Petroleum Minister Sherif Ismail said that there are indications of an improved economic situation in Egypt, pointing out that the Euromoney Conference showed that there are ideas for investment and willingness to enter the Egyptian market.
The minister also said that the government is paying 25 percent of its debts to foreign companies, with the rest in scheduled arrears.
He added that petroleum product subsidies were increased significantly to reach LE130 billion.
The petroleum sector signed a number of agreements recently. Is this a positive sign?
Certainly. We have signed 14 out of 21 agreements in addition to amendments to five agreements of existing excavation areas and nine new areas, with a total investment of US$700 million. Also, we signed the drilling of 110 wells and received non-refundable grants worth US$125 million. These were agreements accumulated since 2010. Activating them is a very positive reassurance for international companies.
How about new agreements?
We are working on seven agreements with the Holding Company for Natural Gas (EGAS) and four other agreements with the South Valley Holding Company for a total of 11 new agreements. This also means that research and exploration activities are still attractive, which is a sign that the Egyptian economy is beginning to recover.
It looks like will see no Arab aid in 2014. What measures have you taken to continue to provide petroleum products?
The government is talking to Saudi Arabia, the UAE and Kuwait about investment projects and partial supply for the domestic market next year.
Could there be joint Egyptian-Arab exploration and production companies?
We have already discussed that idea and they are willing to invest in Egypt.
What about our debts to foreign companies?
The government is paying 25 percent of the debts with the rest in scheduled arrears.
Are they happy with this?
We are negotiating with them, but they know we are committed. We are also negotiating prices for deep water natural gas and studying proposals for the production of unconventional gas, such as shale gas and other types.
In the absence of Arab aid, what will happen to butane gas cylinders?
We will provide them. Mind you, the problem is with the distribution system, the high demand and sometimes the delays in the arrival of shipments due to bad weather. We will fix that.
How long will it take to recuperate?
From two to three years. It really dependents on investments and the success rates of research and exploration. We have projects for 2,500 million cubic feet in the next four years to come.
The current government is not one of a certain majority party and does not need to win voters. Why fear rationalizing subsidies?
Subsidies have increased to LE130 billion, including LE57 billion for diesel, LE28 billion for gasoline and LE22 billion for butane.
Subsidies are influenced by exchange rates, international prices and the difference between imports and local production. Increasing local production reduces cost.
So rationalizing subsidies would not be by moving prices?
Should there be a price increase, it would be gradual and commensurate with the economic growth so as not to adversely affect purchasing power. The increase would bridge the cash deficit of the oil sector and improve other services, such as health or public transport services.
Why not convert public transport buses to run on natural gas?
We are working on 400 buses and aiming for another 600 this year. Also, 190,000 private cars have turned to natural gas, thanks to our pricing policy keeping the cubic meter at LE0.45.
Natural gas delivery companies want to increase their fees. What will you do about it?
They will have to reduce their costs.
What happened to the arbitration proceedings against the oil sector?
Six cases have been resolved completely. This proves that the government is serious about creating the right investment climate.
When will the law on mineral resources be amended?
We are working on it, but we are also working on improving the Mineral Wealth Authority itself.
Edited translation from Al-Masry Al-Youm
