LONDON, Oct 6 (Reuters) - British gas producer BG Group said on Monday it had received $350 million from the Egyptian government following a commitment by Cairo to repay outstanding debts to the energy industry.

The transaction reduces the energy company's receivables balance in Egypt to around $1.2 billion, BG Group added.

"The company continues to investigate options for increasing the supply of gas," it said.

The Arab world's most populous country is facing its worst energy crisis in decades as gas production declines and consumption rises. But energy companies have been reluctant to increase investment after the government fell behind on payments.

(Reporting by Karolin Schaps; editing by Susan Thomas)