Reuters – Gulf oil producers have given Egypt a free fuel lifeline totalling $6bn in value to help fend off unrest on its streets in the summer when consumption soars, the head of its national oil company said.
Tarek El-Molla, head of the Egyptian General Petroleum Corporation (EGPC), told financial newspaper Al-Mal that the aid consisted of “huge quantities” of benzene, diesel, heavy fuel oil mazut, butane and crude oil, since last July.
The aid helps reduce the heavy costs of government fuel subsidies and the drain on foreign exchange reserves.
It came after Saudi Arabia, the United Arab Emirates (UAE) and Kuwait promised Egypt more than $12bn in loans and donations days after the army deposed Islamist President Mohamed Morsi.
El-Molla said the Arab Gulf countries had agreed to rotate management of the support, with the UAE in charge for the first quarter of 2014 and Saudi Arabia taking over in the second quarter.
Aid in the form of refined oil products will continue until at least September, Finance Minister Hany Kadry Dimian has said.
Last year, Saudi Arabia pledged $2bn in energy products with Kuwait and the UAE promising an additional $1bn each.
Fuel subsidies cost Egypt’s government $15bn a year, a fifth of the state budget. The money keeps pump prices well below market values, giving Egyptians no incentive to curb their consumption.
Egyptians rioted over long lines at gas pumps just before Morsi’s ousting following mass protests against his rule.
Foreign currency reserves reached $17.414bn in March but are still nearly half the level seen before the 2011 uprising against Hosni Mubarak as political turmoil has hit tourism and foreign investment.
Egypt also requires liquefied natural gas (LNG) for power generation, in short supply due to declining domestic gas production, even as it cut into exports of LNG previously promised to foreign firms.
El-Molla said EGPC was owed EGP 110bn ($15.7bn) from other government entities, including EGP 35bn each from the finance and petroleum ministries.
He said the petroleum ministry had not yet signed an agreement for gas imports but said it would select from among Russian Gazprom, Gaz de France and Sonatrach of Algeria.
He said EGPC was in negotiations with Royal Dutch Shell and Apache Corp for new drilling projects without providing further details.