Egypt is planning to soon reach an agreement to repay the more than $6 billion it owes international energy companies for the oil and gas it has bought from them, aiming to make the first payment before the year-end, two people familiar with the matter said Monday.
“We are close to agreeing on a timetable for the outstanding debt and the oil ministry is pushing the government to make the first payment before the end of this year,” an Egyptian oil official who asked not to be named told the Wall Street Journal.
“The first payment would hopefully reassure the oil companies and encourage them to increase their investments in the country,” the official said.
Egypt has been facing a slowdown in oil and gas exploration activities over the past couple of years due to continuing civil unrest since the ousting of former president Hosni Mubarak.
The country has been paying hefty premiums for its crude supplies due to the weaker Egyptian pound and is struggling to pay its $6 billion debt to foreign energy companies including: BP BP.LN +0.08% PLC, Apache APA -0.70% Corp, BG Group BG.LN -0.54% PLC and Dana Gas PJSC, an energy company based in the United Arab Emirates.
One of the options being discussed is that foreign companies raise their output of crude and condensates in the country and then export their share of this increased production as repayment for some of the money owed.
“The government is also considering using part of the Gulf aid it has received to make the first payment since it is a quicker solution,” another official said.
Saudi Arabia, Kuwait and the United Arab Emirates promised Egypt a total of $12 billion in loans, grants and fuel shipments to help its ailing economy, following a military intervention in July that ousted Mr. Mubarak’s successor, Mohammed Morsi.
The pledges have so far allowed Egypt to stabilize food and fuel prices, bolster its dwindling foreign reserves and hold off negotiating an International Monetary Fund loan for $4.8 billion.
Source: Business Week