Egypt says it will pay $1.3bln in arrears to oil companies by June

Egypt will settle $1.3 billion in arrears to international oil companies by June, the petroleum ministry said, accelerating its previous ‌timetable for repayments.

Egypt had accumulated about $6.1 billion in arrears to foreign oil companies by June 30, 2024 due to a prolonged foreign currency shortage that delayed payments and weighed on investment and gas output, reported Reuters. 

The shortage has since eased, though ⁠some companies have said that arrears have been once again accumulating.

Under its prior timetable, announced in January this year, the government had expected to still have arrears of some $1.2 billion by June.

Clearing debt may encourage foreign oil and gas companies to resume drilling, which would boost local production that has been steadily falling since peaking in 2021.

More local production ‌would ⁠help the North African nation to reduce its energy imports.

Egypt's energy imports bill has more than doubled since the outbreak of the US-Israeli war with Iran and the government is considering asking employees ⁠to work remotely and closing shops five days a week to cut energy consumption.

According to a recent note ⁠by the Institute of International Finance, the additional cost of oil could lead to an increase in expenditure ⁠of between 0.2 per cent and 0.55 per cent of the country's GDP at a time when its economy is barely recovering from successive shocks.