By Ahmed Talabu
Negotiations between officials from the Egyptian General Petroleum Company, the Egyptian Natural Gas Holding Company (EGAS) and representatives from foreign oil companies are producing agreements to increase foreign investment, according to Minister of Petroleum and Mineral Resources Sherif Ismail. Increased funding would be provided for exploration and increased production of oil and mineral resources he said, in exchange for pledges by the government to pay back late arrears.
He added that arrears owed to foreign companies currently total $5.4bn, according to estimates last month. He added that the Central Bank of Egypt would not be able to make available any funds from recent grants recently received from Arab Gulf countries for the purpose of paying arrears to foreign companies.
Ismail said recent meetings would restore confidence between foreign investors and the government, which, in recent months, missed repayment schedules for arrears. He further stated that foreign companies were not currently withdrawing from the Egyptian market, adding that the government had recently proposed a number of alternative investment options for companies seeking to do business, including increasing production at oil and mineral fields and allotting larger sums of money for the purpose of paying back arrears. He suggested that foreign companies exploit undeveloped fields earlier than previously scheduled, setting aside the largest chunks of revenues received from such explorations for the repayment of late arrears.
He rejected claims that the government sought to sell off a portion of its future production of oil and natural gas for the purpose of using sums reaped from such sales to pay off arrears. He added that it was not yet appropriate to begin allowing oil companies to go public considering current economic conditions.
Ismail concluded by saying that the current state of Egypt’s oil sector was temporary, adding that the market would pick up once security improved and the country’s political situation stabilised. This was especially true he said, considering the desire of many oil companies to remain operating within Egypt over the long term.