilization of
S7 performance wherever they have control or influence in W7 two loading arms.
emission, flared gas and chemical spill. The ultimate
goal will be no damage to the environment.
The company has two Power generation turbines in the The two power generation turbines are not fully utilized
fractionation plant and in the export facilities capacity is (consumption is 2 MW Vs. The full capacity is 10 MW).
S8 10 MW. W8
Not working all the time as the power consumption is very
low and the plant is depending on the national grid instead.
The presence of large liquidity in the Egyptian pound in Aging of the plant equipment.
Egyptian banks from reserve and retained earnings.
S9 W9
S10 The shareholders have their own natural gas productions W10 Accumulating debts in favor of the company with the
companies. EGPC.
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S11 Highly competent employees W11 The company net profit is decreased in the last three years.
S12 Great company culture founded on solid value W12 The company doesn’t have a fractionation unit for ethane
recovery.
S13 Staff training locally and abroad to perform capacity W13 Any planned project this year or the following year will
building. consume a large amount of cash relative to the forecast net
profit this year which is reduced by the effect of COVID-19
pandemic until the production phase.
S14 Committed workforce W14 Limited capability of the NGL plant to treat high
concentration of hydrogen sulfide (H2S) supplied with the
natural gas (Design: 5 ppm Max)
S15 Excellent reputation of the company in the petroleum W15 Limited capability of the NGL plant to treat high
sector. concentrations of methanol content supplied with the
natural gas which accumulated with the produced propane
and reduce its price a little bit.
S16 The Company has Sound internal control system and a W16 Sole local customer for the propane production.
very successful Quality Management System (QMS).
S17 HSE perfect records and awards and safety performance

that are recognized not only among local industry but
20
also internationally.
S18 The NGL plant and export facilities main electrical

power are designed to normally operate independently
from the grid or from power generation turbines
(generated on site).
S19 Energy conservation & Depending on new technologies

applied for extracting the valuable products in the NGL
plant like the turbo expander equipment accompanied
with energy conservation concept, Heat exchanging
equipment named Cold Box.
S20 The plant and its equipment designed to be able to

permit the ease of retrofit for future ethane extraction.
Opportunity Threats
O1 High demand in the local and international markets for T1 EGAS have the power to price the natural gas locally; the
21
LPG, Propane and other natural gas derivatives. supplied natural gas locally with EGAS is permitted by long
term agreement with little variation of price, The high price
of natural gas of Vs. the international prices.
O2 Presence of local customers for ethane and its T2 The work over on the existing wells and new explorations is
derivatives (SENMAR and SIDPEC). suspended due to the low demand during COVID-19
pandemic.
O3 High demand for the ethane & its derivatives and T3 Fluctuation in natural gas derivatives products prices
propane & its derivatives internationally, that demand (propane, LPG, condensate).
increased during COVID-19 period.
The price dramatically dropped in the earlier time of 2020
year due to the high supply and very low demand (COVID-
19 pandemic).
O4 SIDPC expanded the plant to make another line for T4 The quality of the feed natural gas has become lean in
production of propylene and polypropylene. regards to propane and butane plus.
O5 Engineering and construction companies are less loaded T5 The provision of the supplied natural gas in the following
and do not perform as well as before due to the years. no provision of the quality/quantity of the natural gas
suspension and freezing of most projects by will produced from the new concessions
international companies in most industries. (COVID-19
period).
O6 Ethane and Propane are considered major players in the T6 Most of produced gas from deep water in Egypt is lean (low
petrochemical and polymer industry. quality)
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O7 Reduction in the raw materials in this period due to T7 The slowdown of the international economy.
fluctuation in supply and demand
O8 Only one company for ethane recovery plants from T8 The tension in the Mediterranean sea which might decrease
natural gas in the local market. the smooth exploration, drilling, and production.
O9 The concentration of ethane in the supplied feed gas is T9 The international effect of pandemic may cause suspension
high even if it is lean, which indicates a high quantity of of the multinational big companies for investment.
product will be recovered.
O10 EGPC still need large amounts of LPG to fill the T10 Fears from re-lock down again.
domestic deficit.
O11 EPPC company is in dire need of propane to meet its T11 Limitation for the work performing as an effect of the
needs fill the capacity deficit. reduction of the workforce and increase in Social distancing.
O12 The west Nile delta plant owned by BP (one of the T12 Increase the expenses for the continuous sterilization and
company shareholders) currently produced with disinfection for the pandemic.
700MMSCFD/d.
O13 The Mediterranean sea natural gas concessions T13 The decrease in demand of raw material and spare parts as
production can be treated prior to re-export to Europe consequences of the pandemic may convert many industries
via Egypt LNG plants. from efficient supply chains into responsiveness which lead
to increase the cost and increase the lead time
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O14 Many explorations have been carried out in the T14 Many of the Latest discovered concessions in the
Mediterranean sea and still there is provision for new Mediterranean sea have high concentration of hydrogen
explorations and discoveries. sulfide.
O15 There is a leakage that it will be a work over of Temsah

concession dead well (which was very rich well).
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5. Strategic Selection
11.1 Corporate strategy
-the BOD has decided to develop its corporate strategy by adopting directional strategy to grow
in business by diversification through concentric growth strategy by introducing a new product.
-taking advantage of the slowdown and shrinkage of worldwide economy in 2020 caused by
COVID19 pandemic that lowered the engineering and construction service companies cost of
constructing.
-operating the ethane extraction facility, the proposed fractionation tower will receive the natural
gas from newly huge explored gas wells in the Mediterranean Sea and west Nile delta.
- ethane production market in Egypt has only one player and the market can be easily accessed
since the demand for ethane is high locally and globally.
-Building the fractionation unit in the meantime with reduced capital cost is a very good
opportunity.
11.2 Business strategy

Competitive strategy
 Cost leadership
- The capital cost of constructing the Ethane line will be relatively low; taking the
advantage of the discounts and allowances that the engineering and construction
companies offer at this certain circumstances which will lead to tight capital cost
control and a pricing competitive edge than the existing competitor.
- The operation of Ethane fractionation unit will be efficient supply chain
orientation with make- to - stock decoupling point with easy access to the raw
materials, low variation of product demand and full assets and resources
utilization which ensure economies of scale in production with low price and
perfect order fulfillment.
- Low-cost of distribution system for the Ethane product based on the perfect
geographical position of the plant and its export/import facilities and Pipelines as
a way of transportation which provides the chance of cheap transportation either
by the company’s own pipelines that connect the production point to the export
point or by rented one if the Ethane will be distributed locally and that will
decrease the overhead costs.
- The perfect geographical position of the plant and its near to Zohr plant which
constructed in very high capacity to accommodate the wells of the Mediterranean
Sea and the presence of EGAS as one of the shareholders can help the company to
benefit from this to import rich gas from global market at lower prices and the use
25
of the export facilities make outcomes at a very competitive price to other

neighbor countries who shares the same pipeline.
6. Strategy Implementation
The clear available way to increase profitability of the company to its previous figure is to invest
in establishing new fractionation unit that produces the Ethane product to attack the available
opportunity of high demand and low supply in the local market.
In order to start the execution of the strategic plan, the business strategy will be fragmented into
specific tasks and delegate the responsibility to different functional departments for the required
action plan with specific accountability of implementer and specific criteria of implementation
with definite time frame. At the end, all these strategic tasks should be aligned together and
totally integrated to achieve the business strategy.
26
2.1 Implementation Plan

Priority How
Who Will Who Will Criteria Used (what to Time
Strategic Factor Action Plan System Often
Implement Review measure) frame
(1–5) Review
To Review the design of the Engineering - As built P&ID prepared
Technical - Configuration readiness
NGL plant in terms of as built Dept.
Mgr. & confirmed
Existing Plant Design Review configuration and capacity to 5 & Feb.2021 Monthly
Development - Final report delivered.
insure readiness, ability and Development
Mgr.
requirements for extension. Dept.
To study and allocate the place

Engineering
of the Ethane fractionation - Plant layout prepared
Dept.,
unit in the NGL plant in terms - Standard documentations
Where to place the proposed Technical
of operational, maintenance, 5 Project Mgr. reviewed Feb.2021 Weekly
unit. Dept.,
ease of access, safety and - Allocated place meets
&
related standard design standard requirements
Project Dept.
perspectives.
To establish a HAZOP and

,.HSE Dept
risk assessment study and Hazards identified-
Operation
review changes with respect to Impacts identified -
,.Dept
safety considerations to Risks evaluated -
Engineering
Safety Risk Assessment address and assess all the 5 .HSE Mgr Precautions and - Feb.2021 Weekly
,.Dept
associated risks that may conclusions recorded and
&
affect or be affected by the reported
Technical
installation of the new unit and
.Dept
assign tasks with deadlines for
.dedicated Dept.’s
27
Issue Management of Change Technical &

MOC discussed with all
(MOC) form to be signed and Production operation Mar.
Plant Modification 5 dedicated Depts., accepted Monthly
approved from the different Department Mgr. 2021
and approved.
company Dept.’s (Key Officer)
Gas Turbines sold with -

best price
Make budgetary plan and
Available funds in bank -
possible sources of financing
accounts reviewed and
for the construction of the new
Source of funding 5 Finance Dept. CFO reported Mar.2021 Monthly
fractionation unit including the
-Arranged with the banks to
engineering, construction and
be ready with immediate
all the required material.
cash flow when needed
Provide the communication

required with EGAS and - EGAS and EGPC
EGPC to inform them by the information and feedback
Public Chairman & documents
Communication new extension and get the 4 Jan. 2021 monthly
Relations Mgr. CEO
acceptance to start the project
and approval for the shutdown
for tie-in.
Acquiring the required legal

approvals from EGPC, the - Governmental legal
Chairman &
Legal agreements Ministry of Environment and 5 Legal Dept. approvals documents. Feb.2021 Weekly
CEO
other different concerned
ministries.
Engineering
To determine the required ,.Dept Procurement
specs of the new unit in terms Technical .Mgr Standard sizing
New fractionation unit Sizing of standard design aspects to 4 ,.Dept & requirements prepared and Feb.2021 monthly
be submitted with the RFQ as & Technical included in RFQ
.a technical part Purchasing .Mgr
.Dept
A tender to be made among Procurement Procurement Issued RFQ and finished the
Offers Inquiry 5 Feb.2021 Monthly
local and foreign Engineering & Engineering Mgr. contract cycle three months
28
companies to build new

before the start the
efficient ethane tower at lower Dept.
implementation.
cost.
To prepare a time frame
detailed plan include the The construction Schedule
Planning and
progress to be done for all the Issued and approved two
Project Scheduling 5 Scheduling Project Mgr. Mar.2021 Weekly
phases of the new unit from months before starting the
Dept.
the construction phase till the implementation.
operation phase.
Start negotiation with SIDPEC
and SENMAR in the local Sign formal agreements
Communication with market to supply them Ethane Procurement Procurement with customer three months
4 Sep.2021 Monthly
customers and notice customers in the Dept. Mgr. before the end of the
foreign markets as well to construction of new unit.
make long term contracts.
Achieve 20 management
Construction/implementation Management walkthrough for Operation
4 .Plant Mgr walkthrough throughout the Dec.2021 Monthly
audit .the new construction unit .Mgr
construction phase
A project-assigned team from
different departments which
team leader directly reports to
Project management and Chairman & Weekly report illustrates the
the chairman & CEO will be 3 .Project Dept Dec.2021 Weekly
follow up CEO .actual progress Vs. the plan
responsible for following up
day to day activities of the
building process of the plant
To define the needed
workforce (tech., engineers & Announcing, interviewing
operators) to operate the new and hiring the required staff
fractionation unit, interview HR Mgr. process completed six
Operation crew of the new
and hire young qualified & 3 HR Dept. Operation months before the Apr.2021 Monthly
fractionation unit
fresh graduate personnel from Mgr. completion of construction
national market and offer the and make training plan for
required training courses to be them.
ready for the operation.
29
7. Anticipated problem
13.1 Problem Details:
Natural gas must be dehydrated to remove water vapor which causes problems in the natural gas
processing especially in the NGL application as its causes the formation of hydrates, over
saturation of natural gas, and corrosion of equipment. In the NGL plants the natural gas is cooled
to a very low temperature which reach -90C in order to extract the natural gas derivatives. If the
water vapor exists in the natural gas, it will make hydrate and restrictions to the cooling limit and
that Hydrates will cause freezing and blockage of pipelines, heat exchangers, valves, and other
capillary tubes and equipment. The molecular sieve dehydration is the unit which is responsible
for achieving the required dryness of natural gas by removing the water content to a limit of 0.1
ppm (0.00001%) or less.
The extraction of propane-plus from the natural gas requires to cool the natural gas down to a
temperature of -80C and the extraction of ethane with new fractionation unit will require deeper
cooling of the natural gas and the move to more cryogenic area reaching minus 96C that will in
turn require to make the natural gas ultra-dry, consequently, the existing molecular sieve (The
medium of absorption) must be modified to a more capable type to absorb and remove the water
to 0.01 ppm instead.
The NGL plant was in a planned short shutdown in order to carry out different activities, one of
these activities was the replacement of the existing molecular sieve of the dehydration package
as the existing one was deteriorated and became inefficient and also it was an opportunity to
replace with the new type to get more dryness of natural gas. The shutdown was completed
safely and the plant prepared to the startup at Aug, 18th 2020, 8:20 am, the dehydration unit was
pressurized to about 63 bars and after running the plant, it was noticed that the differential
pressure across the dehydration bed is ramping up with abnormal rate and after one week it
reached a very high value and exceeded the warning limit. Additionally, there was a high
differential pressure across the downstream filter, so the unit was isolated and depressurized to
contain the gas release; meanwhile all necessary actions were taken and a team has been
formulated to start the investigation and get the root causes and the recommendation.
13.2 Problem solving methodology and analysis details:

Cause-and-Effect Diagram (fishbone) has been used to collect all the possible root causes and
understand the relation between failure and its causes, and it’s also a result of a brainstorming of
the most effective causes.
30
Causes of Dehydration Package Failure

Insufficient Process Machine
planning
No spare in
W/H
Preceding coalescing
Regeneration
filter inefficient
Delay of Over Lack of
reorder
temperature
Insufficient Knowledge manpower
from worker PCV not
Filter exceeded
Lack of calibrated during
Glycol operation time limit
training last PM
contaminants on
mole sieve Individual
Postponed
operational actions Wrong Temp. Inadequate
due to
from suppliers Control valve PCV output
overtasks
Lack of setting
Coordination PCV
Malfunction
Gas Flow rate Thermal stresses Failure of the
fluctuating during NG over
on mole sieve
pressure
dehydration
normal operation
package
Crush strength Bad handling (molecular
Operators start the unit
value out of specs.
in harmful manner to
of Mol. sieve sieve)
Lack of training during filling
sieve
Over Self
Confidence Lack of
supervision
Didn’t anticipate
Labor aging
lack of knowledge No commitment to Service Company
plant written not following best
Unable to perform procedure practice
standard Lack of
acceptance manpower
inspection
Material People Method
31
13.3 Recommendations for prevention of similar cases:

1. Requesting casual labor to assist in operation and maintenance works of the plant.
2. Performing gap assessment for operation and maintenance personnel to define their
training requirements and conduct both class and on the job training activities.
3. Formal instruction for the entire staff to stick to the vendor, standard and best practice
recommendations and not to ignore or omit any step.
4. Arrange and announce for bidding of Service Companies and selecting the best technical
and financial to perform the replacement of the catalyst/molecular sieve with a good
supervision and follow up during dumping and filling of the catalyst and molecular sieve.
5. Review the design and the performance of the coalescing filter unit to prevent the glycol
and contaminants scape.
6. Review the lead time of the most PCE and SCE in the plant and export/import facilities
and modify the min/max and timing of purchase requisition cycle to avoid stock out
situation, break down and production disturbances.
7. Requesting attendance of factory production tests of the catalyst/molecular sieve before
shipping.
8. Assure the quality for the receiving material by training the technical personnel involved
on standard acceptance testing methods.
9. Holding meeting with supplier representatives to arrange an improved communication
and coordination agreement to eliminate flow fluctuation and other problems resulting
from uncoordinated supplier operations.
10. Awareness session for the operation staff to record and study the learnt lessons of this
case to be applied in similar cases.
8. Drive Change
The successful implementation of organizational strategy is dependent on company`s ability and
management skills to drive and navigate changes, while ensuring that those changes are
strategically aligned to business goals.
The success or failure of a change initiative is not just about initiating, planning, monitoring,
executing and evaluating the project that will drive the change. It also involves preparing the
organization for transformation or expansion, ensuring all stakeholder buy-in, and engaging
executives to champion and support the change before, during and after its implementation.
Our change particulars:
 The establishment of new fractionation section in the company will be accompanied by
additional workloads to the existing workforce in the company both in technical and
administrative departments.
It is expected to encounter some resistance to these additional loads, and it is also
expected from involved technical personnel to be afraid of being embarrassed by facing
new technologies with old fashioned experiences which may affect their performance.
32
 One of the company weaknesses that are expected to resist the successful growth is the
ageing workforce, as a considerable number of employees are pacing about fifty years old
which may generate difficulties in accepting new technologies and the adoption of new
work skills for some.
 Resistance is also expected from some of those elder employees who will feel threatened
by younger ones and may get the feeling that the purpose of this change is to get rid of
them.
The process of change:

1- Gap Assessment
We will start by assessing our readiness for change. This assessment will include
cultural, organizational, historical assessments.
It will also include the assessment of current technicalities of the expected concerned
technicians in order to determine the required level of training to be conducted.
2- Informing and Instructing people
We will start communicating with the employees raising their awareness for the
importance of this change to them and to the business and showing that this change is
for the better and no harm will be done to any employee and addressing a need for
everyone to push for the success of this change.
3- Joining effective people
Analysis should be made before the communication to make sure that we make the
right message at the right time to the right person; key persons will be then invited by
change manager to participate in the change process.
4- Reinforcement and Inspiration:
The message should be repeated at different ways to make sure it has reached every
involved person. This can be done through emails, newsletters, meetings and one to
one communication. Every success should be recognized and celebrated to reinforce
the change in the organization and avoid any turning back.
Managers should have active role in the change process and change management
team should help managers to communicate directly with lower level employees to
give the message that this change is important to everyone in the company and to help
driving this change
5- Resistance Mitigation
Message should be clear to look to the new business as a company necessity that will
reflect on every employee`s benefit rather than an extra workload.
Also, additional contractor manpower will be arranged to assist in both technical and
administrative work and to share workload.
Message also shall be spread to ensure fair opportunities to everyone and everyone
will be involved and have the chance to be promoted and recognized for his
contribution despite of age and level of experience.
The duration of application of this change will be five years, during which, training
programs and development sessions will be held to improve technical and soft skills
33
of all involved employees to qualify them for the operational and managerial
positions. Also there will be courses on change management process.
An early retirement plan will be set for the employees who couldn’t cope with the
organizational change.
6- Action Plan
In this phase, action plan is set, declaring the beginning of change.
During the Implementation of change process Change management team should get
feedbacks from the employees and analyze them. Corrective actions should be
developed to ensure Adoption of the change.
After finishing the change project, it should be reviewed and lesson learnt should be
recorded and evaluated to be taken into consideration for next change process.
9. Evaluation
Performance Evaluation:
Dynamic performance management is simple, cost effective approach to get people and
processes to perform where account the most, and its critical and achieving objectives both
financial and non-financial.
Strategic priorities and strategic initiatives and KPI can be created and monitored using balanced
scorecard methodology through the strategic planning map where center of this map is the vision
of the organization and its strategy and its strongly correlated to four interconnected perspectives
which is financial, customer, Learning &Growth, Internal business process perspectives.
The Balanced scorecard:
- Will be done at least quarterly basis which is even better so that the detection and
correction process can be begin as soon as possible and also at the end of fiscal year to
get the cumulative annually performance.
- That balanced scorecard will be drafted in a simple Excel sheet document with color code
to enable up-to-date tracking of performance and the score for all results can be
calculated using this scale system, other results presented provide different score which
highlighted in different color, color is a good way to communicate scores in terms of how
results came in compared to expectations.
Blue: well above the target
Green: at or above target
Yellow: bellow the target
Red: well below the target
- Based on where the company trying to go at the end of year is we on track (Green) or we
are off-track (Red) and need to make adjustments to out initiatives.
- The overall score is also calculated at the end of the fiscal year assigned to be evaluated
which represents overview of scores of two levels that is score of perspective and the
score of each objective.
34
All the achieving perspectives and its related objectives on the BSC based on fiscal year start on 1 Jul. 2021 to 30 Jun. 2022
Perspective Objective Target Monitoring interval

Stretch
Measures method Target
Perspecti Perspective Objective Objective target
KPI (Achieve Q1 Q2 Q3 Q4 Annual Score
ve Weight Item Weight (Achieve
80%)
100%)
Financial 30% Increase net 25% The annual net Increase the net 20% 30%
profit profit appear the profit Vs.
income statement previous year
Increase 25% The annual ROI Maximize the 10% 15%
ROI calculated from ROI Vs.
financial previous year
statements
Create and 30% Complete the Start Mar. 2022 Dec. 2021
launch new ethane recovery production of
product project Ethane by
Explore 20% Make new Get signed Oct. 2021 Jun. 2021
new contract to sale contract with
customer all the new Ethane
segment product (Ethane). customers by
Score for Financial Perspective 100%
Customer 20% Maximize 40% Customer Decrease the 20% 30%
customer satisfaction unsatisfied
satisfaction survey results feedback (Vs.
previous year)
Maximize 60% Actual market Maximize the 10% 20%
market share percentage current market
share in share (Vs.
currents previous year)
markets
35
Score for Customer Perspective 100%
Learning 30% Create& 40% The No. of Coverage 90% 100%

&Growth implement training courses training
training per each program for all
program employee (4 company staff
courses/employee
)
Decrease 40% The No. of Decease the 20% 40%
employee annual middle employee
turnover employee turnover
turnover (aged
between 30 to 42)
Improve 20% The No. of HR Decrease the 20% 30%
employee satisfaction unsatisfied
satisfaction survey results feedback (Vs.
previous year)
Score for Learning &Growth 100%
Perspective
Internal 20% Vendor 40% The Perfect Increase the 20% 40%
business performance Orders POF
process Fulfillment percentage (Vs.
results previous year)
Launch and 30% Finish study by Get official Nov. 2021 Jul. 2021
complete engineering study ready for
special department for implementation
projects increase the plant
design for
hydrogen sulfide
treatment to a
limit 30 ppm.
Restructure 30% Promote the Finish the Jun. 2022 Dec. 2021
36
organization employee interviews and

competent and fill the vacant
suitable and has slots on the
higher organization
performance
appraisal to the
vacant slot.
Score for Internal business 100%
process Perspective
Overall Score
37
10. Pricing Strategy

Pricing method:
Regarding the pricing method of the new product, the price set in relation to market is the
method adopted by the company. As the product is not significantly differentiated than
competitors so meeting the competition or perfect competition method will be applied. In other
words, the price of the product will be nearly the same as the competitors.
Pricing strategy:
The previously discussed pricing method will be achieved by applying a Market-Penetration
Pricing Strategy. This can be done by decreasing the product’s price compared to competitors
such that the price of the company’s product offers a better customer value that will be reflected
on the increase in demand for the company’s product and gain market share.
Applying this marketing strategy requires offering a competitive product with a competitive
price that can also take advantage of the economy of scale in case of increased demand on the
product.
Another factor that favors the market penetration strategy is that the market is currently in
continuous need of the product and the current competitors cannot satisfy all the market needs.
Furthermore, more companies that will increase the demand on the product are about to launch.
All these factors ensure a convincing market share for the new product.
Finally, the market-penetration strategy adopted for the new product goes hand in hand with the
current business strategy which was the Cost Leadership Strategy. That is to say that the
current market penetration pricing strategy represents a reflection of the cost leadership business
strategy.
11. Distribution strategy

The company follow a level zero distribution channel which is the simplest shape and it involves
a direct sale from the company to consumers with no intermediary. The company will adapt two
options of the distribution strategy for the new product (Ethane) depend on the nature of the
customers whether it’s locally or foreign, which summarized as the following:
 Regarding the local distribution; it can be accomplished through the natural gas pipeline
networks. These pipeline networks are mainly owned by Petroleum Pipelines Company
(PPC) or GASCO and can be rented by many companies including ours for both
acquiring feed gas and distribution of natural gas derivatives as well, So the convenience
point and availability of product in this case is the NGL storage sphere or the customer
point based on the agreement with the customer.
 On the other hand, international distribution relies on the company’s own pipelines that
connect the NGL plant which is represent the production point with limited storage to the
Mediterranean shores at Damietta of the company export/import facilities which in turn
allows shipping of the derivatives products for exportation. So the convenience point and
availability of product in this case is the loading jetty of the Damietta export facilities.
This method of transportation provides the chance of cheap transportation of large
amounts of natural gas derivatives for long distances.
38
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Strategic Management Plan: (A Strategic Pathfinder For Petroleum Company)

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Strategic Management Plan

Strategic Management Plan

Submitted by Group (5) - Run 6

2.1 Company Profile

Component Concentration Processed Natural Gas Feed

2008 2014 2019

Pentane+ mole % 0.638 0.360 0.309

2. Analysis of External Environment

6.1 Natural Environment:

6.2 Societal Environment (PESTEL Analysis)

▪ Stablish the Mediterranean Gas Forum on September 2020 (O).

6.2.3 Sociocultural Factors:

6.2.4 Technological factors:

▪ Wide establishment of integrated EAMS to manage petroleum sector resources and

6.2.5 Environmental Factors:

6.2.6 Legal Factors:

6.3 Task environment

6.3.1.1 Competitive force: Entry of new competitors

6.3.1.2 Competitive force: Bargaining power of suppliers

6.3.1.3 Competitive Force: Substitutes

▪ No provision of completely substitute of the natural gas derivatives as its major

6.3.1.4 Competitive Force: Bargaining power of Buyers

6.3.1.5 Competitive Force: Industry competition

▪ Petrochemical Industry growth is high (O).

6.3.2 Stakeholders (on one slide)

b) Suppliers: Company suppliers include:

1. Raw material suppliers: The Fractionation Natural Gas Company receives

 Directors and Managers:

3. Analysis of Internal Environment

7.1 Organizational analysis

 Plants and equipment:

- The Export/Import Facilities:

The export/import facilities are not fully utilized. (W)

 Current Resources: the company has current resources include:

7.1.2 Competencies (competitive strategy)

 Energy conservation & new technologies applied: (S).

7.2 Value Chain

De-C3 Frac. Tower

De-C4 Frac. Tower

The Value chain of the FNGCO

Lack of succession plan, so that the top management posts

S17 HSE perfect records and awards and safety performance

S18 The NGL plant and export facilities main electrical

S19 Energy conservation & Depending on new technologies

S20 The plant and its equipment designed to be able to

O15 There is a leakage that it will be a work over of Temsah

11.2 Business strategy

of the export facilities make outcomes at a very competitive price to other

2.1 Implementation Plan

To study and allocate the place

To establish a HAZOP and

Issue Management of Change Technical &

Gas Turbines sold with -

Provide the communication

Acquiring the required legal

companies to build new

13.2 Problem solving methodology and analysis details:

Causes of Dehydration Package Failure

Material People Method

13.3 Recommendations for prevention of similar cases:

The process of change:

Perspective Objective Target Monitoring interval