Egypt pays $350mn to BG Group

The Egyptian government has paid BG Group US$350mn in arrears for natural gas deliveries as part of a deal it reached in the summer to pay off all its outstanding debts to the energy industry by 2017.

The exploration and LNG company said the payment reduces the amount Egypt owes to BG to about $1.2bn. This week the government signed a deal with a consortium of banks for a loan consisting of $84mn and $550mn. The sums have been provided for the repayment of Egypt’s debt to oil and gas company operating concessions in the country and are expected to be repaid over five and four years (after a one-year grace period) respectively. 

Prior to the latest round of payments, Egypt’s dept was estimated as around $6bn, between $2bn and $3bn of which is expected to be repaid by the end of this year after under a deal reached by the government under former general Abdel Fattah El Sisi.

BG is one of the largest gas producers in Egypt with its interests accounting for about 18% of its total production last year. The company said: “While the group has been impacted by the reduction of [liquefied natural gas] exports from Egypt, the company continues to investigate options for increasing the supply of gas and is working with the government on resolving the outstanding receivable balance.”

As part of the country’s repayment and investment commitments BP agreed to invest $10bn to develop gas fields over the next five years, which could boost Egypt’s natural gas output by 20%. Last week, the Abu Dhabi-listed Dana Gas also reached a deal in which it will get back payments that will allow it to invest $270m to develop one of its main gas fields in Egypt.