International oil companies (IOC) operating in Egypt pay contractors at an exchange rate that is set weekly by the Egyptian General Petroleum Corporation (EGPC), reported Al Ma News.
Officials at small IOCs stated that the USD average sent to them defines the value decided by the Central Bank of Egypt (CBE) in the financial facilities granted to EGPC. However, if EGPC did not receive any financial facility, the IOCs pay according to the price set in the most recent report sent by EGPC. IOCs are currently paying according to the most recent sent price at EGP 18.
The contractors and service companies provide the concession areas with petroleum services and get 60% of their payments in USD and the remaining amounts in EGP after it is priced according to the USD exchange rates. The sources explained that EGPC was sending monthly reports before the EGP devaluation, pricing USD at EGP 8.87 or EGP 8.88. Yet, after the Egyptian pound devaluation, the corporation decided to send the pricing report on a weekly basis.
In related news, Sea Dragon Energy (SDX) and Merlon International Oil Firms had reached agreements with their suppliers and contractors in Egypt to repay them in EGP instead of USD based on the exchange rate.