Egypt’s debt to foreign oil companies has reached $3bn at the end of December, up from $2.7bn in October, Minister of Petroleum Tarek El-Molla told Reuters Sunday.
Debt to foreign companies has been accumulating since 2008 when the Egyptian government, represented by the Egyptian General Petroleum Corporation (EGPC), became unable to pay for oil supplies extracted from local wells.
The financial situation of EGPC deteriorated after the 25 January Revolution in 2011, leading debt to reach $7bn in 2013, its highest rate since 2008.
The last batch was paid in November 2015 when Egypt took $500m from a $1.5bn loan obtained from the African Development Fund (ADF). By the end of 2014, the dues that the Egyptian government had to pay were $4bn.
The value of debt to foreign companies decreased following a reduction of international oil prices in 2015.
Before the reduction in oil prices, Egypt had to pay $1.2bn each month, which has now decreased to $500m. Despite ongoing payments, officials from EGPC have repeatedly said that better utilisation of oil and its export would be more effective at managing the debt.
Crude oil prices have slumped to their lowest level in five years in September 2015 amid expectations of increased supply from member state the Organisation of the Petroleum Exporting Countries (OPEC).
It is yet unclear whether natural gas revenues could be used to manage Egypt’s debt. Revenues are expected to rise after Italian company Eni announced the discovery of the Zohr natural gas deposit in the deep waters off of Egypt’s north coast in August 2015. Early reports suggest that the deposit could hold a reserve of 30tr cubic feet of gas on an area of approximately 100 sqkm.