The Egyptian government has reached an agreement with foreign oil firms to pay off all of its arrears by 2017 instead of its previous plan to pay LE21 billion ($3 billion) out of a total of LE42 billion ($6 billion) by that time, a source familiar with the matter told Ahram Online.
The source added that the ministry of petroleum plans to pay LE10.5 ($1.5 billion) by this September to companies including BG group and British Petroleum.
Egypt's debt to foreign oil companies decreased to LE41.3 ($5.9 billion) in June from LE42.7 ($6.1) billion the prior month, Tarek Al-Molla, the head of Egyptian General Petroleum Corp (EGPC), told Reuters on Monday.
The decrease was merely LE1.4 billion ($200 million), despite the payment of LE10.5 billion ($1.5 billion) at the end of last year.
But as foreign oil firms increase their investments and explorations in Egypt, their entitlements in the Egyptian government rise, said the source.
This month, Egypt's Prime Minister Ibrahim Mahlab finalised an investment deal with the CEO of British Petroleum (BP), allowing it to invest LE70 billion ($10 billion) in gas fields over the next four to five years, according to Al-Ahram's Arabic news website.
The fields, discovered by BP, are estimated to hold 5 trillion cubic feet of gas and produce 1.2 million cubic feet per day – equivalent to 20 percent of Egypt's current daily gas production.
Several companies had suspended operations in Egypt last year due to the political turmoil that followed ousting President Mohamed Morsi on the back of a popular uprising.
Last July, General Motors, Electrolux and BASF temporarily closed facilities in Egypt, citing the unstable security situation. BG Group and BP pulled out non-essential expatriate staff a month later, reported Reuters.
The government is working to get firms to invest in extraction and exploration, activities desperately needed to help address a severe energy crunch.
Egypt has been in an energy crisis over the past three years, most evident in frequent electricity blackouts. Several government officials have attributed the power cuts to a growing fuel subsidies bill and declining gas production.