An agreement to sell Egypt 4 million barrels a month of Iraqi crude oil
is on hold pending payment procedures, the Iraqi oil minister said
Thursday.
Iraq has agreed in principle to supply Egypt, which has
suffered fuel shortages recently, with the oil, but the agreement has
not be cemented due to difficulties of payment, Oil Minister Abdul
Kareem Luaiby told reporters in Vienna.
"Our term-crude oil contract stipulates that a letter of
credit should be opened in internationally recognized banks prior to the
supply, but Egypt has so far unable to open such letter of credit," Mr.
Luaiby said.
Egypt is working to secure oil supply deals on favorable
credit terms from major Arab producers in an attempt to ease fuel
shortages and a government cash crunch that have proved politically
damaging for the country's Islamist president, Mohammed Morsi.
Another member of the Organization of the Petroleum Exporting
Countries, Libya, agreed in principle to offer Cairo close to 1 million
barrels a month of crude oil on a lengthy one-year credit term, with the
first shipment expected next month.
Egypt has faced a diesel shortage since last year, which has
in turn led to rising food costs, long queues at filling stations and
electricity blackouts. The fuel crisis has compounded broader economic
problems in the country, which in 2011 overthrew the government of Hosni
Mubarak in a popular uprising, paving the way for the electoral victory
of Mr. Morsi's Muslim Brotherhood party.
Egypt's government is short of funds and has been negotiating
with the International Monetary Fund over a $4.8 billion loan, which
analysts and investors say is critical for the country. IMF officials
left Cairo earlier this month without agreeing on the terms of the loan.