British multinational BP is locked in negotiations with the Egyptian government over its shuttered $10bn gas field development project in the West Nile Delta 10 weeks after Egyptian oil minister, Sherif Ismail, announced the project had successfully restarted.

“There is still no deal in place. Negotiations are ongoing,” says a spokesperson for BP.

On 26 June Ismail said BP and Egypt had restarted the project, but the claim an agreement that was in place was later denied by BP, which said the terms of the deal being offered by the Egyptian government were not satisfactory.

With a budget of $10bn, the West Nile Delta North Alexandria concession development project is the biggest oil and gas project in Egypt.

When the field is developed it will produce an estimated total of 5 trillion cubic feet of gas and condensate at a rate of up to 1 billion cubic feet a day (cf/d) of gas, helping to ease the country’s gas shortage.

BP officials declined to give details on the stumbling blocks in the ongoing talks, but a senior employee of a Egyptian state-owned energy company says BP is pushing for higher gas prices.

“All the foreign energy companies operating in Egypt are looking for higher prices now,” says the official, who asked to remain anonymous. “Studies are ongoing looking at the economic consequences of increasing gas prices for producers. The foreign companies need to be patient. Egypt is going through a very difficult period.”

Egypt’s government is currently struggling with its worst energy crisis in decades, as gas demand expands while production declines and the economy reels after the 2011 revolution and subsequent coup in 2013.

Germany’s RWE Dea holds a 40 per cent interest in the North Alexandria concession and is currently in negotiations with the government over several different schemes, according to its general manager, Maximilian Fellner.

“How the negotiations go depends on the individual project,” he says. “The government is under pressure. They are desperately looking for more gas. They are willing to make deals to improve [commercial] conditions [for foreign companies] in order to get this gas.”

Egypt currently buys domestically produced gas at a rate significantly below international market prices, which has historically helped it to maintain generous fuel subsidies.

In recent years, as the economy has suffered and the population has expanded, the subsidy system has become increasingly expensive, contributing to a surge in the country’s budget deficit, which reached an estimated 12 per cent of GDP at the end of last year.

The financial crisis has delayed payments to energy companies and, at the end of June, the Egyptian government owed a total of $5.9bn to foreign operators, which has discouraged operators from investing in the Egyptian oil and gas assets.

Negotiations to import natural gas from Algeria have run into trouble due to the high prices demanded by Algier, while the prospect of importing gas from Israel have become increasingly sensitive due to the Israeli military offensive in the Gaza strip, which has triggered widespread public outrage in Egypt.