Egypt will import 900,000 barrels of oil a month from Libya starting in April and is paying off some of the money it owes to foreign energy firms, according to Minister of Petroleum Osama Kamal, to help ease energy shortages that are hitting the economy.
Libya will provide Egypt with the equivalent of 1 million barrels of crude per month at world prices to support the economy, Nouri Berouin, chairman of the Libyan National Oil Company, told Libya's state news agency.
With its foreign currency reserves at critical levels, Egypt has cut back on some planned oil imports, traders said early this month. The economy has been hit by two years of unrest since Hosni Mubarak was deposed.
Libyan Foreign Minister Mohammed Abdelaziz denied reports that Tripoli had agreed to deposit US$2 billion in the Central Bank of Egypt to support the economy, but said there were talks in general between the neighboring countries on economic cooperation.
"There was nothing agreed upon," he told Reuters, speaking in Doha.
The Egyptian government is estimated to owe billions of dollars to oil producers working in the country, though the government last month disputed a figure that put the debt at $9 billion.
Kamal was quoted by newspaper Al-Mal as saying the government recently paid $1 billion in debt to foreign energy firms and that another $1 billion would be coming in a fortnight.
"The Libyan petrol shipments will arrive next month," Kamal was quoted as saying in a separate Al-Borsa newspaper report.
On Monday, Libyan Oil Minister Abdul-Bari Al-Aroussi said Libya plans to refine some of its crude oil in Egyptian refineries to support its neighbor, which is struggling after more than two years of political unrest.
Kamal also said in comments carried by daily Al-Mal he would meet with several foreign firms this week to discuss new means to pump additional supplies of gas.
Egypt's government is working on an economic program where it plans to cut back on subsidies of fuel. Last year it eliminated subsidies on 95-octane gasoline, the highest grade available, and raised fuel prices in many sectors last month.
The government had plans to start a scheme to ration subsidized vehicle fuel using smart cards available to drivers of vehicles with smaller capacity engines in July.
Al-Masry Al-Youm quoted Kamal as saying the government was looking at a proposal to replace the smart card plan with a system based on mobile phones, indicating the government has yet to finalize the rationing scheme. He did not give a time frame.