Sources: Govt receivables to foreign gas companies to reach US$5.5 bn by end of September

The government currently owes $5 billion in arrears to foreign energy companies producing gas, two informed sources from the energy sector told Mada Masr on condition of anonymity.

Egypt’s receivables to oil majors have mounted over the last two years amid a foreign exchange crisis. The government cleared some of the backlog earlier this year, following an influx of liquidity as part of a bailout.

Companies were paid outstanding arrears worth $1.5 billion during the first and second quarters of 2024, with small additional payments bringing the total to just $1.7 billion, according to the two sources.

But receivables built up again over the third quarter of 2024 as the government did not make fresh payments after June, the sources said.

Overdue payments have reached a value of $5 billion so far and are expected to rise to $5.5 billion by the end of September, with 85 percent of the figure owed to Eni and British Petroleum, according to the sources.

They added that the government informed the companies at the end of August that it would begin paying the arrears in monthly installments of about $400 million, starting in October and continuing for a year. The government promised to prioritize companies with outstanding arrears in upcoming exploration tenders and to offer them preferential terms in new contracts as compensation for the accumulated dues. 

Following the meeting, the Petroleum Ministry issued 12 tenders for gas exploration in the Mediterranean Sea and the Delta.

The companies are concerned about the plan, however, said the two sources. Companies would need to invest millions of dollars for new exploration and would have to wait a year and half before being able to recover their investment costs, while old dues remain unpaid.

At the same time, Egypt is undergoing an energy supply crisis which saw the government implement scheduled power cuts nationwide for almost a year to save fuel. 

Domestic gas production fell dramatically during the second quarter of the current year, reaching its lowest level in seven years at approximately five million cubic feet, compared to its peak of seven million cubic feet achieved in the second half of 2021.

Approximately 70 percent of total domestic production is accounted for by offshore natural gas fields, led by the Zohr field in the Mediterranean. Production at Zohr declined by 36 percent in the period beginning in 2021 and ending in August 2024, falling to 1.8 billion cubic feet per day from nearly three billion cubic feet three years ago, according to data from energy analysis firm MEES viewed by Mada Masr.

Egypt has depended more heavily instead on natural gas it imports from Israel, with imports increasing significantly to total $1.2 billion during the first half of 2024 compared to $1.8–2.1 billion in imports over the past two years, according to foreign trade data issued by the Central Agency for Public Mobilization and Statistics.

The government has also issued tenders to import liquefied natural gas elsewhere to meet the demand for fuel to generate electricity.

Libya and Saudi Arabia covered the cost of four shipments, totaling $200 million, with an additional 20 shipments planned for purchase for next winter.

Fuel and electricity prices have also risen for consumers, with the Electricity Regulatory Authority raising consumption prices across all categories beginning from August at rates ranging from 14 percent to 50 percent.