CAIRO/SINGAPORE Oct 7 Egypt has not received
October allocations of petroleum aid from Saudi Arabia, traders
told Reuters, forcing its state oil buyer to rapidly increase
tenders even amid a severe dollar shortage and growing arrears
to oil producers.
Saudi Arabia agreed to provide Egypt with 700,000 tonnes of
refined oil products per month for five years under a $23
billion deal between Saudi Aramco and the Egyptian General
Petroleum Corporation (EGPC) signed during a state visit this
year by Saudi Arabia's King Salman.
Delivery of the Saudi Aramco products was halted as of Oct.
1 though the reason remains unclear, a trader that deals with
the EGPC told Reuters.
The kingdom has pumped billions of dollars, including
grants, into Egypt's flagging economy since the toppling of
President Mohamed Mursi of the Muslim Brotherhood in 2013 after
mass protests against his rule.
The oil aid has saved Egypt hundreds of millions of dollars
per month at a time when it faces an acute shortage of hard
currency that has forced it to ration dollars for key
commodities and negotiate long term credit arrangements with oil
producers to keep critical supplies flowing.
Under the 700,000-tonne monthly supply deal, Saudi Aramco
agreed to provide 400,000 tonnes of gas oil, 200,000 tonnes of
gasoline and 100,000 tonnes of fuel oil per month, all on a
credit line with a 2 percent interest rate to be repaid over 15
years, an EGPC official has told Reuters.
The EGPC has re-entered the spot market in recent weeks to
fill the gap, traders said, announcing its largest purchase
tenders in months, including calls for some 560,000 tonnes of
gasoil for October arrival, a steep rise from the roughly
200,000 tonnes sought in September.
The state oil buyer announced additional tenders on Thursday
and Friday for 665,000 tonnes of gasoil and 132,000 tonnes of
gasoline for November arrival, levels that could suggest a
protracted delay or suspension of Saudi Aramco products.
The EGPC and Saudi oil officials could not be reached for
Egypt's oil ministry spokesman told Reuters he had no
information suggesting a suspension of aid.
"It's normal for the EGPC to increase quantities in tenders.
Egypt imports products besides those from Saudi Aramco every
month," the spokesman said, adding that it is too early in the
month to say that Saudi Arabia's October deliveries are not
Egypt is widely expected to devalue or float its currency in
the coming days, a major monetary adjustment seen as necessary
to clinch a $12 billion IMF loan aimed at plugging its deficit
but a reform that could hike its cost of importing by some 50
The Saudi oil aid and other grants provided by the kingdom
have been a mainstay in helping Egypt shore up its foreign
reserves, which the central bank governor has said need to top
$25 billion from their end-September total of $19.6 billion
before the country can float its currency.
(Reporting by Eric Knecht and Abdel Rahman Adel in Cairo, and
Jessica Jaganathan; Additional reporting by Rania El Gamal in
Dubai and Ron Bousso and Libby George in London, editing by