Egypt arrears owed to foreign oil firms surges to $3 billion at end-2015

Egypt’s outstanding arrears to foreign oil companies surged to US$3 billion at the end of December 2015 from US$2.7 billion at the end of October, petroleum minister Tarek El-Molla told Reuters Sunday.

The ministry had said in September that Egypt aimed to reduce the arrears owed to foreign oil companies to $2.5 billion by the end of 2015 and to pay them off completely by the end of 2016.

Delays in paying back foreign petroleum companies had discouraged investment in the sector, but a drive to increase the price paid for domestic production and pay back arrears had encouraged new contracts signed in 2015.

El Molla did not provide further detail on why total arrears have risen since November.

Egypt has run short of hard currency since a 2011 uprising drove tourists and investors away. Reserves almost halved to $16.4 billion by the end of November.

Once an energy exporter, Egypt has turned into a net importer because of declining oil and gas production and increasing consumption. It is trying to speed up production at recent discoveries to fill its energy gap as soon as possible.

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