Egypt to clear $1.3bn oil debt to foreign firms by June

Egypt has announced plans to settle $1.3 billion in outstanding arrears owed to international oil companies by June, as it moves to restore investor confidence and boost energy production.

The country’s petroleum ministry said the accelerated repayment forms part of efforts to address longstanding debts, which had risen to about $6.1 billion by mid-2024 due to persistent foreign exchange shortages.

Officials noted that while the currency crisis has eased, some arrears have continued to accumulate, prompting renewed urgency in clearing the backlog.

Analysts say settling the debt could encourage foreign oil and gas firms to resume drilling activities, potentially reversing declining local production and reducing reliance on energy imports.

The move comes amid rising global oil prices triggered by tensions involving the United States, Israel and Iran, which have significantly increased Egypt’s energy import bill.

Authorities are also considering energy-saving measures, including remote work policies and earlier closing times for businesses, to manage consumption.

According to the Institute of International Finance, higher oil prices could increase Egypt’s public spending by between 0.2 and 0.55 per cent of its Gross Domestic Product.

The government had previously earmarked $1.5 billion in 2024 to begin clearing the debt, with about 20 per cent of arrears already repaid under an existing schedule.

The debt accumulation had weighed heavily on investment and gas output, with industry players citing delayed payments as a major constraint.

With improved liquidity following a major deal with the UAE and support from the International Monetary Fund, Egypt is now seeking to stabilise its energy sector and attract fresh investment.