Algeria doesn’t have enough oil for Egypt
Algiers has made it intentions known to Cairo that deals involving natural gas could only be discussed in 2014, due to the need to develop production from new fields first. According to Egypt’s oil minister Osama Kamal, Algeria doesn’t have “enough quantities to be exported to Egypt.”
Algeria’s decision was prompted by the fact that it will not be able to supply Egypt after honoring its commitments elsewhere for this year which is already “full.” The decision has come as a blow to Cairo, which is trying to obtain oil and gas supplies from major Arab producers on favorable credit terms, in order to reduce fuel shortages amidst financial crisis. Costly fuel subsidies have been a major contributor to the Egyptian government’s financial woes.
Egypt will have to wait till next year before it can start negotiating gas supplies. In January, Egypt’s oil and gas output fell by 3% and 9% respectively, according to figures presented by the government. The country has been facing a slowdown in oil and gas exploration activities over the past couple of years, as a result of the continuing civil unrest since the ousting of Mubarak. Algeria has been trying to increase its output and it has plans to begin fracking despite fears that it will cause serious damages to the environment. The spokesman for state-owned Sonatrach was available to clarify the reasons behind the decision to keep Egypt on the wait till next year.
Egypt will be hoping that countries like Libya and Iraq won’t follow Algeria’s path. Libya has agreed to supply almost a million barrels of crude oil per month on a year credit term while Iraq agreed to 4 million barrels of crude oil per month on three-month interest-free credit.