Egypt starts paying off debts to Dana Gas, BG Group

The Egyptian government has made a payment of US$60 million to the United Arab Emirates-based company Dana Gas, an amount representing 28 percent of the country’s overdue bill of US$212 million, the company announced on Sunday.

The payment was made in US$10 million, with the balance deposited in Egyptian pounds.

The statement follows similar news from the United Kingdom’s BG group, which said it had received US$350 million from the Egyptian government on January 2. This amount is also equivalent to roughly 28 percent of the government’s outstanding receivables of US$1.27 billion.

On December 31, the petroleum minister announced that the petroleum sector had made a payment of US$2.1 billion to foreign partners, bringing Egypt’s arrears down to US$3.1 billion.

This follows two earlier payments of US$1.4 billion in October, and US$1.5 billion earlier in December.

Egypt has accumulated billions of dollars in oil and gas debts since the 2011 revolution. Production declined while demand for energy surged, leading the government to dip into shares of domestically produced gas allocated for sale by foreign oil and gas producers, racking up unpaid bills in the process.

Foreign oil companies operating in Egypt, including Dana Gas and BG, have suffered from this practice. In 2012, Dana Gas nearly faced seizure of its Egyptian assets when payment delays from Egypt left the company unable to make a bond repayment on schedule. In January 2014, BG declared force majeure after diversions of gas to Egypt’s domestic grid left it unable to fill export contracts.

Egypt’s growing arrears also left petroleum firms reluctant to invest in the country’s petroleum sector, contributing to Egypt’s energy crunch.

In November, the Ministry of Petroleum announced that Egypt plans to repay all of its oil and gas debts within six months.


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