Egypt seeking to raise gas prices, lure back investors
Egypt's state gas company EGAS has begun talks to try to raise natural gas prices and work out how industrial consumers can pay producers directly, two newspapers reported on Wednesday.
Egypt's cash-starved government has been withholding payments for oil and gas produced locally by foreign energy firms under production sharing agreements, and as a result many of these firms have been unwilling to invest in new projects.
The move seems to signal an effort by Egypt's interim government, appointed after the military ousted Islamist President Mohamed Mursi on July 3, to resolve some of the thorny issues that have all but crippled Egypt's finances.
EGAS hopes the new system will help persuade British Petroleum to invest $1.7 billion to develop its offshore Taurus and Libra fields north of Alexandria, al-Boursa quoted EGAS chairman Taher Abdel El Reheem as saying.
Under the system, industrial consumers make monthly payments for their gas directly into the bank accounts of BP and other foreign partners to guarantee regular funds were received.
EGAS officials were not immediately available for comment.
BP holds 60 percent of the concession for the two fields and Hamburg-based RWE DEA AG the other 40 percent. EGAS is entitled to some of the gas under a production-sharing accord.
EGAS believes the two fields could produce an additional 500 million cubic feet of gas per day, Abdel El Reheem told al-Boursa. BP accounts for about 15 percent of Egypt's crude oil and 30 percent of its natural gas production, he said.
BP and its partners like the direct payment system and EGAS is considering applying it to all future development agreements, he said. It already applies to contracts with ENI.
RAISING GAS PRICES
Al-Mal newspaper quoted Abdel El Reheem saying EGAS began negotiating on Sunday with industrial companies operating in the local market to raise the price they pay for their gas.
EGAS has begun talks with Egyptian Fertilisers, a subsidiary of Orascom Construction Industries, on raising the price its Suez plant pays for gas to $6 per mmBtu from $1.50.
EGAS is also trying to resolve problems with Spain's Union Fenosa after Egypt halted supplies of 800 million cubic feet of gas a day to its Damietta liquefaction plant, al-Mal said.
Al-Mal also reported that United Arab Emirates had agreed to pay for all Egypt's petroleum product cargo imports in July, worth about $1 billion, and Kuwait would pay for 1.6 million barrels of crude imports a month for use in Egyptian refineries.
Kuwait would pay $190 million a month starting in August until $1.5 billion in petroleum aid it had pledged ran out, al-Mal quoted an unnamed source at state oil firm EGPC as saying.
Egypt has asked Kuwait to include Kuwaiti petroleum products, including 70,000 tonnes of diesel and jet fuel worth $60-65 million, as part of the aid.
Officials at EGPC and Kuwait's state oil company KPC were not immediately available for comment.
Gulf Arab states pledged $12 billion in aid after the ousting of Mursi.
- Tourism is the real target of the Tunisia attacks: industry set to suffer
- FIFA scandal probe: No deaths in 2022 World Cup construction, Qatar says
- The UAE harnesses the power of celebrity endorsements
- Gazans reach beyond Israeli blockade through start-up
- France is playing a risky dating game in the Gulf: experts
- Egypt’s seeks $6 billion in direct investments
- 'Mostly soft': Gulf markets consolidate as oil dips
- Egypt: 1 million square meters directed to Kuwaiti firm
- EDCO employees to receive pay raise under new union-negotiated contracts
- Luring investors: Suez Canal 'investment certificate' to guarantee 12% yield