Coral Oil CEO Oscar Yamin a key speaker at the American Overseas Security Advisory Council (OSAC)
BEIRUT: As Lebanon was slipping into a deep economic recession coupled with the continuing depletion of its foreign reserves, a fuel crisis started to emerge as one of the major threat to health care, telecommunications and water supply for millions of people in Lebanon, sparking rising tensions and insecurity.
Facing the mounting risk of a total collapse of the economy, “Coral Oil,” one of the major oil importers in Lebanon, stepped in to ensure not only strategic supply to gas stations across Lebanon, but equally as important to hospitals, telecommunications centers, bakeries, embassies, and many public institutions across Lebanon.
Mr. Oscar Yamin, CEO of Coral Oil and Liquigas, has gone to great lengths in numerous media outlets to explain the state of affairs in the oil sector today, keeping Lebanese citizens apprised of the latest developments in the field, daily challenges faced and measures taken to ensure gasoline and diesel deliveries during times of need.
Yet these are only Yamin’s latest efforts in the fuel crisis.
Recently, Oscar Yamin, in recognition of the leading role Coral played during the turbulence Lebanon was passing through, was invited by the US Embassy in Beirut to present the state of the Lebanese Petroleum Sector in a conference organized by the Overseas Security Advisory Council (OSAC), which promotes security cooperation between American private-sector interests worldwide and the US State Department.
Oscar Yamin, key speaker at OSAC, explained efforts and risks taken to lift Lebanon from a total blackout and the ongoing fuel crisis in the country, in addition to providing his opinion on the latest energy sector crisis during the conference, held at the Yarzeh Officers Club. This gathering was held in the presence of the Lebanese Armed Forces Commander, the General Director of the Internal Security Forces as well as other local and foreign security and safety entities, and was also attended, whether in person or virtually, by representatives of foreign embassies in Lebanon, an audience from the Pentagon and select members of the US Senate.
Over the past two years, Lebanon witnessed a fuel crisis whereby EDL, due to lack of liquidity after the financial repercussions of the 2019 revolution, was only able to purchase some of the fuel and diesel quantities needed to generate electricity, which resulted in severe electricity shortages across the country. This situation impacted the productivity of the public and private entities and led to increased reliance on private gerenators to provide the needed electricity for the proper functioning of public and private entities, and for Lebanese households.
Furthermore, following events that unfolded in October of 2019, the financing operations of various sectors were compromised when the Lebanese government was downgraded by S&P, Fitch, and Moody’s, putting Lebanon on par with Venezuela. Delivery schedules were disrupted because of the credit crisis, and private importing companies’ strategic stock decreased from a month to a two- to three-day supply.
Diesel and gasoline import dynamics changed when compared to previous years as some importing companies did not want to expose themselves to increased monetary risk due to a lack of trust in the Lebanese financial system. Thus, they reduced the quantities imported or, in some minor cases, even halted their activities altogether.
Energy Sector Crisis
To make matters worse, the Beirut Port explosion on August 4, 2020, created additional hurdles on the energy sector. Government resignations, additional power cuts from EDL because of insufficient fuel imports, an international oil price increase, and the decline in the number of operational gas stations resulted in long queues, chaos and the emergence of the black market.
Essential sectors such as hospitals, bakeries, medical factories, supermarkets, telecom, schools and universities were unable to secure either diesel for their generators or gasoline for their employees at official rates, resulting in a reduction in quality of services and in some cases halting production and shutting off facilities.
Since the summer of 2021, many decisions advised by Oscar Yamin have been made to reduce the effects of the energy crisis on Lebanese citizens. The Lebanese government lifted all subsidies on diesel oil, and diesel purchases are now paid in USD. This decision affected importation as it was no longer linked to any pre-approvals or any governmental institution. The private sector is now easily importing diesel with a marked improvement in availability.
Gasoline prices, on the other hand, remain in Lebanese pounds but a new price structure was released, and is now based on LBP/USD exchange rate almost equal to the black-market rate. This pricing structure, is no longer weekly, but is adjusted throughout the week to better reflect fluctuations in the exchange rate as well as in the international oil price, thus easing the concerns of importers and gas station owners, stabilizing the market and curtailing queues at gas stations.
With respect to fuel oil, we notice that the government is contemplating numerous options to alleviate the heavy impact on its finances and on citizens, said Oscar Oscar Yamin, the key speaker at the conference. A reform plan for the energy sector is in preparation, incentives for the use of renewable energy to generate electricity are needed, and in the medium to long term there should be reliance on LNG for generating electricity. It should be noted that Coral does not deal in the importation of fuel oil to Lebanon, whether to EDL or to any other party, and thus it has no part in any decisions taken in regards to this specific product.
(*) Oscar Yamin is the chairman of The Coral Oil Company Limited. Coral is a UK-based company incorporated in 1925. Registering its Lebanese branch in 1926, it was among the first companies to have serviced the Lebanese energy market, whereby it operated commercially under Shell until 1976. Since then, the company has been known as “THE CORAL OIL COMPANY LIMITED.” In 2016, Coral was fully acquired by the Alfred Yamin family as part of the Yamin family’s expansion into the petrochemical industry.