Egypt has announced plans to settle $1.3 billion in outstanding payments to oil companies by June
The petroleum ministry announced on Saturday that Egypt will settle $1.3 billion in arrears to international oil companies by June, expediting its earlier repayment schedule.
By June 30, 2024, Egypt had amassed approximately $6.1 billion in arrears to foreign oil companies, a situation stemming from a persistent foreign currency shortage that hindered payments and impacted investment and gas production. The shortage has since improved, although some companies have reported that arrears are once again building up, indicating that the resolution of the currency issue may not be fully effective in stabilizing payments to these companies.
According to the previous schedule revealed in January of this year, the government anticipated having outstanding arrears of approximately $1.2 billion by June.
Eliminating debt could motivate foreign oil and gas companies to restart drilling, potentially increasing local production that has been consistently declining since its peak in 2021.
Increased local production would assist the North African nation in decreasing its energy imports.
Egypt’s energy imports bill has more than doubled since the outbreak of the U.S. The Israeli war with Iran has led the government to consider asking employees to work remotely and to close shops by 9 p.m. (1900 GMT) five days a week in order to reduce energy consumption.
A recent note by the Institute of International Finance indicates that the rising cost of oil may result in an expenditure increase of between 0.2% and 0.55% of the country’s GDP at a time when the economy is just beginning to recover from a series of shocks.
