Egypt will pay debt owed to Irish oil companies by 2017
TWO Irish oil exploration firms are expecting a cash boost after the Egyptian government vowed to pay all arrears owed to foreign oil firms within three years.
Petroceltic and Circle Oil are owed a combined $109m (€80m) from the Egyptian oil authority EGPC.
According to sources, the state aims to accelerate repayments of arrears in the oil and gas industry, which stands at almost $6bn. It previously said it would repay half that amount by the 2017 timeframe
Davy stockbrokers said the reports are a further sign of the rehabilitation of the oil and gas industry in Egypt.
"For Petroceltic, the improvement in arrears is already underway with roughly half of the c.$80m debtor position on late payment," said analyst Job Langbroek.
"This compares with a total receivable position of around $120m at the end of 2012."
About half of the $80m owed to Petroceltic, which produced 20,354 barrels of oil per day in Egypt, is overdue.
The firm recently revealed plans to raise $100m to expand exploration activity there and in Kurdistan, despite writing off $37m due to unsuccessful wells in Egypt, Bulgaria and Romania last year
Circle, which produced more than 11,000 barrels of oil per day there, is owed $29m, with $21m overdue.
Receivables decreased by 11pc last year, despite a 16pc increase in oil sales for 2013.
Mr Langbroek said the deal looks to be part of the efforts of the Egyptian authorities to increase activity in the Industry and to solve the gas supply problems they are facing,
It is understood the ministry of petroleum plans to pay $1.5bn by this September to companies, including BG group and British Petroleum.
"As well as the general arrears position, the weak domestic gas price has resulted in falling investment and gas output form indigenous production," Mr Langbroek added. "To solve this issue, the state has begun to look to cut subsidies and improve gas prices for the industry. Early indications are encouraging with BP announcing that it would invest $10bn over the next half decade."