Egypt’s petroleum minister seeks an oil deal with Iran

Tarek El Molla, Egypt's Minister of Petroleum and Mineral Resources, is seen during a meeting with Cypriot Foreign Minister Ioannis Kasoulides at the Ministry of Foreign Affairs in Nicosia, Cyprus August 31, 2016. REUTERS/Yiannis Kourtoglou

Egypt’s Petroleum Minister Tarek El Molla is travelling to Iran trying to strike new oil deals, Reuters reported citing sources close to his delegation at Cairo airport.

Egypt is seeking to reach oil deals after Saudi Arabia suspended its oil supply last month that was expected to reach 700,000 tonnes monthly for 5 years be paid off over 15 years, according to an agreement with $23 billion between Saudi Aramco and Egyptian General Petroleum Corporation.

Tensions between Cairo and Riyadh have escalated as a result of Egypt’s divergent stances in sensitive issues to Riyadh.

Egypt voted in favor of a Russian-backed U.N. resolution on Syria in October that excluded calls to stop bombing Aleppo, which Saudi Arabia strongly opposed.

As a result, Egypt’s stance has angered Egypt’s major Gulf backer which condemned Egypt’s vote and described it with the” painful” stance.

After the voting, the Saudi ambassador to the UN, Abduallah al-Mouallimi said, “It was painful that the Senegalese and Malaysian stance was closer to the Arab’s consensus than the Egyptian delegation.”

He also said that he feels pity for these countries that voted for the Russian resolution, stressing that his country will continue backing the Syrian people by all means.

Since 2013 when Abdel Fattah al-Sisi led a military coup against Egypt’s first democratically elected president Mohamed Morsi, Saudi Arabia poured to Egypt billions of dollars in aid to support al-Sisi’s regime.

Reuters reported that Molla is set to meet several senior Iranian officials to discuss the possibility of securing oil supplies from Tehran, according to the source, who accompanied Molla to the airport.

“His visit to Iran, Saudi Arabia’s main regional rival, may signal a further rift between Egypt and its top benefactor, “said Reuters.

It is noteworthy that since the late 1970s Egypt and Iran have had strained diplomatic ties and an Egyptian official visiting Tehran is a rarity.

last month, Molla said that it was unclear when the Saudi oil deliveries would resume and Saudi Arabia has provided no reason for their suspension.

In the same context, Egypt seeks to secure new energy sources, signing a memorandum of understanding with Azerbaijan’s state oil company SOCAR for up to 2 million barrels of crude oil last week.

In addition, the EGPC also signed a farm-out agreement with Kuwait Energy Plc giving Egypt’s state oil buyer a 20-% participating interest in its Siba field in Iraq last week.

Furthermore, an Iraqi governmental official unveiled the completion of an agreement between the Iraqi and Egyptian government that stipulates providing Egypt with oil in return for arms, this was during the latest Egyptian delegation visit to Iraq last week where they met with senior officials, according to al-Arabi 21.

The source said,” Egypt’s Minister of Petroleum and Mineral Resources Tarek El-Molla’s visit to Iraq has accomplished an agreement that provides Egypt with oil (in larger quantities that than Cairo used to receive) in return for arms and ammunition needed by Iraq.”

He also pointed that Egypt’s Minister of Petroleum and Mineral Resources Tarek El-Molla’s visit to Iraq was to complete a previous agreement that was issued before by both the Egyptian and the Iraqi parts and that it will be implemented after Molla’s visit.

On October 30, The Iraqi Prime Minister discussed, with Egypt’s Minister of Petroleum and Mineral Resources Tarek El-Molla, enhancing cooperation between Egypt and Iraq in the fields of industry and oil & gas; in addition to forming an Egyptian-Iraqi partnership through establishing new cooperation strategies between companies in the two countries, according to a statement released by the Abadi’s press office.

The source-who preferred to remain anonymous- said that “Egypt informed the Iraqi government that he has the ability to supply Iraq with the number of arms it needs as well as providing it with military equipment maintenance and in this

case, the price of arms will be discounted from the price of oil exported to Egypt.”

The two sides agreed on exporting 2 million oil barrels monthly from Iraq with low prices that reaches $3 for each barrel, while Egypt pays later or compensate it through the shipments of weapons and ammunition needed by Iraq which engages in battles against the Islamic State(ISIS),” according to the source.

The source said,” The first batch of oil is expected to set off after the completion of technical arrangements next December while an Iraqi delegation will visit Cairo to complete some arrangements with officials in the Egyptian government.”

Some media reports have pointed to an oil agreement between Iraq and Egypt thorough al-Basra port on the Arabian Gulf where some Gulf countries will provide technical support in the transportation process. It was also agreed that al-Aqaba in Jordan and Nuwieba port in Egypt will be the other route.

Some observers believe that the latest Iraqi agreement to provide Egypt with low cost oil for arms came with an Iranian support to pull Egypt in to the Russian, Iraqi, Syrian and the Iraqi camp, taking advantage of the tensions between Cairo and Riyadh.