Oil & Gas Middle East – November 2018

(Jacob Rumans) #1
LEBANON FOCUS

NOVEMBER 2018 oilandgasmiddleeast.com

16


GAS:


KEEPING THE


LIGHTS ON IN


LEBANON


In Lebanon, the Mediterranean country devas-
tated by war, gas could solve key economic is-
sues and help the country keep its lights on

L


ebanon has been defined by instabil-
ity for decades, but one thing remains
constant. Every day, without fail, the
electricity cuts. In the country’s capi-
tal city, Beirut, the electricity cuts for
around three hours a day, but in other
areas, residents face more than 12 hours
of power outages per day.
To cope, the average Lebanese household relies on
a personal diesel-fuelled generator at a cost of around
$1,300 per year, or 15% of income per capita, according
to a 2017 report by the World Bank. But the cuts also
affect business— in 2008, the World Bank estimated
that power outages cost Lebanese industries close to
$400mn in sales losses.
The reasons for the outages are varied—the 15-year
Lebanese Civil War, which ended in 1990, ravaged the
country’s infrastructure, power plants are ageing, but
above all else, Lebanon has no gas.
When asked about the gas shortage in a phone call,
Wissam Chbat, a board member and head of geol-
ogy and geophysics at the state’s Lebanese Petroleum
Authority (LPA), interrupts: “No, it’s not a shortage,”
he says. “There is no gas. None.”
As a result, state-run electricity company Electricité
du Liban (EDL) borrowed around $1.4bn from the
country treasury to purchase fuel in 2018, according to
the country’s budget.
As such, while its Gulf counterparts might be cel-
ebrating a moderate rise in oil prices, higher prices are

bad news for this small, Mediterranean country.
“The average production cost for every
[kilowatt hour (KwH)] is 14-15 cents, depend-
ing on the fuel price, and we sell it for 9 cents to
the consumer,” Chbat says. The country’s seven
thermal power plants use heavy fuel oil, and its
gas turbines run on diesel oil instead of gas.
The situation is cyclical: the government can-
not justify increased tariffs unless generation
capacity is increased, and cannot increase capac-
ity without more investment into the sector.
Projects to build more power plants have been
continually made and shelved.

“...IF WE SWITCH THE CUR-
RENT EXISTING CAPACITY FOR
ELECTRICITY, AROUND 60%
OR 65% OF IT, WHICH IS RE-
ALISTIC, TO FIRED GAS WE ARE
SAVING AROUND $1BN DOL-
LARS A YEAR.”
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