Iran agrees supply of 600,000t of fuel oil to Lebanon

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Iran has agreed to supply Lebanon with 600,000t (3.87mn bl) of fuel oil over a five-month period to help ease a worsening fuel shortage that has triggered rolling power cuts across the country.

The deal was struck today following a series of meetings between delegations from the countries’ respective energy ministries, according to a Lebanon-based source with knowledge of the talks. The Iranian fuel oil is being supplied to Lebanon as a “grant”, the source said. The first supplies could arrive in a few weeks once the two ministries formalise the arrangement.

The fuel oil Iran has agreed to supply will have a sulphur content of above 1pc, the source said, which is not suited to Lebanese power stations. According to tenders issued by Lebanon’s energy ministry, imported fuel oil cargoes should have a maximum sulphur content of 1pc.

This means Lebanon will probably need to swap the Iranian fuel oil for product with specifications better suited to its needs. It has engaged in similar schemes before, most recently last year when it struck a deal with Iraq to broker 1m t/yr of Iraqi fuel oil in exchange for products it required.

Lebanon also asked Iran for gasoil but was turned down as Tehran said it does not have excess product to export, the source said.

Many of Lebanon’s power plants were originally configured to run on gas but have been running on heavy fuel oil and gasoil for more than 20 years. Chronic fuel shortages since the end of the Lebanese civil war in 1990 have resulted in daily power cuts for much of the last three decades.

Lebanon’s current financial crisis, which began in the second half of 2019 and has pushed around three-quarters of the population below the poverty line, has further crippled its power sector as a shortage of foreign currency made it increasingly difficult for Lebanon to secure fuel and other essential goods.

Lebanon has previously received several shipments of gasoil from Iran via Syria, but those were brokered by Lebanese Islamist group Hezbollah, which has strong ties with Tehran. This would be the first supply of Iranian product to Lebanon brokered by the Lebanese state