Egypt aims to reduce oil product subsidies

(Adds details, background)

CAIRO, Dec 14 (Reuters) - Egypt is relaxing a commitment made by the previous government to abolish subsidies on gasoline, diesel and natural gas, following a slide in crude prices and the discovery of an offshore gas field.

The previous government had committed to getting rid of the subsidies that were diminishing the country's foreign currency reserves over a five-year period starting in July 2014.

Prime Minister Sherif Ismail said on Monday that Egypt now planned to reduce the subsidies to 30 percent of where they stood in July 2014, over the same time period.

"We respect the previous government's decisions and are committed to them, but there are changes we need to adhere to in the case of oil product subsidies, such as global energy prices and new discoveries," Ismail told a news conference.

He said lower global oil prices and the discovery of a massive offshore gas field meant Egypt could relax that goal.

The Zohr gas field, discovered by Italy's Eni, is the biggest in the Mediterranean. With an estimated 30 trillion cubic feet of gas, it is expected to plug Egypt's acute energy shortages and save it billions of dollars in precious hard currency that would otherwise be spent on imports.

Egypt is suffering from a foreign exchange shortage that has seen goods pile up at ports. About $6 billion was deposited in Egypt's central bank by Gulf Arab allies earlier this year to help replenish its dwindling foreign currency reserves.

Ismail is due to meet Saudi Arabian Deputy Crown Prince Mohamed bin Salman on Tuesday, when a new Saudi deposit will be on the agenda, he said.

The government is also targeting growth in gross domestic product of close to 6 percent and a reduction in its budget deficit to 8.5 percent by the end of the 2017-18 financial year, Ismail said. (Writing by Ahmed Aboulenein; editing by David Clarke)