The Egyptian government has begun allocating a portion of its share of extracted natural gas to foreign energy companies to settle outstanding debt payments, a source within the Petroleum Ministry’s contracts department told Al Manassa. The move follows directives from President Abdel Fattah El-Sisi to clear the sector’s debts by June 30.
Arrears to foreign extraction partners peaked at $6.1 billion in 2024 during the height of Egypt’s foreign currency crisis. However, the influx of external financing following the Ras El Hekma deal eased the debt burden. Last month, Petroleum Minister Karim Badawi confirmed that the remaining balance had fallen to $1.3 billion.
To accelerate the liquidation of these debts, the government occasionally permits foreign investors to export a portion of Egypt’s gas share, deducting the proceeds from the sector’s liabilities. Prime Minister Mostafa Madbouly previously highlighted this mechanism as a key strategy during the 2024 debt peak.
The source, speaking on condition of anonymity, explained that the gas volumes allocated to foreign partners under this policy exceed standard production-sharing ratios, which typically range between 15% and 35%.
“Some partners are currently receiving a significant portion of Egypt’s share of production—in some cases nearly the entire share—as a temporary mechanism to settle dues,” the source said.
The source emphasized that this policy operates within the framework of existing gas extraction agreements and does not constitute a breach of contract. “Amending petroleum agreements is not a quick or simple procedure; it requires approval from the House of Representatives and review by specialized committees, which has not occurred,” the source added, noting that Eni and British Gas (BG) hold the largest outstanding balances.
Settling these arrears is seen as a vital incentive to encourage further investment in extraction as the gap between domestic production and consumption widens. Earlier this month, Eni announced a new gas discovery in the West Denise-1 exploratory well off the coast of Port Said, with estimated reserves of over 2 trillion cubic feet and 130 million barrels of condensates.
“Resorting to payment in gas volumes reflects flexible financial management in light of global pressures on hard currency,” former Petroleum Minister Osama Kamal told Al Manassa.
The strategy comes as the cost of energy imports rises. Prime Minister Madbouly stated that the monthly energy import bill surged from $1.2 billion in January to $2.5 billion in March, driven by global price hikes following the closure of the Strait of Hormuz. Additionally, the Petroleum Minister noted today that the cost of importing liquefied natural gas has climbed from approximately $11 to $20 per million BTU.
Egypt’s trade deficit continues to be pressured by petroleum imports, which rose to $19.4 billion in the 2024–2025 fiscal year.
“It is a calculated economic swap,” Kamal added. “The state temporarily waives a portion of its current share in exchange for incentivizing companies to inject new investments and increase production.”
