CAIRO - Egypt’s plans to settle outstanding dues to international oil companies include measures linking arrears payments to increased production, according to a petroleum ministry statement on Monday.

The ministry has recently launched an incentive package requiring partners to boost output beyond current levels, with additional revenue from this increase allocated to pay down existing debts, the statement added.

Petroleum Minister Karim Badawi said on Monday that Egypt has begun implementing mechanisms to ensure regular payments to oil partners, including consistent fixed installments to promote continuity and reliability in arrears settlement.

Details of the wider incentive package remain undisclosed, but it is intended to encourage higher production as Egypt contends with a notable drop in domestic gas output, which reached a six-year low in May.

Despite ambitious plans to become a major gas exporter following Eni’s 2015 discovery of the Zohr offshore field, Egypt has had to re-enter the liquefied natural gas (LNG) market to meet domestic needs.

Average production from Zohr, Egypt’s largest gas field, fell to 1.9 billion cubic feet per day in the first half of this year, raising concerns over technical challenges or reduced investment.

In response, Eni pledged last week to initiate efforts to restore some gas output at Zohr by early next year.

In a meeting on Monday with TotalEnergies CEO Patrick Pouyanné, Badawi discussed progress on the Cronos gas field and strategies to link its production to Egypt’s facilities.

This would mark the second offshore field potentially tied to Egyptian export infrastructure after partners in Cyprus’ Aphrodite gas field proposed exporting gas through a pipeline to Egypt’s transmission network as part of a $4 billion development plan.

Cyprus is strategically positioned to leverage Egyptian infrastructure - including subsea pipelines and liquefaction plants - to access European markets, with potential to also supply the Egyptian domestic market, Cypriot Energy Minister George Papanastasiou said at an industry event on Monday.

(Reporting by Mohamed Ezz in Cairo Editing by Matthew Lewis)