Egypt struggles to buy oil as currency crisis deepens
LONDON (Reuters) – Egypt’s currency crisis has intensified its oil supply troubles, as the weaker pound makes it more difficult for cash-strapped Cairo to buy vital crude for its refineries.
State-owned Egyptian General Petroleum Corporation (EGPC) has only purchased 3 million barrels of crude oil for the first quarter of this year, half of what it was seeking in a tender, traders said.
That tender was already considered insufficient to supply Egypt’s refineries, even at reduced running rates.
“Of course it’s not enough, they need more – but no money,” a trader, active in the East Mediterranean oil market said.
EGPC officials could not be reached for comment. Egypt subsidises fuel costs heavily, spending around a fifth of its GDP on making fuel more affordable to the population.
EGPC has been trying to mitigate the cost of subsidies by buying more refined oil products instead of expensive crude oil feedstock, but is hard pressed to meet its needs.
Egypt has not bought any crude for January and on top of this, its December deliveries will arrive late.
JP Morgan sold two million barrels to EGPC via its fourth quarter tender but the company has yet to complete the delivery, the trader said.
The B Elephant tanker has been waiting to discharge in the Red Sea since Dec 24, as seen on Reuters AIS Live ship tracking, after loading crude in Oman.
“JP Morgan’s vessel has been waiting for more than two weeks,” one seller said. “No letter of credit.”
Egypt’s state oil company has found it increasingly difficult to procure letters of credit for its transactions and costs are rocketing.
Several times in 2012, tankers carrying vital oil products piled up outside ports when these letters were delayed, which led to gasoline shortages and protests.
In the latest tender, trading company Petraco will deliver two million barrels of Iraqi Basra Light in February, several traders said. International trader Arcadia will deliver a one million barrel cargo of the same grade in March.