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* EGAS hopes to persuade BP to invest $1.7 bln in gas fields
* Considering applying direct payments to other contracts
* Wants to quadruple price Egyptian Fertilisers pays for gas
* Seeks to settle with Union Fenosa after gas cut-off
By Patrick Werr
CAIRO, July 24 (Reuters) - Egypt's state gas company EGAShas begun talks to try to raise natural gas prices and work outhow industrial consumers can pay producers directly, twonewspapers reported on Wednesday.
Egypt's cash-starved government has been withholdingpayments for oil and gas produced locally by foreign energyfirms under production sharing agreements, and as a result manyof these firms have been unwilling to invest in new projects.
The move seems to signal an effort by Egypt's interimgovernment, appointed after the military ousted IslamistPresident Mohamed Mursi on July 3, to resolve some of the thornyissues that have all but crippled Egypt's finances.
EGAS hopes the new system will help persuade BritishPetroleum to invest $1.7 billion to develop its offshoreTaurus and Libra fields north of Alexandria, al-Boursa quotedEGAS chairman Taher Abdel El Reheem as saying.
Under the system, industrial consumers make monthly paymentsfor their gas directly into the bank accounts of BP and otherforeign partners to guarantee regular funds were received.
EGAS officials were not immediately available for comment.
BP holds 60 percent of the concession for the two fields andHamburg-based RWE DEA AG the other 40 percent. EGAS isentitled to some of the gas under a production-sharing accord.
EGAS believes the two fields could produce an additional 500million cubic feet of gas per day, Abdel El Reheem toldal-Boursa. BP accounts for about 15 percent of Egypt's crude oiland 30 percent of its natural gas production, he said.
BP and its partners like the direct payment system and EGASis considering applying it to all future development agreements,he said. It already applies to contracts with ENI.
RAISING GAS PRICES
Al-Mal newspaper quoted Abdel El Reheem saying EGAS begannegotiating on Sunday with industrial companies operating in thelocal market to raise the price they pay for their gas.
EGAS has begun talks with Egyptian Fertilisers, a subsidiaryof Orascom Construction Industries, on raising theprice its Suez plant pays for gas to $6 per mmBtu from $1.50.
EGAS is also trying to resolve problems with Spain's UnionFenosa after Egypt halted supplies of 800 million cubic feet ofgas a day to its Damietta liquefaction plant, al-Mal said.
Al-Mal also reported that United Arab Emirates had agreed topay for all Egypt's petroleum product cargo imports in July,worth about $1 billion, and Kuwait would pay for 1.6 millionbarrels of crude imports a month for use in Egyptian refineries.
Kuwait would pay $190 million a month starting in Augustuntil $1.5 billion in petroleum aid it had pledged ran out,al-Mal quoted an unnamed source at state oil firm EGPC assaying.
Egypt has asked Kuwait to include Kuwaiti petroleumproducts, including 70,000 tonnes of diesel and jet fuel worth$60-65 million, as part of the aid.
Officials at EGPC and Kuwait's state oil company KPC werenot immediately available for comment.
Gulf Arab states pledged $12 billion in aid after theousting of Mursi.
