Beirut-Baghdad, a partnership now under high tension! As Lebanon continues to face a chronic energy crisis, Finance and Energy Ministers Yassine Jaber and Joe Saddi embark on a joint visit to Iraq this Monday with the aim of salvaging the fuel oil supply agreement signed in 2021 – under which Baghdad supplies fuel to power Lebanese plants – and easing tensions linked to Lebanon’s failure to pay.
Since July 2021, Iraq has been delivering fuel oil to Lebanon under an initial contract worth $700 million, involving an exchange of oil for Lebanese products and services (medical, agricultural or consulting). This contract, renewed once for the same amount, brought the total to $1.4 billion.
But almost three years later, the situation is embarrassing: Lebanon has consumed all the fuel promised without having honored most of its financial commitments. By the end of 2024, only a few in-kind compensations had been delivered, amounting to an estimated $118 million out of a total due of nearly $2 billion, according to some sources.
The purpose of this visit to Baghdad is to relaunch dialogue with the Iraqi authorities and find a diplomatic solution to a situation that threatens one of Lebanon’s few remaining active energy agreements. In the absence of a rapid solution, the flow of fuel oil could be interrupted, with disastrous consequences for the country’s power grid.
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