BP Egypt says LNG shipment was diverted to manage peak demand

CAIRO: BP Egypt said on Sunday that one of its LNG shipments to Egypt was held back this month as part of a deal over the timing of deliveries, and the petroleum ministry dismissed reports that it was linked to payment problems.

LNG tanker British Sapphire was diverted to Brazil rather than discharging in Egypt earlier this month, and traders had said the diversion was related to payment delays at state gas board EGAS. EGAS also denied the reports.

Egypt is facing a dollar shortage that has hit its ability to import, creating delays in opening letters of credit and causing goods to pile up at ports.

"BP has been awarded an LNG supply contract to Egypt to supply cargoes from mid 2015. Six cargoes have been successfully delivered and BP has either received payment in full or received agreed collateral from EGAS for all 6 cargoes," BP Egypt told Reuters in a statement.

"The seventh cargo was postponed to the third quarter of 2016 based on a mutual decision between EGAS and BP to manage supply for peak summer demand," the statement added.

BP said it remained committed to deliver LNG cargoes to EGAS "in accordance with the contractual arrangements in place".

Egypt became a major market for LNG shippers after the launch of two floating import terminals last year and as the country looks to plug an acute energy shortage that has halted industrial production during summer months and caused rolling blackouts.

According to financial and trade sources, last month Egypt asked for 90 days to pay for LNG deliveries, up from the traditional 15, creating arrears currently estimated at $400-$500 million.

EGAS chairman Khaled Abdel Badie told Reuters on Sunday that lower world oil prices should push the country's LNG import bill for fiscal year 2015-16 down to between $2.75 billion and $3 billion from an originally expected $3.5 billion.

The ministry of petroleum on Sunday denied that there has been issues making payments to foreign energy companies.

"There is no truth to what has been said about delays in the payment of dues to international companies for the value of agreed upon LNG shipments," a ministry of petroleum statement said.