In recent years, Lebanon has been promised supplies of liquefied natural gas (LNG) from Egypt. This cheaper source of energy — a pressing need in light of the oil price spike, towering around $10 a barrel — is to be conveyed to Lebanon through the Pan-Arab Pipeline. At the end of February 2008, the ministers of oil and energy of Syria, Lebanon, Jordan, Egypt and Turkey met in Damascus to discuss the nitty-gritty details of this ambitious project.
The venture, which has been in the proverbial pipelines for some years now, will allow natural gas to be transported from Egypt to the Levant and later on possibly to Europe. When completed, it will have a total length of 1,200 km and carry an estimated cost of around $1 billion. In Lebanon, explained Sarkis Hlaiss, general manager of Lebanon Oil Installations, a subsidiary of the Ministry of Energy and Water, “The pipelines, with a $22 million price tag settled in full by the government, cover a distance of 32 kilometers from the Syrian border. Lebanon’s pipeline has been finished for some time now, but we were still waiting for Syria to finalize its portion of the network, estimated at about $200 million, ending in Deir Ammar in Lebanon.”
Following the Damascus meeting, Syria’s minister of oil and mineral resources Sufyan Allaw announced at a press conference that Syria had reached an agreement with Egypt to start supplying gas via the pipeline starting March 21, 2008, after completing necessary final tests.
In Lebanon, during the initial phase the network will be connected to the Deir Ammar station, which currently meets approximately a quarter of the country’s energy demand. However, Hlaiss added that both the Deir Ammar and the Zahrani power stations boast dual gas-oil and natural gas capacity, one being a replica of the other. The power stations had initially been destined to operate on LNG, with the possibility of temporarily switching to oil, during the cleaning of the turbines.
Expanding the gas network
Of course the opposite occurred: power stations are essentially running on gas-oil, which now is not only much more expensive than LNG but also dramatically decreases the life span of turbines, according to a government source. Now that the LNG pipeline is coming, “We are toying with the idea to further expand the current gas network while connecting it to the Zahrani power station,” Hlaiss said.
The pipeline, capable of carrying some 7 billion cubic meters of gas per year, starts in Port Said, on the Suez Canal, and then
Off-shore oil in Lebanon?
In recent months, the topic of possible oil fields off the Lebanese coast has come up in newspaper headlines. But because of the sensitivity of the topic, few facts are known. Speaking to Executive, a Lebanese government source said that up to 25 square kilometers of underwater surface have been surveyed in order to locate oil-bearing deposits, adding that “while preliminary results are excellent, one has to bear in mind that even when geological conditions are at their best, there is only a 15% chance for actual oil deposits.”
According to the source, the possible oil deposits are located at a distance of 32 kilometers away from the Lebanese shore, territorial waters stretching to 80 kilometers.
But for the time being, little more than the initial survey can be done. The exploratory drilling process, which is the only means to confirm the existence of oil deposits, would cost about $300 to $400 million and requires the participation of foreign oil companies. But as the source pointed out, “This participation can only be secured through a bidding process, after the promulgation of oil laws by the parliament, which has been closed for some time.”
runs north through the Aqaba and the Al-Rehab power station in Jordan, before ending in the Syrian city of Homs. The Lebanese government has agreed to buy some 0.6 billion cubic meters per year from Egypt but retains the option to increase the gas input to four times that amount if necessary, according to Hlaiss.
Egypt is also providing 1.7 billion cubic meters of LNG per year to Israel through the Arish-Ashkelon submarine gas pipeline, which was built and operated by the East Mediterranean Gas Company.
“Gas is an excellent source of energy, one beyond comparison with fuel, especially from an environmental perspective. Replacing fuel by gas for electricity production will allow the government to cut oil costs yearly by $200 million at the least, in light of the soaring international oil prices,” the manager pointed out. The government is also considering building another power station, in order to increase electrical production. However, the Memorandum of Understanding, which would ensure the transportation of gas from Egypt to Lebanon, remains to be finalized.
Beyond supplying the Levant with LNG, from Syria the Pan-
Arab gas pipeline will further extend to Europe. Originally, slain former prime minister Rafik Hariri, one of the pipelines architects, had envisioned linking Egypt to Europe with Lebanon acting as a platform for the gas pipeline network, a project which was abandoned at a later stage under pressure from other Arab countries. Today, it will be Syria that is the switchboard.
Still years away
However, sending LNG from Syria to Europe is still years away, as the pipeline going north to Turkish node in Kilis is yet to be put together. “Building of the Homs-Kilis pipeline section will only start in 2009, as the Syrian government is still going through the bidding process,” Hlaiss said.
Addressing rumors that Syria may block the transfer of liquid natural gas to Lebanon, to put political pressure on the Lebanese government in light of the tense relations between the two countries, Hlaiss is sanguine. “I do not believe it is in Syria’s best interest to block or stall the pipeline completion. I highly doubt they will resort to such an alternative.”
