Yemen goes for its first LNG plant

Yemen LNG has signed a US $2 billion lump-sum turnkey contract with Yemgas for the country’s first liquefied natural gas (LNG) plant.

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By  Jyotsna Ravishankar Published  October 4, 2005

Yemen LNG has signed a US $2 billion lump-sum turnkey contract with Yemgas for the country’s first liquefied natural gas (LNG) plant. YemGas is a joint venture between Technip, JGC of Japan and KBR, a Halliburton subsidiary. The new plant will be located at Balhaf on the southern coast of Yemen, about 140 kilometres west of the port city of Al Mukalla. The Yemeni government gave the go-ahead for the proposed liquefaction plant in the last week of August, soon after which the contract was awarded. Yemen has been considering LNG exports for a few years now, but had not proceeded with the facilities due to lack of a strong consumer base. But, early this year Korea, the world’s second largest LNG buyer signed a twenty year contract giving Yemen the confidence to proceed with plans, point industry analysts. This first plant to be built in Yemen comprises two LNG production lines (trains) and will be capable of delivering a total of 6.7 million metric tons per annum of LNG. Train 1 is scheduled to start-up by end of 2008, with Train 2 coming on line five months later. The gas will be transported to the plant from Marib, by a 38-inch, 320km pipeline. The bulk of Yemen’s gas reserves are concentrated in the Marib-Jawf fields. Yemen LNG had signed in February, three 20-year sale and purchase agreements for the plant’s output-one with Suez LNG Trading for 2.5 million metric tons a year, one with Kogas for 2 million metric tons a year and one with Total Gas & Power Ltd. for 2 million metric tons a year. ”Yemen LNG is part of Total's strategy of growing its LNG production by an average of 10% a year to 2010. The group already has interests in six liquefaction plants worldwide, including three in the Middle East. The new project will strengthen Total’s position as a leading LNG operator and producer in the Middle East,” says Christophe de Margerie, president, exploration & production at Total. With an estimated reserve of 16 trillion cubic feet of natural gas, and dwindling oil reserves, LNG may just do the trick for the Yemeni economy. The Energy Information Authority also says that Yemen has the potential to become a commercial producer and exporter of natural gas, despite the fact that no natural gas was produced in Yemen till 2003. Also, Yemen can also compete on prices as gas has already been extracted in the Marib region, no investments will be required for exploration.

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