Egypt announced on 10 June that it has fully settled all outstanding payments owed to foreign oil and gas companies. The government views the move as a major milestone in its effort to restore investor confidence, revive exploration activity, and support domestic hydrocarbon production.
According to Petroleum and Mineral Resources Minister Karim Badawi, clearing the debt opens “a new chapter” for the sector. He said the elimination of arrears removes one of the biggest barriers to investment and should help speed up development and production projects.
The announcement brings to a close a debt-reduction effort that has been underway for nearly two years. As of 30 June 2024, Egypt owed about $6.1 billion to international oil companies. The debt largely resulted from a shortage of foreign currency that strained the Egyptian economy and limited the government’s ability to meet contractual obligations denominated in U.S. dollars.
Over time, the government gradually reduced the balance. After repaying around $5 billion, Cairo had initially planned to lower the remaining arrears to $1.2 billion by June 2026. Improved foreign currency availability allowed authorities to move faster. The outstanding balance fell to $770 million in April 2026, then to $440 million in May, before being fully cleared in June.
Beyond its financial impact, the buildup of unpaid obligations gradually affected the performance of Egypt’s oil and gas industry. Faced with payment delays, several international energy companies scaled back exploration, drilling, and field development programs.
Egypt’s oil production, after years of decline, has recently shown signs of stabilization and modest recovery. Output averaged about 523,600 barrels per day during the first quarter of 2026, supported in part by stronger production in the Gulf of Suez. Gas production, however, continues to decline. Output dropped to about 3.98 billion cubic feet per day, its lowest level in a decade, as production from offshore Mediterranean fields continued to weaken.
The decline comes as the country’s energy needs continue to grow. According to data cited by Enerdata, natural gas accounts for about 81% of Egypt’s electricity generation. Domestic consumption now exceeds national production, forcing the country to increase imports.
Data from Kpler, cited by Middle East Economic Survey, show that Egypt imported about 8.92 million tons of liquefied natural gas in 2025, a record volume that highlights the growing pressure on the country’s energy balance.
For Egyptian authorities, clearing the arrears is primarily a signal to international investors. The Ministry of Petroleum believes the disappearance of this debt removes a major source of uncertainty that has weighed on investment decisions and should encourage new capital flows into exploration and production. The government recently said it had secured more than $19 billion in investment commitments from international companies for the next three years. These include $8 billion pledged by Eni, $5 billion by BP, $2 billion by Arcius Energy, and $4 billion by Apache.
The strategy does not rely solely on repaying past obligations. In May, the Ministry of Petroleum also announced plans to introduce new contractual models aimed at improving the sector’s attractiveness.
One of the main priorities in this new phase involves projects in the Mediterranean. These developments are considered among the country’s most promising opportunities to increase domestic production, but they are also among the most difficult to execute.
According to the Ministry of Petroleum, deepwater fields require advanced technologies, costly drilling campaigns, and major investments in gas gathering and transportation infrastructure before production can begin.
As a result, development costs are substantial and projects often take years to reach production. For Egypt, eliminating its arrears is therefore less an end point than a starting point. The government’s next challenge is to convert renewed investor confidence into new projects, commercially viable discoveries, and additional oil and gas output.
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