Saudi Aramco told the Egyptian General Petroleum Corporation (EGPC), Egypt’s state oil company, in early October that it would halt the supply of refined oil products to Egypt, Reuters cited a government official on Monday.
“Aramco informed the EGPC early this month of its inability to supply Egypt with shipments of petroleum products,” the official said, without giving a timeline for the suspension or a reason.
Saudi Arabia agreed to provide Egypt with 700,000 tons of refined oil products per month for five years under a $23 billion deal between Saudi Aramco and the Egyptian General Petroleum Corporation (EGPC) signed during a state visit this year by Saudi Arabia’s King Salman.
Traders that deal with the EGPC told Reuters last week that Egypt had not received October allocations of petroleum aid from Saudi Arabia, forcing its state oil buyer to rapidly increase tenders even amid a severe dollar shortage and growing arrears to oil producers.
The EGPC plans to allocate more than $500 million to purchase petroleum products and Egypt plans to launch some tenders to buy fuel needed for local consumption.
The Saudi oil aid and other grants provided by the kingdom have been a mainstay in helping Egypt shore up its foreign reserves, which the central bank governor has said need to top $25 billion from their end-September total of $19.6 billion before the country can float its currency.