Egypt says arrears to oil and gas companies fully settled

CAIRO - Egypt's Minister of Petroleum and Mineral Resources said on Wednesday that the full settlement of arrears owed to oil and gas partners marked a turning point for the sector.

Badawi added that the achievement, which reduced arrears to zero from about $6.1 billion in June 2024, "restores investor confidence and paves the way for increased upstream activity and accelerated project development".

Background and Progress

Egypt’s arrears had accumulated due to prolonged foreign currency shortages, which strained relations with international oil companies (IOCs) and contributed to slower production growth in recent years. The government made clearing these dues a priority under directives from President Abdel Fattah El-Sisi.

Key milestones in the reduction included:

• Dropping to around $1.3 billion by early 2026.
• Further reductions to $714 million and then $440 million in May 2026.
• Final settlement completed by June 10, 2026.

This systematic payoff demonstrates Egypt’s commitment to honoring its financial obligations to foreign partners, a critical step toward rebuilding trust in one of the Eastern Mediterranean’s key energy hubs.

Implications for the Energy Sector

Analysts and industry observers view the zero-arrears milestone as highly positive. By eliminating this long-standing issue, Egypt is expected to:

• Attract new investments in exploration and production.
• Encourage accelerated development of existing discoveries.
• Support efforts to boost domestic oil and gas output and reduce reliance on imports.
• Facilitate broader sector reforms, including potential expansion into areas like hydraulic fracturing (fracking).

The move comes as Egypt continues to develop its natural gas resources and position itself as a regional energy player, with growing LNG exports and regional pipeline ambitions.

Minister Badawi has repeatedly emphasized that regular monthly payments to partners, alongside clearing accumulated dues, will remove a major barrier to investment and help reverse previous declines in production levels.

This development is likely to be welcomed by major international energy firms operating in Egypt, signaling a more stable and predictable business environment moving forward.

The government is now expected to focus on leveraging this renewed confidence to unlock new projects and sustain long-term growth in the petroleum sector.