Just a reminder that when I first got the inside tip about the info am about to publish on #Lebanon's FSRU bids & the scandals attached to it the former cabinet was still in power
I had given the tip to an international newswire but the reporter was too lazy to write it, so I did
I had given the tip to an international newswire but the reporter was too lazy to write it, so I did
to cut costs & generate 24/7 electricity as per the country’s Power Plan that was endorsed last April.
The consortium led by #QatarPetroleum Int Ltd & Italy’s #Eni used elusive wording in its tender offer when it bid for the #energy contract, according to legal experts.
The consortium led by #QatarPetroleum Int Ltd & Italy’s #Eni used elusive wording in its tender offer when it bid for the #energy contract, according to legal experts.
consortiums to be awarded the project.
Moreover, the tender book also allowed the bidders to submit alternative offers to allow room for lower costs and possibly more feasible solutions, something which fiscally and economically challenged Lebanon needs.
Moreover, the tender book also allowed the bidders to submit alternative offers to allow room for lower costs and possibly more feasible solutions, something which fiscally and economically challenged Lebanon needs.
A Legal Slip: The Devil Lies in the Details
The Qatari-led consortium gave a great offer on paper; that is until one gets past the pricing and into the legal wording of the offer itself.
As per documents received from credible sources,
The Qatari-led consortium gave a great offer on paper; that is until one gets past the pricing and into the legal wording of the offer itself.
As per documents received from credible sources,
#QatarPetroleum and #Eni’s offer gave the consortium the sole right to reevaluate, and possibly raise its charges going forward. This means the government’s no say on the matter.
QP’s bid noted that the prices may be reviewed at a later stage without noting reviewed by who
QP’s bid noted that the prices may be reviewed at a later stage without noting reviewed by who
at a later stage, thus eliminating the government’s right to be part of such a process.
It also fails to note any mechanism for reviewing the prices and which index will be used in case of price fluctuation.
Speaking to a number of lawyers —some of whom had given consultations
It also fails to note any mechanism for reviewing the prices and which index will be used in case of price fluctuation.
Speaking to a number of lawyers —some of whom had given consultations
on similar projects, or had advised energy companies and governments—& they all pointed out that without setting in the contract the mechanism of how the prices will be reviewed & by who, then it constitutes a serious slip.
Failing to include the government on the decision making or approval of the cost estimates, could prove costly for the government process.
When it comes to reviewing the cost, without stating that it can only be reviewed down,
When it comes to reviewing the cost, without stating that it can only be reviewed down,
and by excluding the government from such a critical decision, this puts the government at risk of having to pay additional costs that it can neither audit nor review.
Lebanese Labor Minister Camille Abu Suleiman (then at the time when I conducted the investigation),
Lebanese Labor Minister Camille Abu Suleiman (then at the time when I conducted the investigation),
who is also part of the ministerial energy committee, said that the energy committee is yet to see the full bids, despite asking for them.
A request was put through by the committee over two weeks ago to obtain and review the bids. (obviously this was prior to the riots&new gov)
A request was put through by the committee over two weeks ago to obtain and review the bids. (obviously this was prior to the riots&new gov)
“We have asked for for the full bids or a legal summary of the terms and conditions,” he said, to be able to make decision that would be in Lebanon’s best interest.
As per the terms in the tender’s book, one party can be authorized on all three parts of the project.
As per the terms in the tender’s book, one party can be authorized on all three parts of the project.
It also allows for dividing the work on more than one bidder.
According to Abu Suleiman, “as a matter of logic, authorizing one consortium to do all the parts of the project, adds additional risks.”
According to Abu Suleiman, “as a matter of logic, authorizing one consortium to do all the parts of the project, adds additional risks.”
He explained that in case of a monopoly, and should a conflict arise between the consortium and the government, then the monopoly gives the consortium an upper hand in controlling and even derailing work on all three parts of the LNG import terminals project in Lebanon.
Thus, developing the integrated LNG import supply chain to provide natural gas to current and future power plants in Lebanon would be in jeopardy.
Two other members of the government’s energy committee, whom I spoke with back then on the condition of anonymity, agreed with
Two other members of the government’s energy committee, whom I spoke with back then on the condition of anonymity, agreed with
Abu Suleiman, saying it is best to award the works to multiple winning bidders, than to have a monopoly.
The works include developing 3 offshore LNG imports terminals in Zahrani, Beddawi and Salaata, as well as the #LNG imports, and pipeline development at the designated sites.
The works include developing 3 offshore LNG imports terminals in Zahrani, Beddawi and Salaata, as well as the #LNG imports, and pipeline development at the designated sites.
Not the Cheapest Offer!
However, at a time when Lebanon is trying to control spending and fight its economic demons, one would expect the government to look for cutting costs without cutting back on quality.
And as the international community grows wary awaiting Lebanese
However, at a time when Lebanon is trying to control spending and fight its economic demons, one would expect the government to look for cutting costs without cutting back on quality.
And as the international community grows wary awaiting Lebanese
politicians to show a serious intent towards economic and financial reform before lending the country money, the alternative offers presented by some consortiums in the project could prove beneficial.
When the MoEW unfolded the offers two months back, the consortium
When the MoEW unfolded the offers two months back, the consortium
led by #QatarPetroleum appeared to have bid the best priced offer.
Or so it seemed.
The consortium had in fact fulfilled the best pricing as per the tender book’s primary conditions,but its offer falls behind when considering alternative bids offered by three other consortiums.
Or so it seemed.
The consortium had in fact fulfilled the best pricing as per the tender book’s primary conditions,but its offer falls behind when considering alternative bids offered by three other consortiums.
As per the offers of several consortiums, which I had the pleasure of viewing via one trusted source, some of the six bidding consortiums not only provided bids that met all the tender’s conditions, but also gave better alternative offers with much cheaper solutions.
The alternative offers actually reduce costs up to 20% from the base case standing at 10.8$/mmbtu.
As per energy sources, the best-priced alternative bid was by #Total-led consortium, which saves the government nearly $300 million in annual costs, or up to $3billion in10 years.
As per energy sources, the best-priced alternative bid was by #Total-led consortium, which saves the government nearly $300 million in annual costs, or up to $3billion in10 years.
Other consortiums that trailed Total with their bids, also offered a better prices as an alternative, than the QP- #Eni consortium.
This includes a consortium grouping BW, Vitol, Butec, AlMabani, and Rosneft.
The alternatives look at eliminating one of the 3 FSRUs (Selaata)
This includes a consortium grouping BW, Vitol, Butec, AlMabani, and Rosneft.
The alternatives look at eliminating one of the 3 FSRUs (Selaata)
with experts deeming it useless, as the country doesn’t need more than one or two FSRUs.
Even MoEW’s consultant on the tender book “Poten and Partners" had raised the point and registered its reservations on that matter two years back when the tender book was being prepared.
Even MoEW’s consultant on the tender book “Poten and Partners" had raised the point and registered its reservations on that matter two years back when the tender book was being prepared.
Eliminating an #LNG pipeline from Beddawi to Zouk power plant due it technical impossibility would also reduce the costs significantly.
The land pipeline from Beddawi to Zouk is technically impossible as it needs to use the railway route & passes through heavily congested
The land pipeline from Beddawi to Zouk is technically impossible as it needs to use the railway route & passes through heavily congested
residential and commercial areas.
Any leak could lead to catastrophic results.
Additionally it’s very costly and uneconomical for the government to repossess the land and clear it all the way, at a time when it is looking for cutting costs.
The Zouk power plant is burning
Any leak could lead to catastrophic results.
Additionally it’s very costly and uneconomical for the government to repossess the land and clear it all the way, at a time when it is looking for cutting costs.
The Zouk power plant is burning
fuel which is cheaper than diesel oil, and its fuel demand is far too smaller than to justify a whole pipeline connection anyway, according to the energy sources.
Both power plants at Beddawi and Zahrani, are running on much costlier diesel oil, despite the fact that they can
Both power plants at Beddawi and Zahrani, are running on much costlier diesel oil, despite the fact that they can
operate on gas and have the infrastructure set and ready for that.
Lebanon currently pays around $330 million to $350 million per year on diesel per plant (Beddawi & Zahrani).
Should Lebanon move to gas, it would save up anywhere between $180 to $200 million/year per power plant.
Lebanon currently pays around $330 million to $350 million per year on diesel per plant (Beddawi & Zahrani).
Should Lebanon move to gas, it would save up anywhere between $180 to $200 million/year per power plant.
The cheapest solution for Lebanon would be for the cabinet to allow the two current power plants to start running on gas (Beddawi and Zahrani) immediately.
Political Pressure?
3 months following the opening of the bids, the government remains at deadlock (7 months ago today)
Political Pressure?
3 months following the opening of the bids, the government remains at deadlock (7 months ago today)
when it comes to awarding the contract. It is still indecisive.
(Please note that the new government under Prime Minister @Hassan_B_Diab formed a new committee to look into contracting #QatarPetroleum for the project provided QP & Eni lower the prices a bit. The negotiations
(Please note that the new government under Prime Minister @Hassan_B_Diab formed a new committee to look into contracting #QatarPetroleum for the project provided QP & Eni lower the prices a bit. The negotiations
are ongoing & Diab insists, along with the new MoEW Raymond Ghajar on awarding the contract to QP disregarding cheaper alternatives despite the fact that the tender booklet asked for such offers to be sent)
It is still unclear as to why the new PM insists on the costlier option.
It is still unclear as to why the new PM insists on the costlier option.
Government sources confirmed back then (7 months ago when this investigation was conducted) that the #Qatari-led bid was being considered by “a significant number of ministers” within the cabinet’s energy committee.
The case remains true today, with 2 ministers as exceptions.
The case remains true today, with 2 ministers as exceptions.
The question remains: Knowing the risks of awarding the contract to Qatar Petroleum-led consortium, why would some ministers lean towards that option, costing the government money and legal headache?
While some argue political bickering and alliances, others believe that
While some argue political bickering and alliances, others believe that
it has to do with the recent visits by a #Qatari Minister and Qatari ambassador to the Lebanese Prime Minister (back then it was Saad Hariri) and some other cabinet members.
Meanwhile, rumors that the cabinet may cancel the whole FSRU/LNG project, were refuted by my sources.
Meanwhile, rumors that the cabinet may cancel the whole FSRU/LNG project, were refuted by my sources.
“We have been meeting regularly to discuss the best options and there is no intention of canceling anything. It is normal to take our time on the matter because the project is critical and we do not wish to rush things,” one energy committee’s member told me back then.
On the side, it would be worth noting that
1- Lebanon's already fragile political ties with #SaudiArabia and the #UAE may see further strain once the EQatar-led consortium nails the FSRU contract.
2- It is best to divide the contract on a number of companies (QP consortium plus
1- Lebanon's already fragile political ties with #SaudiArabia and the #UAE may see further strain once the EQatar-led consortium nails the FSRU contract.
2- It is best to divide the contract on a number of companies (QP consortium plus
plus one or 2 of the companies which gave the top alternative offers), especially that the tender booklet allowed for alternative offers to be presented. So it is legal.
3- Lebanon cannot sustain bleeding dollars especially that it has officially defaulted and with a global
3- Lebanon cannot sustain bleeding dollars especially that it has officially defaulted and with a global
economic meltdown impacting it due to the Covid-19 situation.
So, the additional option which would save the country over $200 million would be to discard the 3rd FSRU in Selaata (it shouldn’t cause any problem as it is a populous decision since the majority of the population
So, the additional option which would save the country over $200 million would be to discard the 3rd FSRU in Selaata (it shouldn’t cause any problem as it is a populous decision since the majority of the population
is against it anyway)
By dividing the work among 3 companies and not just one, work can start on the Bedawi and Zahrani FSRUs, so when they are complete, then there'd be no use for the Selaata FSRU.
However, the non-populous decision by politicians to have 3 FSRUs is set.
By dividing the work among 3 companies and not just one, work can start on the Bedawi and Zahrani FSRUs, so when they are complete, then there'd be no use for the Selaata FSRU.
However, the non-populous decision by politicians to have 3 FSRUs is set.
The 3rd additional option, is that we can also save up to $480 million a year by cutting our fuel oil imports and importing gas for the two power plants in Beddawi & Zahrani.
At the time being, their infrastructure is ready to use gas. Anyone who says that there are no FSRUs
At the time being, their infrastructure is ready to use gas. Anyone who says that there are no FSRUs
to operate,are just trying to find an excuse given by the fuel oil /diesel mafia.
There are gas tankers worldwide that come with an already installed FSRU on their surface, hence the ships which would import gas for Lebanon can provide that service until we build permanent FSRUs.
There are gas tankers worldwide that come with an already installed FSRU on their surface, hence the ships which would import gas for Lebanon can provide that service until we build permanent FSRUs.
and the whole ops would still be cheaper than throwing our hard currency abroad in exchange of importing the much more expensive fuel oil; not to forget that the gas option is cleaner for the environment., and the issue would significantly reduce our trade balance's deficit.
@Rattibha لو سمحت، ممكن أغلبك تجمع الثريد
