Egypt reduces arrears owed to foreign oil companies to US$3.4 bln

Egypt has reduced the arrears it owes foreign oil companies to US$3.4 billion in 2015/16 from $3.5 billion a year earlier, Petroleum Minister Tarek El Molla told Reuters on Monday.

El Molla also said that Egypt received crude oil and natural gas from the foreign partners' share during 2015/16 worth $5.4 billion. Egypt paid them $5.5 billion.

In January, the minister told Reuters that Egypt's outstanding arrears to foreign oil companies rose to US$3 billion at the end of December 2015 from $2.7 billion at the end of October.

The ministry had said in September that Egypt aimed to reduce the arrears owed to foreign oil companies to $2.5 billion by the end of 2015 and to pay them off completely by the end of 2016.

Delays in paying back foreign petroleum companies had discouraged investment in the sector, but a drive to increase the price paid for domestic production and pay back arrears had encouraged new contracts signed in 2015.

In his comments in January, El Molla did not provide further detail on why total arrears have risen since November.

Egypt has run short of hard currency since a 2011 uprising drove tourists and investors away. Reserves almost halved to $16.4 billion by the end of November.

Once an energy exporter, Egypt has turned into a net importer because of declining oil and gas production and increasing consumption. It is trying to speed up production at recent discoveries to fill its energy gap as soon as possible.

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