Lebanon-Iraq oil deal: Cash payments replace barter amid debt woes
Shafaq News/Lebanon has reached an agreement with Iraq to renew its oil import contract,switching from fuel oil to crude oil, as the country grapples with a prolongedfinancial crisis and struggles to sustain power generation.
A Lebanesegovernment source told local media that a delegation, including the Chairman ofthe Investment Promotion Authority in Lebanon (IDAL), Mazen Souaid, andBrigadier General Hassan Choqair, traveled to Baghdad and secured a deal toimport about two million tons of crude oil. The new agreement modifiesLebanon’s payment terms, a key sticking point in negotiations.
“The talkswere tough because Iraq needed assurances that Lebanon would meet its paymentobligations after repeated delays despite previous lenient terms,” the sourcesaid. Under the revised agreement, Lebanon will make immediate cash payments inUS dollars via direct transfers from the central bank, a departure from earliercontracts where payments were made through services offered to Iraqis inLebanon. The two sides also discussed clearing Lebanon’s outstanding debt of $2billion through a bilateral payment platform.
Despiteprevious arrangements allowing Lebanon to pay for fuel in localcurrency—deposited into an account for the Iraqi government at Lebanon’scentral bank—the country has accumulated significant arrears. By the end of2024, Lebanon had paid just $118 million of its $2 billion debt.
