By Dow Jones Business News,
June 26, 2014, 10:15:00 AM EDT
LONDON--Egypt plans to pay back some of its ballooning debt to international energy companies in a bid to revive
confidence in its flagging hydrocarbon sector and boost production, the country's oil minister Sherif Ismail said
Egypt currently owes around $5.9 billion to foreign producers for oil and gas they sell to the government for use
domestically. Its payments have been interrupted due to the continuing political and civil unrest in the country
following the removal of President Hosni Mubarak from office in 2011.
"In the next few months, we will make a partial payment to foreign companies. The minimum payment would be $1.5
billion," Mr. Ismail said in remarks aired on Egyptian state television.
Foreign energy companies operating in Egypt have scaled back investment and pondered exiting the market altogether in
BG Group PLC, one of the major firms operating in the country, has declared force majeure on its Egypt operations and
written-off $1.3 billion in its business there, while Poland's state-owned producer PGNiG abandoned a concession because
of the political situation in the country.
As well as not receiving their full payment for domestic oil and gas sales, because of high Egyptian demand foreign
companies are missing out on selling more of their output on international markets, where they are able to charge higher
Among the companies that could receive payments this year are BP PLC, Apache Corp., BG and Dana Gas PJSC, an energy
company based in the United Arab Emirates, Tarek El Mulla, chairman of state-run Egyptian General Petroleum Corp. told
The Wall Street Journal.
The oil ministry is particularly keen to make a partial payment to BG, one of the country's largest gas producers, Mr.
El Mulla said.
BG said in May that its receivables from Egypt's government had increased to $1.4 billion, half of which is overdue,
up from $1.2 billion at the end of 2013.
"We've had assurances from the government on payments, and we are being paid, but the receivables balance is likely to
continue to increase with limited LNG exports," a spokesman said.
Last year, Egypt made payments totaling $1.5 billion to a number of energy firms operating in the country, while
promising to pay $3 billion by 2017. The payments came after Saudi Arabia, Kuwait and the U.A.E. promised $12 billion in
loans, grants and fuel shipments to help Egypt's ailing economy.
Selina Williams in London contributed to this article.
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