(Ecofin Agency) - Egypt’s oil ministry has signed a memorandum of understanding with Iraq in order to import oil from the latter. This deal is coming almost three weeks after Saudi Arabia's sudden decision to stop oil shipments to Egypt, therefore putting more pressure on the government.
According to Oil Minister, Tarek el-Mulla, the agreement will open the doors for the development of oil cooperation with Iraq.
For his part, Iraqi’s oil Minister, Jabar al-Luaibi, said the agreement prepares the way as Iraq is offering Egypt the opportunity to invest in 12 Iraqi oil fields, Associated Press reports.
In March, Saudi Arabia agreed to provide Egypt with 700,000 tonnes of refined oil products per month for five years under a $23 billion deal signed between Saudi Aramco and the Egyptian General Petroleum Corporation (EGPC) but Egypt stopped receiving its aid some weeks ago.
This has made Egypt’s state oil company to quickly increase tenders.
On October 24, EGAS launched the World’s biggest tender for liquefied natural gas (LNG) in an effort to secure 96 LNG shipments for 2017-2018.
Egypt which was once an energy exporter, turned into a net importer in recent years, as a result of declining production and increasing consumption. This has made the government to ration gas supplies to industries, making some plants incapable of operating at full capacity.
El Molla has said that the country will increase the production of natural gas to 5 billion cubic feet per day during the 2017 and 2018 fiscal year when the giant Zohr field begins operation.
To him, Egypt will still increase its importation of gas to feed the rise in consumption.