Egypt’s Debt to Foreign Oil Firms up at $5.7 Bln

Egypt’s debts to foreign oil companies operating in the country rose to $5.7 billion by the end of March, the head of the state-run oil company told Reuters, up $800 million from the government’s last reported figure despite recent repayments.

Money owed to foreign oil majors including BP and BG Group totalled $4.9 billion in December, indicating Cairo’s debts to the firms continue to mount despite efforts to restore investors’ confidence by paying down the arrears.

“Arrears to foreign oil firms in Egypt reached $5.7 billion by the end of March,” Tarek El Molla, chairman of Egyptian General Petroleum Corp, said late on Tuesday.

Egypt has delayed payments to oil and gas firms as its economy has been hammered by almost three years of instability since a popular uprising ousted autocrat Hosni Mubarak in 2011. Some of the debts were incurred before the revolt.

Egypt paid back $1.5 billion at the end of last year, a signal that the government is trying to get firms investing again in extraction and exploration, badly needed to help address a severe energy crunch.

Molla did not say how or when the country plans to repay the rest of the debt. Oil Minister Sherif Ismail said in February the government hoped to schedule repayments of around $3.5 billion that will be completed by 2016.

Ismail said last week that Egypt would pay an additional $1 billion to the firms within two months.

Energy prices in Egypt are among the lowest in the world, and the cash-strapped government spends more than a fifth of its budget on keeping them down. Artificially low prices provide little incentive for Egyptians to curb consumption.