Egypt Clears $1 Billion in Oil Debt to Reassure Global Energy Giants

Cairo’s move to settle arrears aims to steady investor nerves and signal long-term commitment to energy partners

Egypt just wrote a billion-dollar check—and it wasn’t optional. Prime Minister Mostafa Madbouly confirmed this week that the government has settled $1 billion in overdue payments to international oil and gas companies operating within its borders. The long-awaited payout is part of a bigger plan to stabilize relations with foreign investors and keep energy projects moving.

But the money isn’t just about clearing bills. It’s about keeping the engine running in a sector that props up a big chunk of the Egyptian economy.

Cairo’s message: “We’re still good for it”

Madbouly didn’t mince words. Speaking to Reuters on Wednesday night, he made it clear: Egypt intends to keep paying. Another $1.4 billion will be settled by the end of the year, he said, underscoring the country’s commitment to honoring contracts and maintaining its energy profile.

This wasn’t just a press release—it was damage control.

Delays in settling arrears had started to rattle investor confidence. For some companies, overdue payments had been stretching over years. That kind of backlog makes operators skittish, especially those who’ve sunk billions into Egypt’s offshore and desert fields.

Now? There’s a signal that Cairo is trying to reset the tone.

What’s at stake for Egypt

Egypt’s energy ambitions are no secret. The country wants to be more than just a player in the regional oil scene—it wants to be the hub. But none of that works if trust starts to crack between the government and the companies doing the heavy lifting.

Here’s the tricky part. Egypt is juggling multiple financial pressures:

• Foreign currency shortages due to global inflation and local fiscal tightening

• Rising domestic fuel demand that eats into export potential

• A sprawling subsidy system that still strains the national budget

• A slowing flow of direct foreign investment in the energy sector

In that context, paying down oil debt isn’t just economic policy—it’s survival strategy.

The numbers tell the story

Egypt’s outstanding energy-sector arrears had reportedly exceeded $3.5 billion by mid-2024. Many of these backlogged dues were owed to heavyweight companies like BP, Eni, Shell, and Apache. Some operators had even slowed exploration activities in protest.

Now, that wall of debt is starting to crack.

Take a look at the current picture:

This matters not just for balance sheets—but also for Egypt’s geopolitical standing. Europe, especially post-Ukraine, needs alternate energy sources. Egypt wants to be part of that mix.

A sigh of relief from foreign firms

You could almost hear the relief behind closed doors.

While no international oil company publicly celebrated the payment, multiple sources familiar with Egypt’s upstream sector told Mubasher and Bloomberg that contractors had been privately briefed on the government’s intention to follow through.

One senior executive at a European oil firm, speaking on condition of anonymity, said the payments were “long overdue” but “a positive step in the right direction.”

Foreign firms have repeatedly voiced concerns about currency repatriation issues and delayed payments. But Egypt’s Energy Ministry has said that oil and gas firms working under production sharing agreements (PSAs) will receive dues in both local and hard currency, depending on the contract.

Strategic importance outweighs short-term pain

Egypt doesn’t just export oil and gas—it trades on geopolitical clout. With the Suez Canal, LNG terminals, and access to both Mediterranean and Red Sea shipping routes, it’s uniquely placed to serve Europe, Africa, and Asia.

Madbouly’s statement, then, was less about accounting and more about posture. He stressed the importance of the energy sector for Egypt’s future, calling it a “vital engine” of economic growth.

One Cairo-based economist said the government had little choice. “You can’t have major operators waiting years to get paid and still expect drilling to continue. Eventually, they’ll just shift rigs elsewhere,” he said. “This payment wasn’t a favor. It was a fix.”

What’s next for exploration?

The payment clears a major hurdle, but questions remain. Will Egypt now fast-track new licensing rounds? Will stalled offshore projects in the Eastern Mediterranean get a second wind?

There’s cautious optimism, but not everyone is breaking out the champagne.

Energy analysts say Egypt still has to address:

• Bureaucratic delays in approving new projects

• Fiscal uncertainty linked to IMF restructuring talks

• Limited pipeline infrastructure outside key zones

• Competition from regional giants like Saudi Arabia and the UAE

Still, there’s movement. Egypt recently signed exploration agreements with ExxonMobil and Chevron in the Red Sea. Eni continues to expand its Zohr gas field. And officials say at least four new production licenses are under review for Sinai and the Western Desert.

One thing’s clear—money helps.