Egypt marks the end of subsidies with $6.3 billion in debt to foreign oil and gas companies
Dues owed to foreign oil companies reached a total of $6.3bn this July, compared to $6bn at the end of April, according to Tareq Al-Mula, president of the Egypt General Petroleum Corporation (EGPC).
The government will pay at least $1.5bn of these receivables to these foreign companies by the end of the year 2014, according to previous statements by Sherif Ismail, Minister of Petroleum.
Receivables owed to foreign partners accrue at a rate of approximately $200m per month, due to the government’s inability to pay its dues regularly, said Al-Mula.
The government receives a monthly share of gas and crude oil valued at approximately $700m through its partnerships with foreign companies in Egyptian gas fields. It is paid for through the export of crude oil products from Ras Gharib that are too heavy to be processed through Egyptian refineries. It also results in the sale of a share of oil condensates to various foreign companies.
The Ministry of Petroleum paid about $1.5bn of its debt to foreign partners in the oil and gas sector last December, according to Al-Mula.
He also stated the only way to pay off these debts is for the ministry to receive its dues from government sectors that still owe money for gas and oil usage. This debt currently exceeds EGP 160bn.
A number of foreign partners have reduced investments in the sector for the upcoming period, which will cause average natural gas production to stabilise at 5.1bn cubic feet per day andcrude oil production to stabilise at 690,000 barrels per day over the next four years, according to a senior official with the Ministry of Petroleum.
The official stated that Egypt was producing about 5.7bn cubic feet of gas per day and 695,000 barrels of crude oil in 2010.
The total investment target for foreign partners in the oil sector during the current fiscal year amounts to $8.1bn, specifically for research, exploration, and operation expenses, according to the official.