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Saudi Aramco informed Egypt’s state-held Egyptian General Petroleum Corporation (EGPC) that it would suspend the delivery of refined oil products to Egypt, Reuters reported on Monday, quoting a government official.
In April of this year, Saudi Aramco and EGPC entered into a US$23-billion deal, under which Saudi Arabia would deliver to Egypt 700,000 tons of petroleum products per month, as part of financial support for Egypt.
Last Friday, October 7, traders had told Reuters that Egypt had not received the October share of petroleum products from Saudi Arabia.
On Saturday, October 8, the Egyptian ministry of petroleum issued a statement saying that it had not received any official correspondence from Aramco regarding the status of supplies. EGPC has contracted additional amounts to meet its domestic demand and keep strategic petroleum product stocks, the statement noted.
“Aramco informed the EGPC early this month of its inability to supply Egypt with shipments of petroleum products,” the government official told Reuters on Monday, without either specifying the reason for the suspension or providing a timeline for deliveries.
The deal with Aramco has saved Egypt millions of dollars per month while it is desperately trying to revive its downbeat economy and narrow its budget deficit—one of the largest in the Middle East.
In an attempt to raise cash, Egyptian authorities intend to start their initial public offerings (IPOs) program with state-held oil companies, in a plan to raise US$10 billion from listings in three to five years.
In August of this year, Egypt reached a tentative deal with the International Monetary Fund (IMF) for a US$12-billion loan, in exchange for reforms, to help it narrow its budget deficit, restore investor confidence, and bolster growth. In order to secure that loan, Egypt is widely expected to devalue its currency.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.