Atul Aneja

CAIRO: India and Egypt are looking at ways to deepen their economic relationship despite constraints imposed on foreign investments by rising oil prices and tight money supply.

The visiting External Affairs Minister Pranab Mukherjee sought to advance the economic relationship between the two countries during his talks with his counterpart Ahmed Abul Gheit and Egyptian President Hosni Mubarak.

Diplomatic sources told The Hindu, that apart from trade, India has been keen to strengthen its investments in Egypt.

For instance, the Oil and Natural Gas Corporation-Videsh (OVL) has drilled an exploratory well with a flow of 4,600 barrels, in the North Ramadan Concession in the Gulf of Suez.

The Gujarat State Petroleum Corporation has signed an agreement with two Egyptian partners to develop the North Hap’y and South Diyur offshore blocks in the Mediterranean Sea.

However, the surge in oil prices and the reluctance among bankers to extend cheap loans have begun to constrain investments. “The enthusiasm for fresh foreign investments appears to be abating in recent months as problems in the global economy have begun to affect Egypt,” said the sources.

The bearish mood in Egyptian economic circles could affect proposed Indian investments. Some of the mega-projects Indian companies wish to establish include a petrochemicals complex by Reliance Industries. The $4-billion venture includes the establishment of the world’s biggest plastics park in Egypt.