Egypt to pay $1.5bn oil debt this year

June 27, 2014 - 12:00:00 am

CAIRO: Egypt will pay $1.5bn of the money it owes to foreign energy companies by the end of 2014, its oil minister said yesterday, as the government tries to stave off a worsening power crisis.

The latest government figures put Egypt’s debts to foreign oil companies operating there at $5.7bn, but officials including Oil Minister Sherif Ismail acknowledge that debts are mounting even as the government pays off what it owes now. The government has promised to pay companies including BG Group BG.L and BP $3bn by the end of 2017 as it tries to lure back investors to tap its reserves and boost production to meet soaring demand. In April, Ismail said Egypt would pay about $1bn “within two months” but the government has not yet announced that it has paid.

Ismail told reporters that Egypt’s natural gas production would rise by 550 million cubic feet per day this year, up from the 500 million announced earlier this month. Egypt has cut into exports of liquefied natural gas (LNG) promised to foreign firms, another cause for strain between the government and investors, although Algeria’s Sonatrach has agreed to ship five cargoes of LNG to Egypt before the year-end.