The Egyptian government has paid BG Group US$350 million in arrears for natural gas deliveries as part of a deal it reached in the summer to pay off all its accumulated oil and gas back payments by 2017.
BG Group announced the payment yesterday, saying that it reduces the arrears owed to it by Egypt to about $1.2 billion.
Egypt this week signed a loan deal with a consortium of banks to secure funds to repay some of its arrears. The loan consisted of 6 billion Egyptian pounds (Dh3.08bn) to be repaid over five years, plus a $550 million loan to be repaid over four years after a one-year grace period, according to Egypt’s state-run news agency Mena.
Before the latest round of payments, Egypt owed about $6bn to companies operating oil and gas concessions in the country. The new government, under the former general Abdel Fattah El Sisi, reached a deal to repay between $2bn and $3bn of the debt by the end of the year, the minister of petroleum, Sherif Ismail, said last week.
BG is one of the largest gas producers in Egypt and its interests there accounted for about 18 per cent of its total production last year. The chaos that descended on the country after the Arab Spring in 2011 led most foreign oil companies to scale back on investment and operations.
BG said: “While the group has been impacted by the reduction of [liquefied natural gas] exports from Egypt, the company continues to investigate options for increasing the supply of gas and is working with the government on resolving the outstanding receivable balance.”
The government has been working on repayment deals that include investment commitments. Last summer, for example, BP agreed to invest $10bn to develop gasfields over the next five years, which could boost Egypt’s natural gas output by 20 per cent.
Last week, the Abu Dhabi-listed Dana Gas also reached a deal in which it will get back payments that will allow it to invest $270m to develop one of its main gasfields in Egypt.
amcauley@thenational.ae
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