Egypt to increase oil tenders to raise reserves

Egypt’s recent spike in purchase tenders for petroleum products is part of ongoing efforts to build strategic stocks, the petroleum ministry spokesman said on Sunday on local television amid questions over a possible suspension of Saudi oil aid.

Saudi Arabia agreed to provide Egypt with 700,000 tonnes of refined oil products per month for five years under a $23 billion deal between Saudi Aramco and the Egyptian General Petroleum Corporation (EGPC) signed during a state visit this year by Saudi Arabia’s King Salman.

Egypt has not received October allocations of petroleum aid from Saudi Arabia, traders told Reuters, forcing its state oil buyer to rapidly increase tenders even amid a severe dollar shortage and growing arrears to oil producers.

“We asked for an oil tender because Egypt always seeks to increase its strategic reserves,” Petroleum Ministry spokesman Hamdi Abdelaziz told local broadcaster CBC. “Oil shipments not arriving from Saudi Aramco could be for various reasons… this is something that happens with some shipments.”

Delivery of the Saudi Aramco products was halted as of Oct. 1 though the reason remains unclear. Abdelaziz told CBC the Aramco deal was “purely commercial” in nature.

Egypt announced in April a maritime border accord with Saudi Arabia, which could see it lose control of two Red Sea islands. The accord caused a public uproar and rare protests by Egyptians.

An administrative court voided the accord in June saying Egyptian sovereignty over the islands held and could not be given up. Another court then suspended that verdict, and a third court will now decide the fate of the islands.

Source: Reuters