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Petroleum ministry assigns EGPC to pay for gas shipments through internal revenue - Daily News Egypt

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Petroleum ministry assigns EGPC to pay for gas shipments through internal revenue

By Mohamed Adel The Ministry of Petroleum has assigned the task of importing liquefied natural gas (LNG) needed for power plants through the coming period to the Egyptian General Petroleum Corporation (EGPC). Payment for the imported gas will be managed through internal revenue, according to a senior official at the Ministry of Petroleum. The expenses …


By Mohamed Adel

The Ministry of Petroleum has assigned the task of importing liquefied natural gas (LNG) needed for power plants through the coming period to the Egyptian General Petroleum Corporation (EGPC). Payment for the imported gas will be managed through internal revenue, according to a senior official at the Ministry of Petroleum.

The expenses to import the LNG, which are estimated at $3bn annually, will be liquidated alongside petroleum product subsidies in the budget with the Ministry of Finance at the end of each year.

According to the official, the government’s move to make the EGPC pay for the cost of importing LNG as well as other petroleum products the country needs will drastically threaten the financial condition of the EGPC.

He added that the EGPC’s regular inability to pay back its dues to foreign partners is due to the fact that all of its internal revenues are spent on fuel imports for which the Ministry of Finance is unable to provide the necessary liquidity.

The Egyptian Natural Gas Holding Company (EGAS) had prepared the terms of an international tender for the import of gas shipments for the next four years, but the government assigned the EGPC with carrying out the tender and using a special budget to manage the issue, according to the official.

The EGPC will launch the tender soon in order to sign a contract that will cover the deficit in current gas production in Egypt, through the import of LNG. All of the technical data and mechanisms behind this tender were prepared by EGAS.

Some major obstacles have delayed the Egyptian government’s efforts to work through the gas shortage faced by the country this year. After the government’s negotiations with the Norwegian company Höegh – which would provide a floating station moored off of the Red Sea port of AinSokhna to receive imported shipments of LNG and convert them into their gaseous form – collapsed, officials were forced to resume their negotiations with the rival American company Excelerate Energy.

The petroleum sector is now making great efforts to rent an LNG conversation station for any incoming shipments of LNG in the near future. However, officials of the petroleum sector refuse to make any comment on their negotiations with Excelerate Energy, considering it a matter of national security.

Last year, the government proposed a tender for global companies to import gas to power plants, which was won by Shell Oil. The demise of former President Mohamed Morsi’s regime led to the cancellation of the tender.

According to the official, about 500m cubic feet of gas will be pumped to power plants per day starting from January 2015.

 

 

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