The energy market in Egypt is attracting new investors after the country pledged to reduce its $5.9 billion debt, according to one of the world’s leading Middle East energy experts.
The government has announced it will repay at least $4.5 billion of the debt to international energy companies over the next three years, sparking a return of investor confidence, Justin Dargin, an energy and Middle East expert at Oxford University, said.
"President Sisi made a pledge to prioritize the repayment of all of the outstanding energy related debts." Dargin said, referring to Egyptian President Abdel Fattah el-Sisi.
He added that the government's "bold and comprehensive plan" to reconfigure its energy subsidies and revise terms of investment made in Egypt’s upstream gas market more attractive for global energy companies.
The turnaround has also been helped by an injection of finance from Gulf states.
"The financial backing of the Gulf countries renewed trust in the Egyptian market," Dargin said. "The very visible presence of the Gulf countries in backing Egypt economically and politically has reassured international investors who doubted Egypt’s ability to return to economic and political stability in the mid-term."
Since the overthrow of President Mohamed Morsi in June last year by Sisi, the U.A.E. has provided a $3 billion aid package to Egypt in the form of a $1 billion grant and a $2 billion loan.
Saudi Arabia has also provided $5 billion with a further $4 billion from Kuwait.
Egypt has signed more than 30 oil and gas deals with international companies in 2014 and plans to secure another 15 by the end of the year.
The recent agreements include German firm RWE’s concessions in the Gulf of Suez, the U.K.’s BG Group's $1.5 billion investment in the West Delta deep marine concession, the concession to Dana Gas, of the U.A.E., to develop two on-shore gas blocks in the Nile Delta, as well as deals with Italia's Eni and Edison, Tunisia's HBSI and Canadian firm TransGlobe.
Last month, the Ministry of Petroleum signed a one-year $9 billion deal with the Abu Dhabi National Oil Company.
By Arif Hüdaverdi Yaman