Egypt is close to eliminating overdue debt to international oil companies, removing a bitter legacy from the 2011 revolution that led to a financial crisis and gas shortages in the Arab world’s most populous nation.

Oil Minister Tarek el-Molla said total outstanding debt now stood at just $800 million, positioning Egypt to clear the arrears by 2020.

"The debt is not an issue any more," Molla said in Abu Dhabi.

The drastic reduction in debt, which stood at $6.3 billion in 2012, has largely been aided by rising gas production in recent years, which has helped Egypt achieve self-sufficiency and stop costly imports of liquefied natural gas.

The upsurge in domestic supplies has even resulted in the resumption of LNG exports from the Shell-led Idku LNG facilities on the Mediterranean coast.

The twin Idku plants had to shut down following the revolution, which led to severe gas shortages amid rising consumption and a lack of upstream investment by international players.

The Oil Ministry has successfully tackled the debt in parallel with the payment to the companies operating in Egypt of their share of oil and gas produced monthly.

The initiatives have, in turn, encouraged oil companies to increase upstream spending that led Italy’s Eni in 2015 to discover the game-changer giant offshore Zohr field, the fast-track development of which enabled Egypt to halt gas imports a year ago.

BP is also working to increase production from its offshore Mediterranean assets.

Egypt’s gas production next year will increase to around 7.5 billion cubic feet per day from the current level of 7 Bcfd with priority to meet domestic needs rather than exports.

Molla added that production at Zohr had now increased to 2.7 Bcfd, helping to lift the domestic output to 7 Bcfd. The field was pumping 2 Bcfd at the beginning of 2019.

Meanwhile, Molla said plans to begin gas imports from Israel are on track with first supplies expected before the end of the year.

“Everything is agreed on... countries (involved) have already given their blessings. There is no issue on that,” Molla told reporters in Abu Dhabi.

“It’s a multilateral deal, a gas deal and a pipeline deal, so it is a little bit a lengthy process. That’s why it is taking a little bit of time."

Delek Drilling, a partner in fields off Israel that will supply Egypt, also said exports to Egypt and Jordan are expected to begin before the end of the year.

"Our objective was to flow gas to the Israeli market [from the Leviathan gas field] by the end of 2019 and we are even ahead of our original December target," Delek chief executive Yossi Abu said.

"Israel, Jordan and Egypt will start receiving gas from Leviathan even before the end of this year," he added.

Delek and Noble Energy last February signed a $15 billion decade-long deal to supply 2.26 trillion cubic feet of gas to Egypt's Dolphinus Holdings from the Leviathan and Tamar gas fields.

The supply deal with Egypt followed a September 2016 agreement worth $10 billion between Jordan’s National Electric Power Company and the Leviathan project partners to supply around 1.59 Tcf of gas to Israel’s eastern neighbours over a 15-year period.

Gas imports from Israel might help Egypt restart production from its long-mothballed Damietta LNG plant, which is operated by Spain’s Union Fenosa.

Weekly

Egypt clears debt mountain