Tag: EGPC

  • Centamin fuel supply to resume

    Centamin fuel supply to resume

    Centamin plc, the miner operating the Sukari Gold Mines (SGM), announced Friday that its fuel supplier, Chevron, has been notified by the Egyptian General Petroleum Cooperation (EGPC) that diesel supply “may be resumed” and that no retrospective payment is currently due.

    The notice comes after the company issued a media statement Thursday announcing the suspension of its operations in SGM, citing fuel supply reaching “critical levels.” The EGPC had halted diesel supply to the company due to its refusal to pay what Centamin described as  “an illegal retrospective payment of EGP 403 million for fuel delivered between December 2009 and January 2012.”

    This is the second time the company had to suspend operations, the first being a court decision last October that annulled Centamin’s licence to operate SGM.

    Another reason the company cited for halting operations was customs preventing its latest gold shipment from exportation until an approval from the Ministry of Finance is granted. Centamin found the demand to be “arbitrary” given its possession of “all necessary permissions from the Mineral Resources Authority (EMRA) in line with normal procedures for gold exports.”

    Despite the notification of fuel supply resumption, the company continues to suffer a shortfall in working capital due to the hold up of its shipment. Centamin stated that a “further update on the status of gold exports will be provided in due course as this will determine when operations at Sukari may resume.”

    The FTSE 250 miner’s shares plummeted by 47.44 per cent Thursday after the suspension announcement according to the Financial Times. The stock price rebounded Friday by 24.73 per cent after announcing that fuel supply would resume.

  • Six companies win the EGPC’s latest exploration bid round

    By Ahmed Tolba

    The latest bid round for hydrocarbon exploration issued by Egyptian General Petroleum Corporation (EGPC) saw 25 offers made for 15 blocks in the areas of Sinai, the Western Desert, the Gulf of Suez, and Eastern Desert. EGPC granted 11 concessions out of the 15 initially offered.

    The total volume of exploration investment is $282.3 million, of which $181 million will be made during the initial exploration phase and $109.4 million made upon signing, said the head of the EGPC, Hani Dahi. The number of exploratory wells in this bid round is 97; 54 of which are to be drilled during the initial exploration phase.

    “Four new companies to the Egyptian market have won concessions in this bid round, namely: the Emirati Dragon Oil Holdings and Dove Energy; the Canadian TransGlobe Energy Corporation; and the Irish Petroceltic International,” said Dahi.

    TransGlobe was granted four blocks, Royal Dutch Shell three blocks, and the Greek Vegas Oil, the American Apache Corporation, the German RWE DEA and the British Dana Petroleum were all issued a block each.

  • EGPC: Egypt sees slight bump in hydrocarbon production figures

    October’s production figures of crude oil and condensate witnessed a slight 1.3 per cent bump compared to September’s numbers, stated a report from the Egyptian General Petroleum Corporation (EGPC).

    The increase is attributed to adding the output of several new developmental wells, situated in the Western Desert, to the overall production figures. Collectively, the new wells produce 14,000 barrels per day. Daily domestic consumption of gasoline has increased by 2 per cent, reaching 23.7 million litres, while diesel fuel consumption rose to 45 million litres per day.

    Average daily consumption of (Liquefied Petroleum Gas) LPG cylinders reached 796 thousand per day, currently being produced by 50 factories. The current amount would fulfil the demand of 13.5 million households, with an average of 1.5 cylinders per month per household.

    A total of eight new LPG distribution centres have been brought online, located in the provinces of Cairo, Giza, Gharbeyya, Assiut, Sohag and Minya, bringing the total distribution centres to 2,897 in addition to 182 centres that belong to Botagasco.

    Consumption of natural gas also witnessed an increase of 2.3 per cent, standing at 7.2 million tons of oil equivalent.  Electricity consumption amounted to 4 million tonnes, representing a 4 per cent rise.  Natural gas has been extended to additional 75,447 households, bringing it to a total number of 5.1 million homes.

    The report indicated that Al-Sukkary’s gold mine produced about 1.4 tons of gold last month, the royalty tax of which was EGP 2.3 million. During the 2011-2012 fiscal year, public sector petroleum companies have generated revenues totalling EGP 14.7 billion, a 9 per cent increase from fiscal year 2010-2011. Net profit before tax amounted to EGP 1.765 billion, 515 million of which were paid in taxes.

  • Rebel Economy Wrap

    Rebel Economy Wrap

    Egypt’s oil curse – part 2

    Farah Halime

    By Farah Halime, Rebel Economy

    This morning’s Wrap will be dedicated to Egypt’s energy crisis.

    That’s because two significant calendar events are in store for us this week:

    1) From Thursday, shops will close by 10pm and restaurants without tourist licences will close by midnight, hours earlier than usual
    2) A delegation from the International Monetary Fund will arrive this week to re-start negotiations over Egypt’s request for a $4.8 billion loan.

    Both of these events are inherently related to energy subsidies. Simply Egypt has energy shortages because its wastage and misdirected spending has meant the government is cutting consumption where it can and as quickly as possible. In addition, the delayed reforms of energy subsidies may cost Egypt almost $5 billion unless the government can show it has a long-term plan in place.

    …………

    More immediately, this is the issue:

    Egypt’s state-run oil company, the Egyptian General Petroleum Corporation, the most indebted state entity throughout the Egyptian government is having to repay banks and oil companies billions of dollars to support exploration and its subsidy programme.

    EGPC repaid $3.2 billion loans to banks during the first quarter of the 2012 fiscal year and last quarter of the 2011 fiscal year, MENA state news agency reported

    That brings EGPC’s total debt to banks (just to the banks) to $7.6 billion, from $10.8 billion, MENA reports.  

    Meanwhile, EGPC is struggling to meet over due payments to oil and gas companies. In July alone, the EGPC settled almost $1.2 billion on payments to exploration companies, according to Daily News Egypt.

    Industry sources tell me total outstanding debt to oil and gas companies is between $6 billion or $7 billion. That’s disregarding $9 billion that was paid in the last fiscal year.

    …………

    To explain the above we need to understand what EGPC is in charge of in Egypt: tendering oil and gas concessions in Egypt.  

    That means EGPC will partner with a foreign company, invest a certain amount for exploration and share the profit.  The problem comes when either Egypt uses the whole amount that is discovered and redirects it to local demand rather than exports.  That means Egypt is losing revenue from subsidising those resources instead of exporting them and making a profit on the international market.

    It has exacerbated EGPC’s struggles to pay foreign companies, which extract the country’s oil and gas resources.  And that’s just a basic explanation.

    These repayments are often restructured with interest added on.  So that means EGPC is paying over due payments plus between 1.5% and 2.5% interest.  (p.s. a note to the Islamists who initially argued against the IMF loan and now say it is “Sharia-compliant”- this blows the IMF loan completely out of the water considering the interest rate on that is just 1.1 percent with a long grace period.  How do you feel about the biggest state company in masses of debt paying masses more interest?)

    Another task EGPC is charged with is maintaining the subsidy system by providing petroleum products.  But as we know, these have been running short, so the oil company has had to borrow from the ministry of finance to import more products.  That costs money and banks are less willing to lend.

    As one industry source told me, “EGPC has maxed out its credit cards and few banks are willing to give it any more money.”

    That is, except for National Bank of Egypt, the state-owned bank that may bail-out EGPC with credit facilities amounting to at least $3 billion, according to a number of local reports.

    EGPC met with NBE to discuss details of a bail-out plan last month, according to a report from Al Masry Al Youm.

    NBE offered to restructure $4.5 billion of EGPC’s debt to foreign companies allowing EGPC to more slowly repay the debt, the report said.

    We have gone full circle and now the IMF delegation is due to Cairo where it expects some kind of subsidy plan.  Especially considering spending on subsidies is one of the major expenditures, along with interest payments and government salaries that account for roughly three-quarters of total government spending.

  • EGPC struggles to stay afloat

    By Noah Chasek-Macfoy

    The Egyptian General Petroleum Company (EGPC) repaid local banks a total of $575 million towards outstanding loans in the first quarter of the current fiscal year, reported MENA.

    The sum paid to local banks is just a portion of the total funds EGPC has repaid to banks. During the first quarter of the 2012 fiscal year and the last quarter of the 2011 fiscal year, the EGPC repaid $3.2 billion to banks from which they have loans, bringing the EGPC’s total debt to banks down from $10.8 billion to $7.6 billion. The EGPC remains the most indebted entity within the Egyptian government.

    Financial obligations to international oil and gas exploration and development companies is one of the largest consistent burdens on the state-run company. Earlier this fiscal year, president of the EGPC, Hani Dahi, announced that his company had spent $25 million in past year and a half to fulfil its financial obligations to foreign oil and gas companies. In July alone, the EGPC settled almost $1.2 billion on payments to exploration companies.

    The EGPC has faced difficulty repaying its obligations to foreign oil and gas companies on time. Last year the EGPC came to a an agreement with foreign companies to continue operating while the EGPC paid the overdue obligations on a timeline that extended through the end of the current fiscal year at interest rates of between 1.5 and 2.5%. Despite the deal, earlier this month a number of companies requested that the EGPC settle its debts in a single payment.

    The EGPC is currently discussing the details of a plan with the National Bank of Egypt (NBE) that would make an immediate single payment possible. Several weeks ago, NBE proposed that it buy the EGPC’s debt to foreign companies allowing EGPC to more slowly repay the debt. While estimations of the debt in the media have ranged from four – seven million dollars, the NBE deal set the sum to be paid to the oil and gas companies at 4.5 billion dollars.

    This is not the first time EGPC has gone to banks to help make up the shortfall in payments owed to foreign companies. The EGPC has traditional loans to Morgan Stanley, BNP Paribas, and Islamic funding agreements with the International Islamic Trade Finance Corporation. Locally the EGPC already owes NBE approximately $3.6 billion of its outstanding $7.6 billion to banks. This past May, the EGPC failed to gain new loans from both the Central Bank of Egypt and NBE, with both banks citing that the EGPC had breached its credit ceiling.

    Because of increasing demand at home caused by Egypt’s on-going fuel crisis, the EGPC has been redirecting oil resources, otherwise intended for export to the international market, for local consumption. The lost revenue from decreased exports in addition to the need to subsidise increasing imports has exacerbated the EGPC’s struggles to pay the foreign companies, which extract Egypt’s oil and gas resources.