Egypt announced it will repay $1.3 billion owed to international oil companies by June, according to a statement from the petroleum ministry on Saturday, as reported by Reuters, bringing forward its earlier repayment schedule.
The country had built up approximately $6.1 billion in arrears to foreign oil firms as of June 30, 2024, largely due to a prolonged shortage of foreign currency that delayed payments and negatively affected investment and gas production.
Although the currency situation has improved, some companies report that arrears have started accumulating again. Under a previous plan revealed in January, the government had expected to still owe around $1.2 billion by June.
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Settling these debts could incentivize foreign oil and gas companies to restart drilling activities, potentially boosting domestic production, which has been declining since reaching its peak in 2021. Increased local output would also help Egypt reduce its reliance on energy imports.
The country’s energy import bill has more than doubled since the start of the U.S.-Israeli conflict involving Iran. In response, the government is considering measures such as implementing remote work policies and requiring shops to close by 9 p.m. (1900 GMT) five days a week to curb energy use.
A recent note from the Institute of International Finance warned that higher oil costs could raise government spending by between 0.2% and 0.55% of GDP, at a time when Egypt’s economy is still recovering from multiple shocks.
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Image Credit: Asharq Al-Awaat
