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Egypt tries crude swaps to import foreign oil

July 20, 2014


Egypt's state-owned Egyptian General Petroleum Corp (EGPC) issued a tender to swap a 435,000-450,000 barrel cargo of its Qarun crude oil grade for a similar-sized cargo of Iraqi Basra Light for August delivery, a tender document showed. The tender closes with offers remaining valid until July 21. The tender specifies that the delivery will take place through storage-tank transfer at its oil hub Sidi Kerir on August 16.Egypt has been largely unable to buy crude oil in the international market for more than a year due to a domestic subsidy scheme which absorbs some 20 per cent of state spending. One of its major refineries, Midor, on the Mediterranean coast, was struggling to run at even half capacity without Iraqi oil and failed to award processing tenders last year as the economics were not attractive.The oil crunch reached a peak under deposed President Mohamed Morsi. Queues at petrol pumps were common and sometimes led to protests and EGPC had to stop importing foreign crude for its domestic refineries.Following the return of a military-led government last year, Arab Gulf states ramped up aid, including in the form of crude oil and oil products such as gasoline and diesel either as donations or with special terms. Newly-elected President Abdel Fattah Al Sisi has also announced cuts in energy subsidies for the fiscal year 2014/2015 to ease its budget deficit.Though the country produces and exports its own oil, it used to import up to nine million barrels per quarter to supply its vast refinery network."They started doing it (swap tender) for July a few weeks ago and will practically do it every month ... They have better refining values with Basra," one trader said. The trading arm of Azeri Socar and oil major BP were the winners of the last tender, traders said, which involved two cargoes of Qarun, one cargo of Western Desert and at least two cargoes of Iraqi Basra Light delivered to Egypt.

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Source: Oil & Gas News

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