TFLE01: REQUEST FOR ASSISTANCE IN DELIVERING OIL

C O N F I D E N T I A L SECTION 01 OF 03 BEIRUT 002487 SIPDIS SIPDIS STATE FOR NEA/ELA STATE PASS USTR TREASURY FOR MNUGENT USDOC FOR 4250/ITA/MAC/OME NSC FOR ABRAMS/DORAN/SINGH E.O. 12958: DECL: 07/26/2016 TAGS: PGOV ECON EINV ETRD EPET LE SY SUBJECT: TFLE01: REQUEST FOR ASSISTANCE IN DELIVERING OIL AND FUEL SUPPLIES TO LEBANON Classified By: Ambassador Jeffrey Feltman; reasons 1.4 (b) and (d). ¶1. (U) This is an action message. Please see paragraphs 12 and 13. ¶2. BACKGROUND: Lebanon is currently facing a humanitarian crisis with more than 700,000 Lebanese now displaced from their homes. Humanitarian supplies are arriving and negotiations are being made for a humanitarian corridor to help deliver much needed supplies and food aid. If the Israeli air strikes and naval blockade continue, Lebanon will experience a power and fuel crisis as well; a fuel crisis would directly impact all humanitarian efforts including water pumping stations, sewage treatment, and the ability to transport relief convoys into affected areas. ¶3. The Embassy has talked with several representatives of the oil and power industries in order to get a better understanding of the situation on the ground, estimate remaining supplies of gasoline and diesel, and assess what means could be used to help remedy the situation. We discussed the current crisis with Maroun Chammas, the Deputy General Manager of MEDCO (Mediterranean Oil Shipping and Transport Co.); Bahij Abu Hamzeh, the President of the Syndicate of Petroleum Importers and the Chairman of COGECO (a major importer of gasoline and diesel oil with large storage facilities in Jiyeh); Youssef Issa, the Director General of the Zahrani Oil Installations; Joseph Tayeh, the Chairman of United Petroleum Company; and Walid Deghaily, the Director of Logistics at Electricite du Liban (EDL). The situation now stands as follows: GASOLINE -------------- ¶4. (C) Gasoline (primarily used for cars): According to Chammas and Tayeh there are roughly 30 million liters of gasoline in the storage facilities at Dora. There is an additional 10-15 million liters of gasoline stored at COGECO in Jiyeh; this facility is closed for security reasons at the moment because storage reservoirs at the nearby Jiyeh power station burned during Israeli air raids in southern Lebanon. According to Chammas and Tayeh there will be no more gasoline after 12-15 days. It takes 15-20 days to get a vessel of gasoline to Lebanon and no vessels are currently allowed to enter Lebanese waters. ¶5. (C) When Chammas and Hamze were asked about the possibility of humanitarian relief efforts using the closed COGECO facilities, they said that access to the COGECO terminal was not possible now. Company representatives are now trying to set up a road to reach the facilities. According to Hamze, there is a small access road from the Chouf that can be used by pick-up trucks. Hamze said that COGECO normally supplies the Chouf, Aley, and Metn. He stated that COGECO has large storage capacity that could reach up to 40,000 tons (approximately 50 million liters) of gasoline and diesel oil. Hamze said that he does not mind supplying southern Lebanon with gasoline and diesel oil, but only "under United Nations control." ¶6. (C) Lebanon normally uses four to five million liters of gasoline a day. Many stations were full or near full capacity when the hostilities began. Petrol stations that were not near full capacity demanded larger supplies than normal during the initial days of the crisis. Chammas told us nine days ago that supplies could run out as early as last weekend if the pace of demand continues. He told us on July 25 that after an initial surge in demand that was 2-3 times the normal demand, demand is now about half of normal demand--2 to 2.5 million liters of gasoline a day. Demand has gone down because there is very little activity and basically no demand in the South and Biqa Valley at the moment. Most stations in Central Beirut and areas of the North have sufficient supplies for the next two weeks. HIGH-SULFUR DIESEL OIL -------------- BEIRUT 00002487 002 OF 003 ¶7. (C) High-Sulfur Diesel Oil (This is used for generators, hospitals, bakeries, and industries. The Lebanese Armed Forces (LAF) and Internal Security Forces (ISF) also use this oil. The Lebanese call high-sulfur diesel oil red mazout.): High-sulfur diesel oil is imported by the GOL and stored in the Zahrani oil installations in the south and the Tripoli oil installations in the north. The Zahrani storage facilities, located five kilometers south of Sidon, received a large shipment of high-sulfur diesel oil just days before the hostilities broke out and now have 30 million liters. This is sufficient supply for more than a month under normal circumstances, but it is difficult to reach the facilities because of the location and the danger involved in reaching the location. Only four to five tanker trucks a day have been able to use the facilities during the fighting (on days with limited air strikes as many as ten tanker trucks have accessed the facilities). Tripoli currently has 15 million liters of high-sulfur diesel oil and the supply is currently being rationed. The closed COGECO facilities currently have 11 million liters of high-sulfur diesel oil. Priority is now given to hospitals, bakeries, and the armed forces for high-sulfur diesel oil. Under normal circumstances, Lebanon uses two million liters of high-sulfur diesel oil daily. Demand is now lower and Syrian trucks are smuggling roughly one million liters a day into stations in parts of northern Lebanon. Zahrani oil installations continue to supply the domestic market, mostly the Sidon area, with high-sulfur diesel oil. LOW-SULFUR DIESEL OIL -------------- ¶8. (C) Low-Sulfur Diesel Oil (primarily used for cars and trucks and called green mazout by the Lebanese): According to Chammas there are two million liters remaining of low-sulfur diesel oil in Dora. Tayeh said that there is a maximum of five million liters remaining in storage. The closed COGICO facilities in Jiyeh hold an estimated 11 million liters of diesel oil. Low-sulfur diesel oil can be used in place of high-sulfur diesel oil but generally is not used as a replacement because of the higher costs. FUEL OIL FOR POWER PLANTS -------------- ¶9. (C) We were told by Issa that fuel oil for power plants at Zouk will run out in 7-10 days and that there is no fuel oil available at Jiyeh because storage facilities burned. DIESEL FOR POWER PLANTS -------------- ¶10. (C) We were told by Issa that there is high-sulfur diesel oil for power plants at Zahrani and Deir Ammar for ten days with rationing of electricity. The Beirut area of Lebanon was the only area where electricity was not being rationed. Electricity is now being rationed in Beirut ¶11. (C) The Embassy is trying to get better information on electricity availability, but many of our contacts are reluctant to give out information because the Minister of Energy and Water Fneish has ordered GOL employees not to discuss supplies of fuel and diesel to generate electricity. More severe problems with electricity supplies would directly impact fuel supplies, as many people would then become dependent upo粑 generators. Everyone we talked to said Lebanon is now in a crisis period with regards to oil and power. Estimates varied from a week to two weeks until we would see dry pumps and storage facilities if the Israeli blockade continues. ¶12. (C) Action request for the petroleum sector: Based on suggestions from the petroleum sector on how humanitarian supplies could continue to flow uninterrupted, post requests the USG to engage with the Israelis in order to: --guarantee safe passage of sea tankers to unload gasoline BEIRUT 00002487 003 OF 003 and diesel oil in Dora (for five petroleum importing companies) and Jiyeh (COGECO) storage facilities. (Note: There are also storage facilities available in Amchit north of Beirut, but Chammas told us that these installations do not have the storage and delivery capacities of the Dora facilities.) --guarantee that the facilities in Dora and Jiyeh would not be shelled. --guarantee road access to trucks delivering gasoline and diesel oil to regions in the South. ¶13. (C) Action request for the electricity sector: Based on the urgent fuel needs of Electricite du Liban, post requests assistance with the Israelis on opening: --A sea line for diesel oil to the Zahrani power plant in southern Lebanon. --A sea line for diesel oil for the Deir Ammar power plant in northern Lebanon. --A sea line for fuel oil for the Zouk power station. ¶14. (C) Chammas, who has storage facilities in Dora, said he can get a sea tanker carrying roughly 25,000 tons of gasoline if he has guarantees about safe passage for the sea tanker and that the Dora installations will not be shelled. He told the Embassy that it takes at least 15 days to get a vessel to unload petroleum products. (Note: Other sources said it could take a week if there was a vessel available close to Lebanon. End Note.) ¶15. (C) An alternative to using sea tankers for gasoline and diesel supplies is to use the land route from Syria. Chammas told us that the Lebanese petroleum importing companies indirectly approached Syria on July 26 to provide Lebanon with unleaded gasoline. He said that 95 octane is readily available and 98 octane is available in small quantities. Chammas said that the Syrian decision to supply fuel to Lebanon would be a political decision and that Syria would take 48 hours to provide a response. Chammas does not favor using tanker trucks to transport gasoline and diesel oil from Syria, as tanker trucks can only carry between 20,000 and 30,000 liters and it would be chaotic to deliver to gas stations. COMMENT -------------- ¶16. (C) Petroleum products are, of course, strategic goods, and Israel's destruction of some fuel storage facilities and gas stations was probably intended to interrupt supply routes to Hizballah. But these products also must be factored into our humanitarian considerations. For example, diesel for the electricity plants is essential in order to keep the water pumping stations and sewage treatment plants running. Without water, without electricity, and without sewage treatment, the humanitarian conditions in Lebanon will worsen considerably. Rather than address the ensuing humanitarian problems, we hope the Israelis will be prepared to angage on facilitating fuel deliveries. Given the lead time needed to get fuel deliveries arranged, we hope that the Israelis give permission now, while there is still time to avert total black-outs. Siniora and his cabinet will be weakened considerably if the taps go dry and the lights go out. And if that happens, there is no quick and easy fix. So we hope for quick action. FELTMAN