Iraq has made a deal with Lebanon to sell 1 million metric tons per year of heavy fuel in return for goods and services in a barter deal. That deal could help OPEC’s second-biggest producer reduce a surplus of fuel oil while stimulating cash-strapped Lebanon to obtain the commodity needed for power plants.
Iraq‘s oil ministry said that the fuel oil will be sold at international prices and will be paid in exchange for goods and services. Raymond Ghajar said in a press conference that Iraq fuel oil doesn’t meet the specifications of its power plants, Lebanon will resell the Iraq fuel. It uses the proceeds to buy spot cargoes of fuel that do meet its specifications, the outgoing energy of Lebanon.
He said that One million mt/year of fuel would meet around a third of Lebanon’s needs. Cash-strapped Lebanon is suffering from severe power outages due to the financial crisis gripping the country, which relies on imported oil products for electricity generation. He also added that the fuel would be used for electricity generation and was enough for four months. He said it was worth about $300 million to $400 million.
Lebanon, which has struggled to meet electricity demand at the best of times, has imposed increasingly long power cuts across the nation as fuel supplies have run short during the crisis that erupted in late 2019. Many Lebanese depend on private generators that use diesel, which is also in short supply. Hospitals said this week their generators were at risk of running out of fuel, putting critical patients at risk.