Egypt reaches first deal to revise gas prices with foreign energy firm

Egypt has agreed to revise the price it pays to buy natural gas to be extracted by German oil and gas group RWE DEA, a move likely to mean higher prices for the state.

Oil Minister Sherif Ismail said on Wednesday that state-run gas company EGAS had reached an agreement in principle with RWE DEA to modify its current Delta concession contract, the first step by the government to fulfil a pledge to provide more attractive terms to foreign firms needed to boost production.

The revisions aim to "strike a balance between the parties to the agreement regarding the costs of drilling, development, and production in these areas", Ismail said.

Though he did not say how the prices would change, he said that the move was in the context of the government's aim of "matching the cost of development of some newly discovered gas fields", suggesting the government would pay companies more for the gas they extracted.

The step would lead to increased investments that could speed up the development of offshore finds, Ismail said.

Fuel-short Egypt badly needs to convince foreign energy firms to boost investments.