From The Daily Star
Egypt has gone from fuel famine to glut thanks to gifts from Gulf monarchs since the army removed the Islamist president in July – and that is giving the state oil company and foreign traders new headaches. The Egyptian General Petroleum Corp., facing rising fees for delaying tankers as gift cargoes fill its ports, has begun to cancel or postpone contracted purchases. Traders have, for now, lost one of their best customers in the Mediterranean and some say the confusion has put them off dealing with Cairo.
Chaos in Egypt’s fuel supply chain that left drivers fuming in long lines at the pumps played a part in popular protests that preceded the military takeover. Now Egypt’s oil import terminals are so crowded that some tankers have been lying off Alexandria and Suez for two months, running up bills.
EGPC chairman Tarek al-Molla told Reuters last week that he was giving priority to discharging cargoes donated as part of aid packages from Saudi Arabia, Kuwait and the United Arab Emirates. Delays to shipments ordered on the open market are incurring penalties, known in the shipping trade as demurrage.
“Contracted cargoes are waiting on the water,” the chairman said. “So we started telling them to please postpone, please cancel.”
Traders say EGPC has been failing to issue the letters of credit, or L/Cs, needed to finalize payment before unloading, creating delay and uncertainty about deliveries that is making it difficult for firms to hedge their trading books.
“It’s pretty disastrous for anyone who has shorts into Egypt,” said one, referring to traders like himself who have a contract to supply Egypt. “They keep saying ‘No L/C, no L/C.’ But there is no incentive to get one because of the donations.”