Egyptian state-owned energy companies are negotiating new terms and repayment schedules for debts owed to foreign partners, Oil Minister Sherif Ismail said, as the country tries to boost output amid political turmoil.
The restructuring is a “huge challenge” and a priority for the government, which wants foreign oil and gas companies to continue investing in exploration and development, Ismail said in an e-mailed statement from the ministry. The statement didn’t specify the amount of debt the ministry seeks to restructure, nor did it identify the partners involved.
Egypt is increasingly strapped for cash to repay international energy companies in the aftermath of the 2011 uprising against former President Hosni Mubarak. Foreign-currency reserves have dwindled and the pound weakened, raising investor concerns. Egyptian General Petroleum Corp., the state-run company in charge of oil operations, owes foreign companies $5.4 billion, Ismail said in an Aug. 22 interview from Cairo.
Among the options under discussion is for foreign companies to raise their output of crude and condensates and then export their share of the increased production as repayment for money they’re owed, Ismail said. The restructuring won’t affect foreign companies’ plans to invest more than $8.5 billion to explore for and develop energy in Egypt’s fiscal year ending June 30, 2014, he said.
China Petrochemical Corp., Asia’s largest refiner, agreed last week to pay $3.1 billion for a 33 percent stake in Apache Corp.’s Egyptian oil and gas business, marking the biggest purchase in the Middle East by the Chinese state company known as Sinopec Group.
A military coup toppled former Egyptian President Mohamed Mursi in July, sparking protests and violence that have killed at least 1,000 people. Mursi had become the first democratically elected president a year ago after Mubarak’s 29-year reign ended in February 2011 following calls for his ouster.