Lebanon's Energy Minister Walid Fayad stated that Baghdad has agreed to raise the supply of heavy fuel oil under an existing deal by 50%, reaching 1.5 million metric tons this year. This statement was confirmed by the Iraqi prime minister's office, according to the Financial Post.
Additionally, Iraq and Lebanon have reached a commercial agreement for Iraq to provide its neighbor with 2 million metric tons of crude oil annually. Fayad confirmed this agreement, which was also acknowledged by Baghdad.
The initial heavy fuel oil deal, established in July 2021, involves Iraq supplying fuel to the Lebanese government in exchange for services, including healthcare for Iraqi citizens. Lebanon then exchanges the heavy fuel oil for gas oil, which can be utilized at power stations that have been operating at limited capacity due to financial constraints.
Fayad explained that the 2 million metric tons of crude oil in the commercial deal would also be subject to an exchange. He stated that the deal includes a deferred payment mechanism for six months from the date of receipt, without any financial interests, considering competitive international prices.
Earlier this month, Fayad informed reporters that these agreements were part of Lebanon's efforts to improve power supply. Since July 2021, Lebanon has been importing heavy fuel oil from Iraq to generate electricity, providing around four hours of power daily based on the agreement between the two countries.
Lebanon's financial crisis, coupled with a shortage of foreign reserves necessary for importing gas oil, has led to power rationing of approximately 20 hours per day. As a result, most individuals have relied on private generators and solar energy.