Egypt is embarking on a plan to buy more oil products for power generation as the cash-strapped North African nation frees up gas for LNG exports, as part of efforts to repay money it owes to foreign operators.
State-owned Egyptian General Petroleum Corp. plans to buy more than a million tons of diesel, gasoline and butane gas for delivery in November, up 60 percent from the same period last year, according to people familiar with the matter, who asked not to be identified as they’re not authorized to speak to the media. Egypt’s energy ministry didn’t respond to a request for comment.
Egypt is seeking to encourage renewed investment by foreign energy companies, which have reduced financing in the country after years of waiting for the government to repay money it owes them. Declining domestic gas output amid surging local demand led Egypt to become a net importer of liquefied natural gas last year in order to avoid blackouts.
That has added new financing strains on the government which is emerging from its worst economic crisis in decades. To break this cycle, Cairo decided to allow foreign energy operators to export their share of local gas production as LNG as a way to get their arrears paid and to go ahead with investments in Egypt’s gas output.
Three LNG cargoes have been exported since September, including one that the government said was shipped from Egypt’s Idku terminal on behalf of Shell Plc. The government is now in talks with the foreign energy companies to allow them to produce volumes for two shipments every month for loading between November and March from Idku, according to the people.
Egypt’s production of crude oil and condensate fell to 486,000 barrels a day in July, the lowest in decades, according to data from Joint Oil Data Initiative. In contrast, the country’s import expenses for petroleum products and LNG are projected to rise to about $20 billion this year from $12.5 billion in 2024, according to official data.
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