Lebanon says Egypt gas deal waiting on US sanction call

An agreement signed last week to send 650mn m³/yr of Egyptian gas to Lebanon through Jordan and Syria is waiting on final guarantees from Washington that the deal does not violate US sanctions before it can move forward and become operational, Lebanon's caretaker energy minister Walid Fayad said today.

"What we have is an assurance in principle — Egypt, Jordan and ourselves," Fayad told the MEA Energy Week conference organised by Siemens Energy. "But what we are waiting for is an assurance, in final terms."

The plan, which the four countries have been discussing since December, will involve gas being sent through the 10bn m³/yr Arab Gas Pipeline. Lebanon has been struggling with acute power and fuel shortages in recent years. The additional gas from Egypt would support an increase in power generation of around 450MW, equivalent to four hours of electricity supply a day.

Renovation work on the Lebanese segment of the pipeline began in January, with the aim of having it ready for a potential start-up of gas flows by March. But lingering uncertainties over US sanctions on Syria and over financing have set things back.

Anybody working with Syria is subject to US sanctions under the so-called Caesar Act, which was enacted in 2019 to force Syrian president Bashar al-Assad to find a political solution to the country's more-than-decade long civil war.

"What I have assurances of from… US administration representatives is that they will work to get the final assurance from the [Biden] administration about the Caesar Act and the non-sanctionable status of the contracts," Fayad said.

The US State Department's senior adviser for energy security said in February that he hoped the funding for the project would be arranged by the World Bank "in a matter of weeks". But Fayad said the countries are still waiting on the funding, not just for this project but for another scheme agreed in January that would see Lebanon import electricity from Jordan, again through Syria.

Lebanon's energy ministry is working to secure 8-10 hours of power per day through these two deals to supply the country's main power provider Electricite du Liban. These should complement two agreements signed with Iraq last year — one to buy 1mn t/yr of heavy fuel oil and resell it for the products it needs, and a second to receive 500,000t (3.73mn bl) of gasoil.

By Nader Itayim