Adipec 2021: Egypt plans to supply gas to Lebanon early next year to ease power crisis

The North African country will export gas via a pipeline passing through Jordan and Syria

A resident knits by torchlight in an apartment during a power cut at night in Beirut in September. Bloomberg

Egypt plans to start supplying gas to Lebanon by early next year, to help ease the power crisis in the country, its petroleum minister said.

The North African country will export up to 65 million cubic feet of gas per day to Lebanon, Tarek El Molla told reporters on the sidelines of the Abu Dhabi International Petroleum and Exhibition Conference on Tuesday.

“We are going to supply them with what they are requesting. We are just doing due diligence and checking the pipelines through Jordan and Syria,” he said.

“The supply is expected at the end of the year and early next year,” Mr El Molla said.

Lebanon has been dealing with a severe power crisis that has nearly crippled its economy. The country experienced a total blackout in October as the two power stations supplying the national grid ran out of fuel.

State-run Electricite du Liban recently said it was producing minimal amounts of power as it was unable to import fuel, leaving businesses and households almost entirely dependent on small, privately-owned generators.

Egypt is providing gas to Lebanon under a US-backed deal that seeks to ease power shortages in the country. Under the agreement, Egypt would supply gas to Lebanon that could provide it with six hours of power per day. Gas will eventually be brought to Lebanon via Syria and the Arab Gas pipeline.

Lebanon will pay Egypt for a yet-to-be-decided amount of gas, through a World Bank loan.

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Energy-deficient Lebanon, which relies primarily on fuel oil and gasoil to power its electricity grid, is increasingly looking to gas as an alternative. It also straddles a gas-rich region.

Egypt is the second-biggest producer of gas in North Africa after Algeria and accounts for about 1.1 per cent of the world's proven reserves, according to the BP Statistical Review of Energy 2021. Last year, Eni also announced the discovery of a gasfield, which is estimated to hold up to four trillion cubic feet of gas, in the waters of the Nile Delta, offshore Egypt.

Lebanon's power woes are compounded by an ongoing economic crisis, which ranks among the world’s top 10 crises – possibly even the top three – since the mid-19th century, the World Bank said in June. The country defaulted on about $31 billion of Eurobonds in 2020 and its currency has lost more than 90 per cent of its value against the US dollar, leading to surging inflation, increased unemployment and poverty.

Lebanon’s economy shrank by 20.3 per cent last year, after a 6.7 per cent contraction the previous year, the World Bank said.

The country has restarted talks with the International Monetary Fund to secure a bailout package worth $10bn but the government will have to execute significant reforms to seal the deal, experts say. The IMF package is significant as it could unlock aid worth billions of dollars from other donors.