VZCZCXRO2749
PP RUEHAG RUEHBC RUEHDE RUEHKUK
DE RUEHLB #2487/01 2081207
ZNY CCCCC ZZH
P 271207Z JUL 06
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC PRIORITY 4810
INFO RUEHEE/ARAB LEAGUE COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/USCENTCOM SPECIAL HANDLIN MACDILL AFB FL PRIORITY

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