Deadline for gas terminals extended by 90 days

The Energy Ministry extended by 90 days a May 20th deadline for reviewing and selecting companies to build floating liquified natural gas (LNG) terminals that would allow Lebanon’s power plants to be run on the cheap, efficient fuel.

Zaher Sleiman, an advisor to the Energy Minister who has been overseeing the project, told LOGI that the extension had been made because the Lebanese government was busy working on the 2019 draft state budget. “To go ahead, we need the government to read our evaluation report, but ministers are busy with budgeting,” he said, speaking before the Budget was endorsed.

The terminals, known as Floating Storage and Regasification Units (FSRUs), would supply Lebanon’s power plants with cheaper and more environmentally friendly natural gas than the heavy fuel oil currently being used.

This would help to slash Lebanon’s yearly electricity deficit - which stands at about $2 billion a year depending on the price of fuel - and reduce air pollution.  

The government has called for three FSRUs to be built, off the coasts of northern Deir Ammar and Selaata, and southern Zahrani respectively.

In a 2018 policy brief, the American University of Beirut’s Issam Fares Institute for Public Policy and International Affairs noted that awarding three FSRU’s contained “a risk that the large capacity will be underutilized and that the overall project efficiency and competitiveness will be low, which might imply a higher cost on the offtakers.”

“This needs to carefully considered, and such plans for large FSRU capacity have to take into account that potential indigenous production might soon be on stream,” it said.

Six companies and consortiums have pre-qualified, after bids were submitted in November. Those who are awarded contracts will be responsible for both importing LNG and building the FSRUs.

Sleiman said that the Energy Ministry was completing its technical evaluations of the bids presented, after which it would assess their financials. They will then write up a report, which will include recommendations by international consultancy firm Poten and Partners, and refer it to Cabinet.

Sleiman said all documents that do not contain confidential information could be made public, in accordance with Lebanon’s Right of Access to Information Law. “We want to do it the right way, and with the maximum transparency,” he said.


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