Lebanon, Syria and Egypt have agreed to ship 650 million cubic meters of natural gas per year from Egypt to Lebanon via Syria amid efforts by Lebanon to increase its electricity generation capacity and reduce blackouts that have crippled its economy in recent years.
The deal, signed at a ceremony at the Lebanese energy ministry in Beirut on Tuesday, would see gas piped to Lebanon's northern Deir Ammar power plant, where it could add some 450 megawatts, or around four extra hours of power per day to the grid.
Deir Ammar is one of several plants in Lebanon that can run on both gas and diesel, but use the latter as the gas pipeline has yet to come online.
The deal also still requires the approval of the World Bank, which has pledged financing, and the United States for compliance with its Syria sanctions regime, Lebanon's caretaker energy minister Walid Fayad told Reuters.
Fayad announced the agreement alongside representatives from Egypt and Syria, as well as Magdy Galal, chairman of the state-owned Egyptian Natural Gas Holding.
They did not disclose the financial terms.
A statement issued later by the office of Lebanon's caretaker prime minister Najib Mikati after his meeting with Galal and Egyptian ambassador Yaser Alawi quoted Alawi as saying the price offered was “30 percent less than global market prices.”
Lebanon's state-run power company produces just a couple hours of power per day, forcing many to pay for expensive private generator subscriptions.
To ease the power crunch, a plan was floated last year for Lebanon to receive electricity from Jordan and natural gas from Egypt, both via Syria, which would add up to 700 MW to Lebanon's grid.
The World Bank had agreed to provide financing if Lebanon enacts long-awaited power sector reforms to reduce waste and boost tariff collection.
Lebanon's cabinet passed a broad electricity reform plan in March but has yet to implement key components.
The transmission through war-ravaged Syria had also prompted concerns about exposure to US sanctions, which penalize anyone dealing with the government in Damascus.
US officials say they have given countries “pre-clearance” to engage in talks without the specter of sanctions but could only fully determine compliance once contracts were signed.
Fayad said he hoped the new deal would pave the way for World Bank financing and US sanctions waivers, saying “I think we did everything that they asked for.”
There was no immediate comment from the US embassy or the World Bank office in Lebanon.
(Source: Reuters and staff)