Lebanon, Egypt, Syria to build $1b gas pipeline

Lebanon, Egypt and Syria signed yesterday a memorandum for an agreement to build a regional gas pipeline worth $1 billion, Egyptian Oil Minister Sameh Fahmy said. The pipeline, which would market Egyptian and Syrian gas, would start near Arish in northern Egypt, run under the Mediterranean to Lebanon and then on to Turkey and Jordan via Syria.

The agreement stipulated the establishment of two companies to build and operate the pipeline within three to four years. Two firms will be set up by the three countries and the private sector to build and run the pipeline.

Al Sharq (Orient) company will build and operate a 400-kilometre sea pipeline, running outside Israeli territorial waters, and market Egyptian gas. The second firm, The Arab company, will build and operate a 400-kilometre land pipeline and market the Syrian and Egytian gas.

"We estimate the cost of the sea pipeline to be around $800 million and the land pipeline $200 million," Fahmy told a news conference after signing the agreement in the Lebanese capital. The deal was signed by Fahmy, Syrian Minister of Oil Mohammed Maher Jamal and Lebanon's Energy and Water Minister Mohammed Abdel Hamid Baydoun.

The Lebanese minister expected the project to start in six months. "The technical study of the first part of the pipeline has passed the initial stage and I do not think it would take more than six months to start," he said.

Financing the project would be discussed by the three countries and borrowing is one of the options to help the financing. "But of course borrowing would be within reasonable limits," Fahmy said. Baydoun said Lebanon would benefit from the project by cutting its costly energy bill with cheaper gas.

Lebanon will import 12 million cubic metres (mcm) of gas per day. Syria will provide three mcm per day and Egypt nine mcm per day in the first stage. Lebanon's needs might be met by Egypt alone at a later stage. "Fuel and gas cost us about $1 billion annually. We have great interest in moving from fuel to gas because that would save around 30 per cent of our bill," Baydoun said.