Zainul Rahim is Country Chairman for Shell in Egypt. He has been a Shell man since joining the company in 1978, and has worked in many different positions within Shell, from well site petroleum engineer and production technologist to IT planner and Deputy Chairman for Shell Malaysia. He talks to ‘Shell in the Middle East’ about the highlights of his career, the challenges of his current position in Egypt and his plans to keep busy after retirement – which include indulging his love of art and music and taking up the guitar…

Q. Where were you born, brought up and educated?

I was born in Malaya, as it was called in those days, in Alor Star in the state of Kedah. Whilst I am a quarter Malay, I am also a quarter Chinese, a quarter Thai and a quarter Sumatran, due to the fact that both my parents were from mixed nationality marriages. So I represent a real melting pot of Malaysian society.

I had five brothers and two sisters but, unfortunately, one of my sisters has since passed away. My father was a teacher at the Sultan Abdul Hamid College in Kedah and taught some of today’s leading politicians, including Malaysia’s ex-Prime Minister Dr Mahathir.

When I was still very young, about two years old, my father was chosen to go to Brinsford Lodge Teacher Training College in Lancashire in the UK to pursue further training, but he was only allowed to take three of his eight children with him. I was one of the lucky ones and so, along with one brother and one sister, we went to live in the UK for two and a half years.

We returned to Malaya where my father was set to work at the Sultan Idris Training College in Tanjung Malim, in the state of Perak, where he was appointed to the post of Deputy Principal. He was later promoted to the post of Principal. At this time the family was reunited and I spent most of my childhood growing up in Tanjung Malim.

My mother did not work as, with eight children, she had her hands full at home. However, as the wife of the College Principal she had to do a lot of entertaining and was renowned for her excellent cooking and dinner parties.

At the age of 14 I went to the Malay College in Kuala Kangsar, which is the royal capital of the state of Perak. Then, after completing my O-Levels, I was awarded a Colombo Plan scholarship and sent to Perth in Western Australia to continue my education. After completing my matriculation in Perth, I went to the University of Western Australia, where I majored in mechanical engineering.

My years in Australia were memorable for many reasons, not the least being that it was there that I met and married my wife, Norie. To support her I had to work in the evenings, so whilst my time in Australia was very enjoyable it was also very demanding. It was my first trip abroad as an adult outside Malaysia, as it is now called, and I learned a great deal about Australia and its culture. The one bad thing I will always remember about Australia was the dreaded swarms of flies!

Q. How did your career develop after university, and what was your first job with Shell?

After completing my university degree I returned to Malaysia and joined a mechanical and electrical consulting firm. I remained with this company for two years before hearing of an opening with Sarawak Shell at its main base in the town of Miri in Sarawak, which is one of two Malaysian states on the island of Borneo.

I had always been interested in the oil business, especially exploration and production. I was fascinated by the technology involved, such as being able to drill a hole two or three kilometres deep into the earth to reach an exact point. So I jumped at the opportunity and went to work as a well site petroleum engineer for Shell in Miri.

This was in January 1978. My parents disapproved of this move as in those days Sarawak and the island of Borneo were considered, by West Malaysians, to be god-forsaken, remote and primitive locations. However, I persevered with my ambition to pursue my destiny in the oil and gas business. I remained in Miri with Sarawak Shell for eight years, working in a series of different jobs, including well site petroleum engineer, drilling engineer, petrophysicist and production technologist.

Both my children were born during my time in Miri. I have one daughter, who was born in 1984 and is presently at Stanford University in California, whilst my son, who was born in 1985, is now at the University of British Columbia in Vancouver.

Q. What jobs did you hold in Shell after Miri?

That is a long story! After eight years in Miri I was posted to The Netherlands to work for NAM [Nederlandse Aardolie Maatschappij], which is the main Shell company in the Netherlands, as a production technologist. I remained in that job for three years.

My family and I enjoyed our time at NAM but as hot-blooded Malays we found the winters in northern Holland to be very cold and depressing at times - well, initially at least - but we had lots of fun later on with the snow. My first job in NAM focused on land operations, and this was quite different from what I had been used to in Sarawak, where most of my work was associated with offshore operations.

After two years I was moved to NAM’s offshore gas operations in the North Sea. This was very interesting as it involved working with tight gas sands and using techniques which were new to me, such as fraccing.

In November 1988 I was recalled to Malaysia and sent back to Miri to lead a production technology team for the Sabah Waters. Exploration drilling was being conducted in the newly acquired SB-1 acreage, and I was fortunate that Shell made its first discovery, in Kinabalu, during my time there.

After a year and a half I was posted to Kuala Lumpur to work as Shell’s Exploration & Production liaison man, then after just 18 months I was sent back to Holland, this time to work in IT [Information Technology] in The Hague. This was a major shift for me because I was taken away from my comfort zone in petroleum engineering.

However, I was told that it was necessary if I was to progress to higher levels within Shell, so I accepted the post and learned a great deal from that experience. It was an eye-opener to see how structured IT people were and it was an invaluable experience for me to work in a completely different environment. I stayed in IT for four years, beginning as Senior Information Planner then as Project Co-ordinator, before my yo-yo of a life returned me, once again, to Miri, in March 1996.

I arrived back in Miri in the midst of a major organisational review where I was given the task of leading a team to review and propose a new framework of processes and governance for Petronas Relationship Management, Integrated Gas Business Management and Joint Venture Management.

Over the following years I held a succession of different jobs with Shell in Miri, including Information Management & Technology Manager, Business Services General Manager, Technical Services General Manager, then General Manager for Shell’s Sarawak Business Unit, which was the biggest business unit in Shell’s exploration and production business in Malaysia at that time.

Then when the position of Deputy Chairman for Shell Malaysia, based in Kuala Lumpur, became vacant, I was fortunate to be appointed to this job in 2001, and worked under H. K. Lim, then Country Chairman. He taught me an awful lot and whilst he was very tough on his senior managers he was a pleasure to work for and very good with the lower and middle ranking staff, for whom he had a lot of time.

Being in Kuala Lumpur was very refreshing. It was nice to be back in mainland Malaysia, where I had more contact with family members and my roots.

Q. When did you take up the job you hold in Egypt today? Were you pleased to be offered the job and what are the particular challenges of the position?

I remained as Deputy Chairman for Shell Malaysia until 2005, when I was offered my present position as Country Chairman for Shell Egypt. This is the most senior position I have held within Shell and, as Shell Malaysia staff retire at 55, this will also be my last job with Shell.

I was very pleased to be given this opportunity, despite the fact that Shell’s operations in Egypt are considerably smaller than in Malaysia.

However, I was extremely pleased to have the opportunity to run my own operation as it has always been something I have wanted to do.

That said, when I arrived in Egypt I had not realised the gravity of challenges facing Shell Egypt. The main issue with the exploration and production business was the lack of exploration successes and declining production, which led to a perception by some people that it was a sunset business, which in turn contributed to low morale among staff at Shell Egypt, who had particular concerns about the future of the company.

The priority, I felt, was to develop a very frank and open relationship with all members of staff, at all levels, in order to pull together as a team and effect a turnaround, not just in terms of morale but in terms of exploration and production successes.

At the beginning of 2006, I painted a rather grim picture of our E&P business in Egypt. We had a 30 per cent reserves write-down, we weren’t sure we could meet our production target, our exploration plan was severely challenged and our credibility to deliver was at stake. However, I am very pleased to say that our successes in 2006 have changed the situation in Shell Egypt tremendously and now things are really looking up.

We spudded seven exploration wells in the Western Desert in 2006, and completed five wells before year end, with all the wells yielding discoveries. Five discoveries from five exploration wells is an extremely good performance. The two remaining wells reached total depth early this year, and both have also been successful discoveries, with one well exceeding expectation. Shell Egypt also exceeded its 2006 production target, so 2006 saw a real turnaround for us.

We have also been conducting an extensive 3D seismic campaign which has improved the prospectivity of our exploration blocks in the Western Desert, and the potential for further discoveries is very good. So the future for Shell in Egypt is looking good.

We have a great working relationship with BAPETCO [Badr El-Din Petroleum Company], a 50-50 joint venture between EGPC [Egyptian General Petroleum Corporation] and Shell. BAPETCO is the operating company for our activities in the Western Desert, and the co-operation between Shell and BAPETCO has been extremely good. BAPETCO has, with a performance of 97 per cent uptime, one of the best operating records of any joint venture within the Shell Group.

With the continued successes we have had in the Western Desert, I believe, more and more, that there is a case to be made for Shell Egypt to secure a long-term, sustained growth from the Western Desert. This would, together with success in NEMED – Shell’s 31,135 square kilometre North East Mediterranean Deepwater concession – provide a step-jump in Shell Egypt's growth profile.

In NEMED we are presently carrying out Phase 3 of our drilling campaign. So far, we have had gas discoveries in the southwest cluster, which we hope will provide – together with the current drilling campaign – the basis for further development.

The first three wells will be drilled in the southwest cluster, with the first two being both appraisal and exploration wells, whilst the third well will explore a new intra-salt play. A fourth well, which is planned in the far eastern part of the concession, targets a pre-salt, HPHT [high pressure, high temperature] objective.

If this drilling campaign comes through, Shell Egypt will be a very successful company indeed and will be able to contribute significantly to the future economic development of Egypt, whilst providing substantial added value for the Shell Group in terms of both reserves and revenue.

So, to answer your questions and to sum up the challenges, Shell’s ambition in Egypt is to grow the business through two strategic thrusts. Firstly, by maximising value from existing assets, through intensifying near infrastructure exploration in the Western Desert and bringing new discoveries onstream at the earliest opportunity, whilst maximising exploration in the Nile Delta. Secondly, by building and growing an LNG [Liquefied Natural Gas] position through commercialisation of gas discoveries from the Nile Delta, and by that I mean from our NEMED and North West Damietta concessions.

Q. As Country Chairman you also have a responsibility for Shell’s downstream business in Egypt. How is business?

Shell has developed a successful and profitable local gas distribution company [LDC] with Fayum Gas. However, to optimise the limited human resources in Gas and Power, and as part of our activities portfolio management actions, we have divested our interests in Fayum Gas to one of our local partners in Fayum Gas, to take up the development of the company. With gas distribution being its core business, we are confident it will be able to offer more opportunities for staff and a better future for the company. However, we retain a sizeable interest in Natgas, another LDC in Egypt.

Another downstream gas business which Shell operates in Egypt is Compressed Natural Gas [CNG] for motorists. This is part of our downstream retail organisation where we are looking for expansion opportunities.

We are also in discussion with the Government to explore opportunities to expand Shell’s retail outlets in Egypt.

An increase in pump prices, controlled by the Government, in 2006 has also helped make the bottom line of the retail side of the business much healthier.

As for our Lubricants business, it continues to be a challenge, with the lubricants management team working hard to improve market share for Shell-branded lubricants. Our lube oil blending plant continues to perform strongly, with plant output expected to grow in the immediate future.

Q. You mentioned retirement. When will you be leaving Shell Egypt – and will you be sad to leave Egypt at such an exciting time?

My retirement date is set for the end of February 2008 and, as for leaving Egypt, I will have mixed feelings about it. On the one hand, I will be sorry to leave Egypt as my wife and I have enjoyed our stay here very much and I will miss the good working relationship I have developed with excellent teams in Shell Egypt and BAPETCO.

On the other hand, I will be happy to go, knowing that I will be leaving a company that is well positioned to move forward in realising its growth ambition, as I truly believe we have made real progress in the last 12 months.

Q. When you retire, where will you go and how would you like to spend your time?

I will go home to Malaysia and home for me there is Kuala Lumpur. I intend to build a house overlooking a golf course, 30 minutes south of Kuala Lumpur. I play golf for fun and I am not at all competitive. I am also very fond of painting and would like to spend some time painting watercolours, which I also collect.

For me it is very important to keep my mind active so I will consider lecturing at universities to pass on some of the knowledge I have gained about the oil and gas business – or I may even just teach young people to speak better English so that they can go out and work in the international labour market. I may also consider sitting on the boards of some major companies in Malaysia.

Another passion of mine is music but I have never had the time to learn an instrument - so I am thinking of taking up the guitar…