Libya plans to supply 1 million barrels of oil a month to Egypt on credit, Libya's deputy oil minister said Wednesday, a move that could offer relief from fuel shortages that have recently afflicted the embattled Egyptian economy.
Libya plans to supply 1 million barrels of oil a month to Egypt on
credit, Libya's deputy oil minister said Wednesday, a move that could offer
relief from fuel shortages that have recently afflicted the embattled Egyptian
economy.
Omar Shakmak told Dow Jones the agreement, which would meet about 5% of
Egypt
's oil
needs, was agreed on standard commercial terms, but that the length of the
period of credit under which
Libya
would
supply the oil had yet to be finalized and could extend beyond the six weeks
commonly practiced in the industry.
The move comes as
Egypt
has been
struggling since last year with fuel shortages that have led to long queues at
fillings stations and electricity blackouts. It also follows a promise from
Cairo
to
hand over a prominent supporter of former dictator Moammar Gadhafi to
Tripoli
,
prompting allegations from Libyan activists that the North African nation is
using its oil wealth to gain political leverage.
Continuing unrest in the
Egypt
since
the ouster of former president Hosni Mubarak has weakened the economy, draining
foreign-exchange reserves, reducing tourism revenue and forcing the government
to maintain costly price subsidies.
Egypt
is
trying to secure a $4.8 billion loan from the International Monetary Fund to
resolve balance-of-payments problems and restore its image with international
investors.
Fuel shortages, which government and industry officials have blamed on the
worsening state of the country's public finances, black market trade, lower
fuel production and an inefficient subsidy system, have added to the problem.
Abdulhamid el-Jadi, an independent Libyan governance activist who has
criticized mismanagement of
Libya
's oil
wealth under the old and the new regimes, said there could be a political
dimension to the deal.
Last year, Libya's general prosecutor requested that Egypt hand over 40 Libyans
affiliated with the Gadhafi regime, but Cairo appeared reluctant to hand them
over, a former Egyptian official who was involved in the talks told Dow Jones
Newswires at the time.
Libya
had
offered
Egypt
more
than 1 million barrels a month on easy credit if the wanted officials were
handed over, but
Egypt
declined the offer, the former official said.
The new agreement comes after
Egypt
arrested last week Ahmed Gaddaf al-Dam, a cousin of Mr. Gadhafi and one of the
several high-profile figures who have been pursued by the Libyan authorities
for their role in the 2011 war.
Egypt
has
said Mr. Gaddaf al-Dam will be handed over to
Libya
.
"Criminals should be handed over regardless of trade," said Mr.
el-Jadi, adding that tying oil deals to politics reminded him of the Gadhafi
era, as he sold African nations cheap oil to strike alliances.
Mr. Shakmak insisted the terms offered to
Egypt
were
driven solely by commercial considerations. "I am not involved in
political discussions," he said, adding that the prices offered were in
line with the market and offering credit was a routine practice in the oil
industry.
He said some of the crude would be processed on behalf of
Tripoli
and
returned to the country as gasoline for Libyan consumers, for a fee.
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