Lebanon opens LNG import, supply tender

Lebanese Energy Minister Cesar Abi Khalil launched a tender for the import and supply of liquefied natural gas, in a significant step towards securing affordable fuel to power the ailing energy sector. The tender aims to create three LNG import terminals from the north to the south of the country, and to arrange gas supply contracts.

The primary aim is to facilitate the distribution of natural gas to Lebanon’s power stations, five of which were built to run on gas but have instead been using heavy fuel oil and diesel.

Abi Khalil said during a news conference held at the Energy Ministry that using natural gas would reduce fuel costs by roughly 40 percent, not to mention saving on maintenance costs, driving an increase in plant productivity, while also drastically decreasing pollution.

“[The power plants at] Deir Ammar [in Batroun] and Zahrani [in Nabatieh] are made to run on gas, but there is no gas. For 22 years they’ve been running on gas oil, which has cost the Lebanese state $27 billion,” he said.

Using natural gas, at current oil prices, would save the Lebanese state $460 million a year, he said.

Abi Khalil said that companies would have “roughly 120 days to study the conditions and submit a tender.” The liquefied natural gas import initiative has been on the table since 2010, but successive governments have bickered over formalities and failed to make headway.

The plan constitutes the “backbone” of a wider gas distribution project to pipelines that run across Lebanon, “first to power plants, then industry, and in the future, hopefully, to our cities,” the minister said.

, who is coordinating the project as within Lebanon Oil Installations, a government agency under the authority of, told The Daily Star an easily accessible LNG supply would also spark “awesome economic activity,” and attract investment to the country.

So how exactly do these terminals work? Zaher Sleiman head of the LNG unit at the Energy Ministry explains: “These are platforms, berthed offshore of the power plant area. A ship will come and feed these terminals with LNG, and the terminal will re-gasify the LNG, and send it, via pipeline, to the power plants.” He said these plants would be linked together by a network of pipelines in order to ensure “security of supply.”

More than one company or consortium could win the bidding given that the tender corresponds to three different sites: one in the northern part of Lebanon, another in the southern part, and a third to the North of Beirut.

Selaata will be the site of a future power plant, and at Deir Ammar and Zahrani, which already have existing power plants, an additional power plant in each location would be constructed.

Sleiman noted that U.S.-based consultancy agent Poten & Partners was acting as an “international observer,” on the tender.

He said the reliability and size of the companies involved would itself act as an accountability mechanism, and data related to the tender would be made public.

During an initial effort to gauge interest in the tender, 96 companies, making up 33 consortiums, had showed interest – a “positive sign,” according to Sleiman. 13 consortia were pre-qualified to participate in the tender.

 

Source: Daily Star