Egypt to pay-off all foreign oil firm arrears by 2017
Cairo, July 23, 2014
The Egyptian government has planned to pay-off all of its arrears to foreign oil firms by 2017, said a report.
Its previous plan was to pay EGP21 billion ($3 billion) out of a total of EGP42 billion by that time, said the Amwal Alghad report.
The Ministry of Petroleum is set to pay EGP10.5 billion by September to companies including the BG Group and British Petroleum, it said.
The country’s debt to foreign oil companies decreased to EGP41.3 billion in June from EGP 42.7 billion the previous month, Tarek Al-Molla, head of Egyptian General Petroleum Corp (EGPC) was quoted as saying.
As foreign oil firms increase their investments and explorations in Egypt; their entitlements in the Egyptian government rise, said the report.
Egypt's Prime Minister Ibrahim Mahlab finalised an investment deal this month with the CEO of British Petroleum (BP), allowing it to invest EGP70 billion in gas fields over the next four to five years, it said.
The fields, discovered by BP, are estimated to hold five trillion cu ft of gas and produce 1.2 million cu ft per day - equivalent to 20 per cent of Egypt's current daily gas production.
Following the suspension of operations and temporary closure of facilities in Egypt by several companies due to the political situation after the ousting of President Mohamed Morsi, the government is now working to get firms to invest in extraction and exploration – activities desperately needed to help address a severe energy crunch, said the report.
Egypt has been in an energy crisis over the past three years, most evident in frequent electricity blackouts. Several government officials have attributed the power cuts to a growing fuel subsidies bill and declining gas production, it added.