Doha: Opec member Qatar will begin helping Egypt with gas supplies through a swap deal from May 27 as the country struggles to meet its domestic energy needs, Egyptian Oil Minister Osama Kamal said in remarks published on Monday.
Egypt will take a share of the natural gas extracted by foreign companies operating on its soil to help ease its fuel shortages, and Qatar will send liquefied natural gas directly to the companies’ overseas customers, Kamal said, according to the website of the state-run television station.
Both countries, however, are still negotiating the credit terms for the deal, he said, without giving further details on the amount of LNG the Gulf state was willing to supply.
“Egypt will not pay for these shipments immediately to the Qatari government because we need the availability of large foreign reserves at the central bank,” Kamal said.
Egypt is working to secure oil- and gas-supply deals on favourable credit terms from major Arab producers in an attempt to ease fuel shortages and a government cash crunch that have proved politically damaging for the country’s Islamist President Mohammad Mursi.
Libya, another member of the Organisation of the Petroleum Exporting Countries, has agreed in principle to offer Egypt close to one million barrels a month of crude oil on a lengthy one-year credit term, officials from the two countries told The Wall Street Journal. Opec member Iraq has also agreed on a draft contract to supply Egypt with four million barrels of crude a month on three-month interest-free credit, said officials from both countries.
Egypt, a significant gas producer with much of its output consumed domestically, began reining in exports last year and is planning to issue a tender soon for local firms to import liquefied natural gas to meet its domestic needs. It is in talks with Russia for gas supplies, while Algeria informed the Egyptian government it can only start negotiating natural-gas deals next year once it boosts its domestic production from new fields.
The North African country has faced a diesel shortage since last year, which has in turn led to rising food costs, long queues at filling stations and electricity blackouts. The fuel crisis has compounded broader economic problems in the country, which in 2011 overthrew the government of Hosni Mubarak in a popular uprising, paving the way for the electoral victory of Mursi’s Muslim Brotherhood.
Egypt’s government is short of funds and has been negotiating with the International Monetary Fund over a $4.8 billion (Dh17.62 billion) loan, which analysts and investors say is critical for the country. IMF officials left Cairo last month without agreeing on the terms of the loan.
