Tag: Egypt

BG Group Plc (BG/) received $350 million from the Egyptian government as part of the country’s commitment to pay back outstanding debt to the energy industry.

The payment reduces BG’s domestic receivables balance to about $920 million, the company said  in a statement.

Egypt said in last October it would repay $1.5 billion of debt owed to foreign energy companies with savings from a recent reduction in fuel subsidies and proceeds from a planned bond sale. The country ran up debts to companies including BG and Dana Gas PJSC (DANA) as public finances deteriorated amid the political turmoil following the Arab Spring uprising of 2011.

BG has been impacted by the reduction of LNG exports from Egypt, it said. The Reading, England-based company lifted only one LNG cargo in the country in 2014. It is investigating options to increase the supply of gas and is working with the government on resolving the outstanding receivable balance.

BG loaded its first LNG cargo at its Queensland Curtis facility in Australia this week. The company expects limited LNG throughput from Egypt in the near term, it said in its third-quarter results.

Hopes are rising that a $4billion project to widen the Suez Canal will provide Egypt with a boost in construction activity, while also significantly raising revenue in the longer term, Global Arab Network reports.

The Suez Canal brings in around $5billion in revenue annually and has evolved into one of the world’s most strategically important international trade conduits since it opened almost 150 years ago. Today, the waterway is still the quickest sea route between Europe and Asia.

Egypt’s challenging economic environment has led officials to refocus their efforts on expanding and upgrading the canal. Estimates suggest that revenue from the waterway could increase to $13.5billion once the work is completed, although some aspects of the project, including its location, have come under criticism.

Egypt’s army will coordinate the work on the initiative, known as the Suez Canal Corridor Development Project, which was launched on August 5 by President Abdel Fattah Al Sisi. The initiative will involve 35km of dry digging and 37km of “expansion and deepening”, according to Mohab Mamish, the head of the Suez Canal Authority. This will see the canal’s waterway widened, creating a much longer stretch of “dual carriageway” where ships can pass more easily.

The expansion should lead to increased efficiency as well as a reduction in the maximum waiting time from 11 to three hours. The number of passing ships that can be handled daily will almost double to 97.

Various press reports have said the forecast time scale for the expansion has been reduced from five years to three years and eventually to an unlikely 12 months. The project is being part funded by investment certificates issued by the authority and cash will also be raised from floating shares and loans from Egyptian banks.

Egypt’s economy has struggled in recent years, weighed down by lower growth and a widening budget deficit. Foreign reserves have also come under severe pressure. The gross domestic product (GDP) is expected to rise by just 2.3 per cent in 2014, while the budget deficit has reached 14 per cent of GDP.

The army has been set the target of digging 1m cu metres daily as part of the bid to complete the work within 11 months and introduce trial runs of vessels in the new stream within a year. A total of 12m cu metres were dug in the first fortnight, according to a statement from the military.

However, while work on the expansion is gaining momentum, aspects of the project have also elicited concerns. Haitham Awad, an engineering professor at Alexandria University, questioned the decision to put the new route so close to the existing canal, telling regional press that the presence of groundwater, which has already disrupted digging, would increase costs.