Yemen to export LNG within weeks

 

The Yemeni government announced that the Yemen Liquefied Natural Gas (LNG) project will commence gas exports from Balhaf in the coming few weeks. Despite past uncertainty on the completion of the project, internal sources confirm to PC that the project is almost completed and about to commence operations.

 

Deputy Prime-minister Dares said that the LNG project is about to be completed soon, noting that it would be the largest source of income for Yemen in the coming twenty years.

 

Yemen's revenues will reach between US $ 30 to 50 billion in the twenty next years.

 

The LNG project depends on gas produced in Block No. 18 in the Marib governorate, where the gas reserves reach 9.15 trillion cubic feet (TFC) in addition to 0.7 TCF of probable reserves.

 

The project comprises new and existing upstream gas processing facilities including a 25 km, 20-inch transfer line linking the two gas processing units in the gas fields of Block 18 in Marib; a 320km, 38-inch new main pipeline, which will connect the gas processing facilities to the new liquefaction facilities in Balhaf, and a spur line to transport domestic gas to the Ma'abar area of Dammar governorate.

 

The project is providing around 700 permanent posts and an additional 700 for contracted service providers over the lifespan of the project.

 

The French Total company is the project leader of the US $ 4 billion project with about 39.62 percent, Yemen Gas Company (YGC) has a 16.73 percent share, Hunt with 17.22 percent, South Korean Corporation (SKC) with about 9.55 percent, Korea Gas Corporation (Kogas) 6.00 percent, Hyundai Corporation 5.88 percent and the General Authority for Social Security and Pensions (GASSP) with about 5.00 percent.

 

On 30 July 2009, it was announced that the first shipment will be delayed by one month, most likely in the fourth quarter of 2009, due to what has been described as “minor technical problems”.

 

The figure below shows the make-up of the project.

 

 

 

Analysis and forecast (↓ decreasing risk)

 

The potential income that will be generated by the LNG project will be a life-saver for the Yemeni economy. It is estimated that about 70% of the government’s income is from the rapidly dwindling oil revenues and this figure is set to reduce dramatically, first due to reducing oil prices and secondly as the oil reserves dry up, by 2015 according to most estimates. Oil revenue is expected to be about US $ 1.2 billion this year.

 

The income that will be generated from the LNG project will contribute by between 7 to 11 % of the country’s GDP. With the country struggling to attract investment in tourism and agriculture due to ongoing instability, income from the project will help prevent a complete breakdown of the government’s finances in the next few years. It is unlikely that the project will improve the current economic situation, but will nonetheless prevent economic collapse.

 

 

Dozens killed in South Yemen and Sa’ada clashes as the southern movement intensifies activities, ethnic violence erupts in north and army clashes with Al Qaeda; Southern leader ordered to leave country

 

Fighting has almost simultaneously erupted in various parts of Yemen, killing and wounding dozens of soldiers, rebel fighters and civilians.

 

Ten people have been killed in clashes over control of a north Yemen mosque between Shiite Houthi rebels and militants from the country’s main Sunni opposition party Al Islah, both groups said.

 

In unrelated incidents, the Shiite rebels have killed seven soldiers in attacks in north Yemen, according to military sources. An unspecified number of soldiers were also wounded and captured in the violence which erupted in the mountainous rebel stronghold of Sa'ada.

Also in unrelated incidents, but almost on the same day as the Sa’ada fighting, at least 12 people were killed and 20 injured when angry demonstrators shouting secessionist slogans clashed with security forces in Abyan, a town in the former South  Yemen, according to officials and local sources. The government said the demonstrators had been trying to storm a local prison in a bid to free tens of detainees. More soldiers were reported killed in southern fighting on 27 July.

 

The Yemeni government reportedly ordered the prominent leader of the southern seperatist movement, Tarek Al Fadhli to leave Yemen within days He said he will not leave.

 

On 30 July 2009, three soldiers were killed by Al Qaeda militants in the north of the country.

 

20 July – 28 July -30 July 2009

 

 

Analysis and forecast (↑ increasing risk)

 

Tensions have been flaring up sporadically in both the south and north of the country. The northern Houthi rebels have a very fragile ceasefire with the government after fighting five civil wars, the last of which ended two years ago. The ethnic violence that erupted between the Houthis and local Sunnis, was unusual and if not held at bay, may cause the region to descend into further anarchy.

 

However, the most serious development was the persistent intensity of the clashes in the south. The anger amongst the southerners has been increasing gradually, with demands for greater equality. As those demands were not being answered by the central government, more and more southerners are being recruited to the camp calling for complete secession. The central government is extremely unlikely going to accept such demands and both sides will likely resort to fighting.

 

The return of former southern leader Ali Salem Al Beidh to the fore of politics, once again calling for secession, from his exile, has given his supporters a boost to their cause. The return of Al Beidh has been a result of an internal dispute within the southern opposition parties, whom he reportedly accused of not sufficiently supporting his cause.

 

The central government has two choices: either to offer the southerners immediate complete integration opportunities, including in the armed forces or continue fighting in this rapidly intensifying conflict, which presents serious threat to the ability of the government to control the south, with its abundant natural resources, including oil.

 

The escalation of rhetoric between the government and the southern separatists indicate that more clashes are expected.

 

The most recent clashes in the north with Al Qaeda meant that the country’s security forces are simultaneously fighting on three fronts. The ability of the government to continue fighting on those fronts and with the increasing ferocity is questionable.