Algeria to supply Lebanon with fuel after shortage causes 'total blackout'

Algeria will supply Lebanon with fuel after a shortage at the country's only remaining operational power plant prompted a widescale blackout, a statement from Algeria Press Service said late Aug. 18.

Lebanon's state utility Electricité du Liban announced Aug. 17 that the Zahrani power plant had exhausted its fuel oil supply.

EDL said in a statement the depletion of fuel oil supplies led to a "total blackout" across the country including the Beirut airport, ports, water pumps, sewage systems and prisons.

Algerian President Abdelmadjid Tebboune told Lebanese caretaker Prime Minister Najib Mikati that "Lebanon will be immediately supplied with quantities of oil to help it overcome the current crisis in the electricity sector," according to a statement carried by Lebanon's National News Agency.

It's unclear how Lebanon, which is strapped for cash, will pay for the Algerian fuel oil. Previous swap deals with Iraq for fuel have involved complicated compensation mechanisms where Iraq provides Lebanon with fuel in exchange for services provided to Iraqi citizens. Lebanon's power stations cannot process the heavy Iraqi fuel, and Lebanon must sell Iraq's fuel to purchase fuel it can use.

Lebanon has long suffered rolling blackouts that have been made worse by the country's economic crisis since 2019. Reliant on imports paid for in US dollars, the country has struggled to buy basic goods, including fuel oil, as its currency has lost around 90% of its value against the US dollar.

Algeria's light, sweet Saharan Blend has an API gravity of 43.19 and contains 0.1% sulfur, according to the Platts Periodic Table of Oil. Platts, part of S&P Global Commodity Insights, assessed Saharan Blend FOB Algeria at $80.17/b on Aug. 16.

In 2022, Algeria sent $103 million in petroleum gas to Lebanon, according to the Observatory of Economic Complexity, a trade tracking company.

Naphtha, LPG and fuel oil account for the bulk of Algeria's oil product exports, according to Commodity Insights research.

"Oil product net exports are expected to drop over the long term, as demand grows and local production declines, going from 480,000 b/d in 2023 to 341,500 b/d by 2050," according to Commodity Insights research.