The Egyptian General Petroleum Corporation (EGPC) proposed last week an international tender to foreign companies to supply the local market’s needs of petroleum products (benzene, diesel, Butane gas, and Mazut) for October. This tender comes in anticipation of news that the Saudi Arabian Oil Company’s (Aramco) shipments did not arrive.
Minister of Petroleum and Mineral Resources Tarek El Molla told Daily News Egypt that Saudi Aramco might not send the agreed fuel shipments for October, so EGPC proposed a tender to provide the required needs of the market.
He added that Saudi Aramco has not officially notified the ministry of anything yet, but it is likely that they cannot supply the required shipments for this month due to its internal conditions, noting that this is acceptable in long-term contracts of petroleum products.
El Molla pointed out that Saudi Aramco has been sending all the agreed fuel shipments regularly since May. The deal included supplying 400,000 tonnes of diesel, 200,000 tonnes of benzene, and 100,000 tonnes of Mazut monthly, over a period of five years.
Some traders told Reuters that Egypt would not receive the Saudi petroleum aid of October, in which EGPC was forced to propose an immediate tender despite the severe shortage of US dollars and the increasing arrears for oil companies.
El Molla added that the Egyptian-Saudi contract stipulates that the value of petroleum product shipments will be paid according to the international prices at the time of supply.
He further added that during the summer months, Saudi Aramco petroleum shipments were regularly received at Egyptian ports and were distributed within the domestic market to meet the growing demand.
The Ministry of Petroleum has signed a commercial contract with Saudi Aramco to provide Egypt with petroleum products for five years starting from May, and EGPC shall pay for the shipments at an interest rate of 2% and a grace period for up to three years.
The total cost of the shipments worth $30bn is related to the continuing decline in petroleum prices globally.
This agreement came after the signing of a financing agreement between the EGPC and the Saudi Fund for Development (SFD), on the sidelines of the Coordinating Council of the two countries held in Riyadh in March.
El Molla said that the local consumption of petroleum products and natural gas amounts to 6.5m tonnes monthly, 4.2m tonnes of which are secured from domestic production.
He added that Egypt imports 2.3m tonnes of petroleum products and natural gas monthly, to meet the local market’s needs.