The Ministry of Petroleum’s outstanding dues to the Royal Dutch Shell Company increased to $1.3bn from $1.1bn in July from the returns of the foreign partner’s gas share produced from Rashid and Borollos fields’ concessions, which BG recently acquired.
A source said that the Ministry of Petroleum did not fulfil its promise to its foreign partner Shell— to repay $400m of BG’s dues during June— because the Central Bank of Egypt (CBE) did not provide the required amount, in light of the Egyptian pound’s devaluation against the US dollar.
He added that Shell has decided to postpone the implementation of phase 9B in Borollos fields, until the Ministry of Petroleum commits to its promises and repays financial dues.
He explained that the government acquires roughly $50m of the foreign partner’s gas share of Rasheed and Borollos, and has not fully repaid it due to the US dollar shortage problem Egypt is facing.
The source pointed out that the ministry promised its foreign partners to pay part of the financial dues throughout 2016, after failing to adhere to the previous deadlines set with another partner. The Ministry of Finance and the CBE did not provide US dollars to repay part of the Ministry of Petroleum’s outstanding debt, which amounts to $3.5bn.
He pointed out that the ministry’s dues owed to BG represents 45% of the government’s total debt to foreign oil companies operating in Egypt.
He said that the Ministry of Petroleum has agreed for Shell to export the liquefied gas shipment every 20 days through the EDCO liquefaction plant, and to increase gas quantities in case natural gas is available in the national grid.
The price of gas in phase 9B in the deep Mediterranean waters was agreed to be calculated with a pricing equation linked to the price of Brent crude at a maximum of $5.88 and a minimum of $2.5 per million BTUs.
Shell suspended the work of phase 9B in the Mediterranean Sea concession area. The rig Saipem moved from the site after completing phase 9A and linked it to the national gas grid six months ago.