Kuwait will boost its supply of crude oil to Egypt by nearly a third and increase shipments of petroleum products in a deal the Gulf state’s oil minister said was an obligation to help Cairo through its problems.
State-run Kuwait Petroleum Corporation (KPC) will provide 85,000 barrels per day (bpd) of oil to Egypt, up from 65,000 bpd previously, state news agency KUNA said on Tuesday.
It will also increase its supply of diesel and jet fuel to 1.5 million tonnes per year, up from 860,000 tonnes. The contracts run for three years and were signed on Monday, KUNA said.
Egypt has been relying on crude deliveries from the Kuwaiti government at favourable terms as well as on donations of gasoline and diesel from Gulf Arab states to help reduce the drain on its foreign exchange reserves and the heavy costs of government fuel subsidies.
“We will overcome any difficulties Egypt is suffering from and we will not hesitate to help them,” Kuwait’s oil minister Ali al-Omair told Reuters when asked whether Kuwait was concerned Egypt might have payment problems.
The new contracts, signed with Egypt’s General Petroleum Corporation, are valid until the end of 2016 and based on global market prices, KPC official Nasser al-Mudaf told KUNA.
Mudaf, who runs KPC’s global marketing division, added that KPC was willing to sign additional contracts with Egypt to supply cooking gas and fuel oil within the next two months and that these would also be based on international prices.
Kuwait is also considering using Egyptian refineries to process Kuwaiti oil as well as using shipping facilities in the country, Mudaf said.
Egyptian Oil Minister Sherif Ismail told Reuters in February that Egypt would need to import an additional $1 billion of petroleum products and secure significant natural gas supplies to meet energy needs for the summer.
The Gulf Arab states of Saudi Arabia, United Arab Emirates and Kuwait, wary of Egypt’s Muslim Brotherhood, gave Egypt billions of dollars in aid, including oil, after the ousting of Islamist president Mohamed Mursi.
In July last year Kuwait pledged $4 billion to Egypt, with a $2 billion central bank deposit, a $1 billion grant and $1 billion in oil products. This was separate from oil supply contracts which Kuwait has had with Egypt for years and which were due for renewal.