Egypt receives Saudi oil after suspension on trade lifted

#Business

Suspension came after Egypt voted in favour of Russian-drafted UN Security Council resolution on Syria that Saudi Arabia strongly opposed

Saudi Aramco ships oil to Egypt again (Reuters)
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Monday 20 March 2017 11:20 UTC
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Egypt has received its first two oil shipments from Saudi giant Aramco after deliveries were suspended for several months over political differences, an oil ministry spokesman said on Sunday.

"On Friday and Saturday, we received the first two deliveries after a resumption of the contract with Aramco," oil ministry spokesman Hamdi Abdel Aziz told AFP. Saudi Aramco could not be reached for immediate comment.

"We will receive another two deliveries on March 26 and 27."

During a visit to Cairo by King Salman in April last year, Saudi Arabia agreed to finance Egyptian imports of refined products from Aramco for five years in a $23bn deal.

But in October, Aramco decided to suspend deliveries of 700,000 tonnes of petroleum products during a spat between the two countries over the conflict in Syria.

At the time, Aramco was cited as saying the suspension came amid "special commercial conditions amid fluctuations in international oil prices".

But the move came after Egypt voted in favour of a Russian-drafted UN Security Council resolution on Syria that Saudi Arabia strongly opposed.

Moscow is a staunch supporter of President Bashar al-Assad's government, while Riyadh is a key backer of the rebels.

Riyadh has also been frustrated by Cairo's unwillingness to send ground troops to join a Saudi-led coalition fighting rebels in Yemen.

Saudi Arabia has provided Egypt with billions of dollars in aid and credit since then army chief, now President Abdel Fattah al-Sisi, overthrew his Islamist predecessor Mohamed Morsi in 2013.

The kingdom is strongly opposed to the now outlawed Muslim Brotherhood movement to which Morsi belongs.

"Politically it is a very positive step," Pharos Holding energy analyst Karim Ezzat said of the resumption of oil product shipments.

"It's not the nominal amount that you get as such, but really the investments, the backing, the political backing, that is the more important side."

Egypt had turned to the spot market in recent months but also sought similar deals to make up the shortfall. Crude oil from Iraq is expected to arrive in late March as part of an agreement for one million barrels a month.

Still, said Ezzat, the Aramco deal which includes a low 2 percent interest rate to be repaid over 15 years, was difficult to match at a time of low oil prices and fiscal belt-tightening.