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Barcelona — Lebanon has vowed to make natural gas its primary energy source in the power sector, the country's energy minister Cesar Abi Khalil said, with plans to install three floating LNG import facilities in the short term and a new offshore exploration round set for early 2019 to develop domestic gas.

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Speaking at the Gastech conference in Barcelona, Abi Khalil said the government has adopted a policy for gas to account for two thirds of Lebanon's power mix by 2030 from effectively zero at present.

Estimates vary, but Lebanon is expected to have gas demand of 4-5 Bcm/year by the end of the next decade as it prioritizes gas in the power sector alongside renewables.

"We are at a crossroads -- we are a nascent province in gas but domestic production can help us meet our target of gasifying our energy sector," Abi Khalil said.

Beirut's plan in the short term is to import LNG for use in the power sector as it moves away from fuel oil-fired power generation.

It has launched a tender for companies to provide the three FSRUs -- to be moored at Beddawi (near Tripoli), Selaata (near Beirut) and Zahrani (near Tyre).

Some 13 companies or consortiums were shortlisted with the pre-qualification phase set to end on October 1 ahead of the competitive bidding process.

The winning bidder is expected to be announced in early 2019, with operations set to begin in 2020.

"We are planning to bring three FSRUs [to Lebanon] to fire coastal power plants on gas," Abi Khalil said.

"This should bridge the gap from now until we have our own indigenous gas," he said.

There has already been interest from suppliers in sending LNG to Lebanon once it has its FSRUs up and running, including Qatar and the US.

Neil Chatterjee, commissioner at the US Federal Energy Regulatory Commission (FERC), said at the Gastech conference that the US would be ready to send US LNG to Lebanon.

Lebanon's power demand is growing quickly and there are plans to build a fleet of CCGTs along its coast. Demand is being driven in part by the influx of refugees from Syria into Lebanon in recent years due to the long-running civil war in its neighboring country.

Abi Khalil said Lebanon had taken in 1.5 million refugees from Syria -- a significant addition to its 6 million population.

LICENSING ROUND

Abi Khalil said Lebanon was preparing a second bidding round at the start of 2019, having awarded two blocks this year to a consortium of France's Total, Russia's Novatek and Italy's Eni after its first round.

"We have offshore gas and this is creating new opportunities for investors, foreign friends and partners," he said.

"We have formed our legal framework for regulatory issues with the companies so it is mutually beneficial."

The consortium of Total, Novatek and Eni is set to move ahead with exploration offshore Lebanon with a first well in 2019 following the signing with Beirut of exploration and production agreements (EPAs) for the two blocks -- 4 and 9 -- earlier this year.

The agreements provide for the drilling of at least one well per block in the first three years, with the consortium's priority to drill the first well in 2019.

Lebanon approved the award of the two offshore blocks in its Exclusive Economic Zone to the consortium in December 2017 as it looks to develop its vast gas resources, thought to be as high as 100 Tcf (2.8 trillion cu m).

"The bid rounds are in line with our strategy of gasification," Abi Khalil said.

He said Lebanon's energy strategy was based on two pillars -- gas and renewables.

In 2009, the government pledged to have renewables account for 12% of its energy production by 2020. But, Abi Khalil said, this has "already been achieved."

He said the country had signed the first power purchase agreements with the private sector for wind generation, and there were ongoing tenders for solar farms with storage.

"All this is happening so the energy mix is as balanced as possible to ensure sustainability."

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Jonathan Fox, jonathan.fox@spglobal.com