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By Sarah McFarlane and Summer Said 

Egypt is pushing big energy companies to give it a break on payments for fuel shipments after Saudi Arabia's sudden decision in October to halt artificially cheap petroleum deliveries tightened an economic squeeze in the North African nation.

Egypt, one of the biggest global importers of commodities ranging from wheat to diesel fuel, is struggling to pay oil companies ahead of trying to make the world's largest-ever short-term deal for liquefied-natural gas.

At a meeting in Cairo on Wednesday, Egypt asked energy suppliers to give the country six months instead of three months to come up with the money for already-ordered deliveries of LNG, crude oil and petroleum products, an Egyptian government official said.

The official didn't specify which companies were at the meeting. Egypt's biggest energy suppliers include BP PLC, Vitol Group and Trafigura Group, among others. Vitol and Trafigura declined to comment. BP didn't immediately respond to a request for comment.

The request underlines the deteriorating economic conditions in Egypt during a period of political unrest and terrorist attacks that have continued unabated since the Arab Spring uprising in 2011.

Egypt's net foreign reserves stood at less than $20 billion at the end of September, down from roughly $36 billion before the 2011 uprising, according to Central Bank data.

The country is seeking as much as $6 billion from bilateral creditors to meet the conditions for the International Monetary Fund to consider a $12 billion loan aimed at plugging its national-budget deficit and supporting its battered currency.

Egypt is pressing oil companies for more time to pay after Egyptian officials said Saudi Arabia reneged on a five-year contract agreed in April to supply Egypt with over $20 billion of oil products.

Saudi Arabia, the world's top crude-oil exporter, and other Persian Gulf states have pumped billions of dollars into Egypt's economy since the toppling of President Mohammed Morsi in 2013.

Saudi Arabian Oil Co., known as Saudi Aramco, didn't give a reason for why it was halting its product supplies to the country as of Oct. 1, an Egyptian Ministry of Petroleum spokesman said. The spokesman said Egypt plans to allocate more than $500 million to purchase petroleum products and will launch tenders to fill the gap in the local market.

Egypt has become a net energy importer in recent years because of declining oil and gas production and growing demand. The country launched its first liquefied natural gas import terminal in 2015, adding a second terminal within months, quickly becoming the largest importer of LNG in the Middle East. A third terminal is planned for next year.

Egypt, along with other new importers including Pakistan and Jordan, have benefited from entering the LNG market at a time that prices have plummeted because new projects have boosted global supplies.

"Electricity demand grew in excess of 5% last year, facilitated by the availability of LNG," said Lucas Schmitt, LNG analyst at Wood Mackenzie.

Egypt hasn't yet procured LNG to meet its needs in 2017 and is expected to seek offers to deliver 120 cargoes, the largest-ever short-term tender, traders said. At today's prices those deliveries would be valued over $2 billion. It isn't clear how long Egypt will want to pay for those cargoes.

"Some [companies] will be willing to accept the credit risk, but this could also come at a premium for Egypt compared to other importers in the region," Mr. Schmitt said.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Summer Said at summer.said@wsj.com

(END) Dow Jones Newswires

October 13, 2016 15:06 ET (19:06 GMT)

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