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ELECTRICITY CRISIS

Emirates National Oil Company wins bid to swap Iraqi fuel for use in Lebanon's power plants

Emirates National Oil Company wins bid to swap Iraqi fuel for use in Lebanon's power plants

ncreased power outages are affecting residents countrywide as Électricité du Liban rations power amid fuel shortages. (Credit: João Sousa/L'Orient Today)

BEIRUT — The Emirates National Oil Company (ENOC,) has won a tender to swap an initial 84,000 tons of fuel exported from Iraq to Lebanon for fuel compatible with Lebanese power plants, the Ministry of Energy and Water announced Thursday.

Here’s what we know so far:

    •  In July, Lebanon signed an agreement with the Iraqi government to import 1 million tons of Iraqi fuel oil, in a bid to ease the country’s nationwide blackouts. Caretaker Energy Minister Raymond Ghajar said at the time that Iraq would provide the fuel oil in exchange for goods and services provided by Lebanon, but what exactly those services would be was not clear.

    •  The Iraqi fuel oil, however, is incompatible with Lebanon’s power plants, meaning that instead of using it directly to produce electricity, Lebanon must swap it for fuel oil of a grade that can be used in the local power plants. This will be done through monthly spot cargo tenders, the Energy Ministry said in a statement.

    •  The first swap will entail replacing 84,000 tons of black fuel from Iraq with about 30,000 tons of heavy Grade B fuel oil and about 33,000 tons of gas oil, the statement said.

    •  According to the ministry, Lebanon will receive a shipment of fuel from Iraq between Sept. 17 and 19, as the swap will begin between Sept. 3 and 5 and should take up to two weeks.

    •  Yesar Al-Maleki, an energy economist and advisor at the Iraq Energy Institute, told L’Orient Today that ENOC will be selling Iraqi high-sulfur fuel oil (HSFO) and will use the proceeds to buy Grade B heavy fuel oil (HFO) that meets Lebanon’s specifications, as well as gas oil, which it will then ship to Lebanon. ENOC will make a profit through the arbitrage when it sells the HSFO, he said, adding that the deal was “overall, [a] good choice and great news for Lebanon.”

    •  On Aug. 6, the Lebanese government and the Iraqi government announced that they would be selecting potential bidders to take part in the swap agreement. The bidders had until Aug. 12 to submit their applications to the Lebanese government oil department.

    • According to the ministry’s announcement, the other companies participating in the tender were Independent Petroleum Group (IPG) and Coral Energy Dubai Multi Commodities Centre (DMCC.)

BEIRUT — The Emirates National Oil Company (ENOC,) has won a tender to swap an initial 84,000 tons of fuel exported from Iraq to Lebanon for fuel compatible with Lebanese power plants, the Ministry of Energy and Water announced Thursday.Here’s what we know so far:    •  In July, Lebanon signed an agreement with the Iraqi government to import 1 million tons of Iraqi fuel oil,...