Egypt cuts back on oil imports
With foreign reserves falling, Iraq may step in
Egypt has cut back on some planned oil imports, traders said yesterday, as it watches its foreign reserves fall and seeks loan funding.
Its state oil firm has agreed to buy only some of the gasoil it had originally sought for the second quarter and cancelled a crude oil buy tender for a total of nine million barrels for the same period.
No reason was given for this,but traders said stretched finances may have been a cause of revised import volumes, although Iraq has also promised to step in with supplies.
Cash-strapped Egypt has canceled tenders in the past, re-issuing them later to take advantage of cheaper market prices.
Egypt is burning through foreign currency reserves and is under pressure to trim its state energy bill, which eats up about 20 per cent of the budget.
President Mohamed Morsi has promised to pursue painful economic reforms, including cutting back on state subsidies for food and energy, and to secure a $4.8 billion loan from the IMF.
“They need oil but they have no money,” one oil trader said.
But another trader said that a promise by Iraq to supply Egypt with four million barrels of crude oil per month could have been a factor in the decision.
Egypt will now buy 13 out of 24 gasoil cargoes sought for delivery to Mediterranean ports, and seven out of nine cargoes for delivery to the port of Suez, which is typically supplied from the Middle East or Asia.
“If 40 per cent of the (Iraqi) crude is refined into gasoil... 200,000 tonnes let’s say, that’s six to seven less cargoes a month that will need to be imported,” the trader said.
The tender for the remainder of the gasoil cargoes has been cancelled, the first trader said. BP emerged as the main winner, selling five cargoes for delivery into the Mediterranean port of Alexandria and three cargoes to the port of Suez.
Glencore will deliver five cargoes split between the Mediterranean ports of Alexandria and El Dekheila, while Mercuria will deliver the remaining three cargoes awarded for delivery to Alexandria.
The other winners of the tender for delivery into the port of Suez were Lukoil and Vitol, awarded two cargoes each.
Traders closely monitor Egyptian purchases of gasoil, used in industry and agriculture, because state Egyptian General Petroleum Corp (EGPC) is one of the largest buyers in the Mediterranean.
Despite growing unrest and increasingly stretched finances Egypt has continued to attract some of the largest oil players in the region, with at least six different firms competing to supply it with the gasoil.