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What motivated the decision to establish an LNG project in Yemen?


The launch of Yemen LNG comes at a time when the international demand for gas has grown tremendously. Gas is a clean and cost-effective energy source. It is used for power generation as well as domestic heating. As the country’s largest-ever industrial investment (budgeted at around US$ 4.5 billion), the decision to launch the Yemen LNG project in August 2005 was an important milestone for both the Government of Yemen and the Yemen LNG shareholders. The location of Yemen is strategically advantageous allowing accessibility to all Liquefied Natural Gas (LNG) markets, both in the Asia Pacific basin as well as to expanding markets on either side of the Atlantic. 

Yemen has been able to take advantage of the increase in gas demand by initiating the construction of an LNG plant in order to commercialise and export associated gas in the form of LNG to markets the Far East, the Middle East, Europe and the Americas.

The proven gas reserves are sufficient to produce and export 6.7 million metric tonnes of LNG per annum (mmtpa) for at least the next 20 years to Yemen LNG’s long-term customers and potentially also to new customers in other markets in the future.

What are the key components of the LNG plant in Balhaf?

Yemen LNG has constructed a liquefaction plant at Balhaf on the coasts of the Gulf of Aden, 200 km South-West of Mukalla and around 400 km East of Aden. In addition, two out of three pipelines have been constructed: one Transfer line to connect the two Upstream gas processing facilities in Marib, one Main Pipeline – length 320 km, 38-inch diameter, to feed the LNG plant from the Upstream facilities, and lastly a third line (Spur Pipeline) - yet to be constructed - which will transport gas to the city of Ma’bar for domestic supply purposes.  

The plant comprises two liquefaction trains and has an overall guaranteed capacity of 6.7 million metric tonnes of Liquefied Natural Gas per annum. The liquefaction technology is based on the proven industry standard APCI process. The Plant contains two 140,000 m3 storage tanks as well as ancillary facilities, including, power generation, desalination, waste water treatment and steam generation to enable the LNG Plant to operate on a self-supporting basis in an efficient, reliable and environmentally compliant manner in accordance with applicable international standards.

When did Yemen LNG export its first LNG cargo?

Yemen LNG exported its first LNG cargo on 7 November 2009 with the presence of HE President of Yemen, Ali Abdullah Saleh.

How was the site for the plant selected?

The initial process to identify the best location to construct a liquefaction plant of natural gas as well as the most appropriate route for the Main Pipeline commenced in 1995. Minimising the likely impact on the environment and local communities played a key factor in the selection of the final location.

Given the location of the Marib gas field as the source of the feed gas, the closest seas for the location of the liquefaction plant with export capacity were the Red Sea to the West and the Gulf of Aden to the South. A thorough survey of all potential port sites in Yemen identified Balhaf as the most suitable site for a number of reasons.

The Main pipeline route from Marib to Balhaf passes mainly through deserts and thinly populated regions ensuring minimal impact on the natural habitat and livelihoods of the local population.  After its completion during the last Quarter of 2008, this 320 km pipeline was buried over its entire length.

Who are the current shareholders in the Yemen LNG project?

Yemen LNG is a fully integrated project. After years of studies, planning and negotiations with various stakeholders, Yemen LNG was launched in August 2005, bringing together the competencies of five experienced international shareholders in the Liquefied Natural Gas (LNG) industry and in addition two government bodies.  

The Yemen LNG shareholders are Total (39.62%), Hunt (17.22%), Yemen Gas Company (16.73%), SK Corporation (9.55%), Kogas (6.00%), Hyundai (5.88%) and the General Authority of Social Security and Pensions (5.00%). For more information please visit the shareholders section of the website.  

How much in revenues does Yemen expect to be generated by this LNG project?

Yemen LNG is considered the largest industrial project ever undertaken in the country. Long term revenues shall be secured with LNG sales for the next 25 years. With Yemen LNG, the country is in a strong position to valorize future gas discoveries.

In economic terms, how significant is the Yemen LNG project?

The country’s oil and gas production started in 1986, and had an output level within the region of 300,000 barrels per day in 2010. The country is likely to continue to rely on its natural resources to provide for its population of around 22 million inhabitants.

This project is an outcome of an ambitious programme of economic growth and social development and is playing a crucial role in the success of the expansion and promotion of the oil and gas industry. It is the largest industrial investment ever made in Yemen and will be one of the top contributors to the macro-economic and industrial development of the country over the coming years encouraging greater foreign investment and improving opportunities for local investors to expand internationally.

The shareholders and the Government of Yemen have made a capital outlay of around US$4.5 billion. The project will contribute significantly to the economic development of Yemen, thereby providing the financial catalyst for future economic growth and modernisation.

Furthermore, the size of the project and the complexity of the technology used has created job opportunities and will improve the skill base of the local workforce. Employment during the construction phase reached at peak 12,000 of workers both in the plant and the main pipeline. The core workforce of the organisation is at around 700 permanent posts for Yemenis over its lifespan, in addition to several hundred involved through service companies contracted by Yemen LNG. 

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