Saudi Aramco refuted reports on Monday that it had suspended the supply of oil products to Egypt, as the country continues to suffer from a lack of fuel.
An official in Aramco told the Saudi news website Al-Mnatiq that the company is obligated to implement its contract with the Egyptian General Petroleum Corporation (EGPC), which was signed several months ago. The contract stipulates that Saudi Aramco will supply the EGPC with 700,000 tonnes of petroleum products every month for a five-year period.
He shot down reports that the company had officially suspended the contract, adding that the petroleum shipments have been delayed due to the reassessment of Saudi Arabia’s share of sales from its oil production.
During a September meeting held in Algeria, the Organisation of the Petroleum Exporting Countries (OPEC) decided to decrease Saudi Arabia’s production of oil by 500,000 barrels a day.
Saudi oil expert Osman El-Barak said that Saudi Arabia considers its agreement with Egypt a commercial deal, not oil aid. This means that the political situation has nothing to do with commercial deals, and it is likely that the company will resume the supply of oil products to Egypt after reassessing its internal issues.
“Aramco verbally informed the EGPC earlier this month of its inability to supply Egypt with shipments of petroleum products for this month only,” an Egyptian official told Reuters.
He added that Aramco has not given a reason for the suspension, but they said that the deal is still ongoing.
The EGPC proposed last week an international tender to foreign companies to supply the local market’s needs of petroleum products for October.
Sources in the Ministry of Petroleum said that this tender has nothing to do with any shortage or suspension of oil products, as all countries seek to secure their needs for oil products according to consumption rates, particularly in light of the US dollar crisis.
Egypt always proposes oil tenders at the beginning of the winter season and the start of the academic semester, when consumption rates increase significantly, according to the sources.
During an official visit by Saudi King Salman bin Abdel Aziz to Cairo in April, Saudi Aramco signed the $23bn contract with the EGPC to supply Egypt with 700,000 tonnes of oil products monthly over a five-year period.
The deal included supplying 400,000 tonnes of diesel, 200,000 tonnes of benzene, and 100,000 tonnes of Mazut monthly. EGPC pays for the shipments at an interest rate of 2% over a 15-year period.
Egypt has already received 3m tonnes of oil products since the start of the deal in May.