Egypt is to import fuel from Libya without having to resort to hugely expensive letters of credit (L/Cs).

The cost of L/Cs in Egypt, which is currently gripped by a currency crisis (DC World News, 28 February 2013), has risen enormously since the ousting of former President Hosni Mubarak.

May agreement

Reports indicate that Egypt will import one million barrels of Libyan oil a month, with the first shipment due for May delivery.

The deal is significant because Libya will extend credit to its Egyptian purchasers, which means buyers will not need to seek bank credit of any kind.

Currency crisis

Analysts suggest that Egypt will probably pay international prices for the oil on credit terms of 90 days.

Libya has also agreed to provide US$2 billion in cash to Egypt to help alleviate its currency crisis.

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