Foreign companies operating in the oil sector have linked increasing their investments to their payment from the Egyptian government, in light of the government’s failure to keep to the repayment schedule that was previously agreed upon.
According to an official at one of these foreign companies, the Egyptian government has no choice but to pay its dues if it wants an increase in investments within the sector, which would lead to an increase in oil and gas production rates.
Even if the Ministry of Petroleum pays back an estimated $1.5bn, which was announced in a previous statement by Minister of Petroleum Sherif Ismail, the foreign partners will not change their positions on increasing their investments for the development and exploration of oil and gas fields. The current rates of production will remain in place until all payments are completed.
The official added that the Egyptian government has negotiated and agreed upon several repayment schedules before but the Ministry of Petroleum has not followed them.
If the government charged the EGPC with the expenses of importing liquefied natural gas in addition to bearing the cost of importing shipments of necessary petroleum resources for the country, this would threaten the financial situation of the EGPC in a serious way, and would increase its inability to repay dues to foreign partners over the ensuring four years, according to an official at the Petroleum Authority.
The ministry of petroleum assigned the importation of liquefied natural gas needed for electricity stations over the coming period to the EGPC, and this was in order to provide payment for imported gas from domestic revenues.
Expenses for the importation of liquefied natural gas, which are estimated at roughly $3bn annually, are going to be liquidated along with the subsidies for petroleum products that are part of the budget each year with the Ministry of Finance, according to the official.
The reason the authority is unable to regularly pay dues to foreign partners, the official continued, goes back to the inability of the Ministry of Finance to manage the necessary liquidity for this.
The Egyptian Natural Gas Holding Company (EGAS) has prepared a brochure on the terms for an international tender for importing gas shipments for the coming four years, and the EGPC was assigned to pay the value of the shipments rather than the Ministry of Finance, according to the official.
EGAS sent the EGPC the entire file for the tender, which it was preparing to offer for the holding company, and sent all the technical data on import operations and the required mechanisms involved.