Egypt’s state-owned Egyptian Natural Gas Holding Company (EGAS) has made its first payments to liquefied natural gas (LNG) suppliers since payment terms for deliveries were extended, trade sources told Reuters Tuesday.
Egypt imports around six to eight cargoes of LNG per month and traders said that until last week EGAS had not paid suppliers since December when it extended payment terms to 90 days from the usual 15 days, due to the country’s foreign currency crisis.
EGAS head Khaled Abdel Badie told Reuters his company has made all payments that were due on LNG shipments but did not specify whether these were the first payments this year.
“We agreed with the companies to paying dues owed to them over a period of 90 days, and we are committed to this payment process,” he said.
Egypt became a major market for LNG shippers after the launch of two floating import terminals last year as the country looks to plug an energy shortage that has halted industrial production during summer months and caused rolling blackouts.
A sharper decline in foreign currency receipts since the Russian airliner disaster in October, which has hit tourism, combined with low oil prices limiting aid from Gulf allies, has hindered Egypt’s ability to pay for commodities.
Market participants said Egypt now owes LNG suppliers up to $1 billion and the extended payment terms have increased the country’s risk profile for future LNG deals.
In January British oil major BP diverted a LNG tanker to Brazil rather than discharging in Egypt, a move which traders said was related to payment delays from EGAS, but BP and EGAS said the cargo was postponed.
BP declined to comment on whether they had received any payments from EGAS subsequent to the extended payment terms.
“We remain comfortable with our contractual arrangements with EGAS under which we continue to deliver,” a spokeswoman for BP said, adding that contract details were confidential.
Commodities trade house Trafigura, the largest supplier to EGAS, also declined to comment on whether they had been paid.
“We consider ourselves a long-term partner of Egypt. We have confidence in our client’s commitment and continue to deliver two to three cargoes of LNG per month to Ain Sokhna,” a spokeswoman for Trafigura said.
Other LNG suppliers to Egypt include Shell, Gas Natural, Vitol, EDF Trading, PetroChina and Noble.