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Egypt pays $1.3bn arrears to foreign oil and gas companies

Egypt arrears foreign companies power cuts students Reuters/Mohamed Abd El Ghany
Libraries have been opening for students in Egypt to study for exams during frequent power cuts
  • Tranche was second payment this year
  • Eni said to be owed $1.7bn
  • Egypt aims to increase output

Egypt cleared $1.3 billion of outstanding payments to foreign oil and gas companies operating in the country in June and has established a plan to reimburse the remaining dues within the next month, according to the government.

The payment accounted for about 20 to 25 percent of the arrears owed to the companies, Prime Minister Mostafa Madbouly said.

It is the second time this year that Egypt has paid money owed to foreign oil and gas companies. In March, the government reimbursed about $1.5 billion, equivalent to 20 percent of the arrears.



Analysts believe that paying in full before the end of the year is likely to be difficult, however.

The International Monetary Fund estimated the outstanding bills to foreign oil and gas companies in March at approximately $4.5 billion.

Egypt accumulated debt worth billions of dollars owed to foreign partners and contractors a decade ago as a result of the economic crisis and a foreign currency shortage, which worsened in early 2022.

This shortage has eased in recent months, as the country secured international financing from institutions including the IMF, and an influx of capital from the UAE for the Ras El Hekma development on the Mediterranean coast.

As a result, Egypt recorded its highest foreign exchange reserves ever in June, after remittances rose almost 75 percent year on year.

According to reports, overdue payments to the Italian company Eni, one of the most important foreign investors in Egypt’s hydrocarbon sector and operator of the giant natural gas field Zohr, have reached $1.7 billion. Eni told AGBI earlier this month that it was confident in the recovery of outstanding dues. 

Eni announced on Wednesday that it will invest about $160 million in the second half of 2024 to drill two new wells in the Zohr field.

The aim is to boost dwindling output. The field currently represents around 40 percent of Egypt’s total gas production.

Egypt is attempting to increase its oil and gas output as it deals with a severe energy crisis. Daily blackouts have led to the deaths of several people.

In February, the government outlined a plan to boost production rates, increase oil and gas reserves, enhance crude oil refining capacities and bolster petrochemical production, with a total investment of approximately $17 billion by 2030.

On Tuesday, the new Egyptian government approved five projects to explore oil and gas potential. 

These petroleum agreements, which include projects in the Mediterranean, Nile Delta and Western Desert, are expected to attract $200 million in investments.

They involve the Egyptian Natural Gas Holding Company, the Egyptian General Petroleum Corporation and a consortium of international and national companies.