Egypt to repay debts to foreign oil firms within six months

Egypt plans to repay all of its $4.9 billion debt to foreign oil and gas companies within six months, the Oil Ministry said Thursday, a move it hopes will prompt them to boost exploration and ease the worst energy crunch in decades.

Egypt has delayed payments to oil and gas firms as its economy has been hammered by almost three years of instability since a popular uprising ousted autocrat Hosni Mubarak.

Arrears began to accumulate before the revolt, but worsening state finances saw the debts mount to billions of dollars while the government diverted gas earmarked for export to meet domestic demand.

Gas production has steadily declined in Egypt while consumption keeps rising, but firms have been reluctant to increase investment in exploration and production, particularly in costly offshore areas, until the government repays them.