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Egypt to settle debts to foreign oil companies ‘soon’, minister

Egyptian oil Minister Tariq El Molla [Masr Alarabia]
Egyptian oil Minister Tariq El Molla [Masr Alarabia]

Egypt will set a specific budget to settle foreign oil companies’ debts soon, Egyptian Petroleum Minister Tarek El-Molla said today.

Speaking at the Egypt Petroleum Show – EGYPS 2017 in Cairo, El-Molla explained that the ministry is planning to put in place a schedule to repay arrears to international oil companies.

“We didn’t yet set a date, however we are committed. We are going to have shortly a repayment schedule agreement with partners,” the minister stressed.

El-Molla pledged that the ministry would work hard to solve issues faced by the international oil companies in the Egyptian market, as well as to facilitate an appropriate business and investment climate. He called on petroleum companies to increase their investments in “this booming sector”.

Read: Inflation hits highest level in over a decade in Egypt

Last Wednesday, the UAE’s Dana Gas announced it had frozen its investments in Egypt over delayed payments by the Egyptian government, which amounted to $265 million in December.

Egypt’s arrears owed to foreign oil companies, which represent a massive share of Egypt’s total external debt, stood at $3.5 billion at the end of December, down from $3.6 billion in September.

Last financial year, the government paid $100 million of accumulative arrears.

Oil debts began to accumulate before the 2011 uprising but they swelled to billions of dollars amid worsening state finances while the government used gas earmarked for export to meet the domestic demand.

Also read: UAE threatens to freeze investment in Egypt over unpaid debts

According to an IMF report released last month, the Egyptian government has pledged to settle its arrears to foreign oil and gas companies by the end of June 2019 and not to accumulate new debts.

El-Molla also noted that the government intends to reduce liquefied gas imports, in an attempt to increase domestic production and to start new gas explorations. He added that the central bank provides some $800 million a month for oil and gas imports.

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