Iraq and Lebanon have made headway in solving the energy crisis in Lebanon through a plan to export Iraqi oil to Beirut, according to Iraqi News Agency on Wednesday.
Negotiations will proceed at the ministerial level between Baghdad and Beirut to ensure “Lebanon will not go into darkness” after the end of the contract with the Algerian oil exporting company Sonatrach, Abbas Ibrahim, director-general of Lebanese Public Security said.
Work will be underway following the conclusion of technical discussions between specialized teams from Iraq and Lebanon once the Iraqi Council of Ministers approves the plan, he said.
Sonatrach announced in November last year that it would not renew its contract, which was initially signed in 2005 and renewed five times by Lebanon’s cabinet.
Lebanon, seeking alternative oil supplies to Algeria, announced on Monday that it reached an agreement with Iraq to start fuel imports from Baghdad in 2021, based on international prices. However, the volume of imports, which is not clear yet, will be limited to cover the majority of Beirut's fuel needs to generate electricity.
The announcement came after a meeting between Iraqi Oil Minister Ihssan Abdul Jabbar and Lebanese Energy Minister Raymond Ghajar in Baghdad on the same day.
The economic crisis in Lebanon has deepened since 2011, when the growth rate saw a dramatic drop to just 1.5% from 9% between 2007 and 2010. Public debt as of June 2020 also saw an unprecedented increase to $94 billion, exceeding 150% of GDP, to become one of the highest debt rates in the world, according to the Ministry of Finance.
Lebanon is trying to alleviate the energy crisis at a time of economic fallout from the pandemic, and in the aftermath of the Beirut explosion on Aug. 4 last year when a large amount of ammonium nitrate stored at the port of the city exploded, causing at least 204 deaths and $15 billion in property damage.
Over the last 10 years, Lebanon has lost $40 billion through waste and inefficiency in the electricity sector. The country imports $5 billion worth of gasoline and diesel annually to cover demand from 8,000 private generators.
By Busranur Begcecanli