Egypt vows to repay debt in six months

Egypt owes $4.9bn in dept to foreign oil and gas companies

Oil facilities in Egypt.
Oil facilities in Egypt.

Egypt's oil minister said he plans to repay all of the country's $4.9bn debt to foreign oil and gas companies within six months, Reuters has reported.

The announcement was seen as a move to boost exploration and ease the country's worst energy crunch in decades.

Egypt has delayed payments to oil and gas firms since economy took a downturn among political instability and unment rising domestic demand for power.

International firms have been reluctant to increase investment in exploration and production particularly in costly offshore areas, until the government repays its debt.

The ministry said in a statement that Egypt planned to borrow $2 billion to help it finance the repayments, seeking to repay 60%of the arrears by year-end.

"This offering comes as one of the short-term measures taken by the government to pay the (international oil companies') arrears," Oil Minister Sherif Ismail said in the statement.

He said state oil and gas boards EGPC and EGAS were holding further talks with the companies, in parallel with repayments, to "manage their expectations".

Egypt repaid $1.5bn to companies in October, leaving $4.9bn outstanding.

But Dana Gas DANA.AD said on Wednesday it understood that about half that amount had been repaid, with $700 million more due by the end of the year.

Dana plans to invest more than $350mn in Egypt over the next few years to drill new wells and redevelop existing wells.

BG Group's earnings hard by Egypt's turmoil distrupting its production and exports of liquefied natural gas from the country.

"The Egyptians have paid a big tranche in September and have promised to repay more within a few months, but they have made similar promises in the past and we will have to wait till we see the money," a senior source at BG told Reuters.

 

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