New life from Korea for Yemen LNG

24 September 2004
Yemen LNGis bidding to sell liquefied natural gas (LNG) to South Korea under a long-term supply agreement, in response to a request for proposals (RFP) sent to 11 potential suppliers by state-owned Korea GasCorporationin August. Success in landing one of the three contracts on offer could revive a project that has been on the drawing board for more than five years, but has been on hold because of a failure to find customers (MEED 28:6:02).

The three contracts each call for the supply of 1.5 million tonnes a year (t/y) of LNG, with an option to increase this to 2 million t/y. The duration of the agreements will be 20 years, with the possibility of an extension to 25 years. Korea Gas is due to make a selection by the end of the year, with deliveries beginning on 1 January 2008.

Yemen LNG's shareholders are France's Total with 43 per cent, state-owned Yemen Gaswith 23 per cent, the US' Hunt Oilwith 18 per cent, South Korea's SK Engineering & Constructionwith 10 per cent and Hyundai Heavy Industries, also of Korea, with 6 per cent. 'Hopefully the Korean content of the company will be an asset to our bid,' says a Total spokesman.

'We aim to make a final investment decision on the project by mid-2005, after which we would be ready to issue an engineering, procurement and construction (EPC) tender. FEED studies have been completed by the US' Bechteland Paris-based Technip.' The work covers a liquefaction plant at Bel Haf, on the coast near Mukallah, a 25-kilometre, 20-inch pipeline linking two gas processing facilities at Marib and a 320-kilometre, 26-inch pipeline from Marib to Bel Haf.

The project will use gas - currently re-injected - from Marib block 18, which is operated by Hunt. Total investment of about $2,000 million would be required from the partners. As the facilities would not be operational by the 1 January 2008 contract start date, Total would meet the supply requirements from its LNG production elsewhere in the world during the first year of the agreement.

Yemen LNG is also talking to several US companies about supplying the American market and is targeting India as another potential destination for its output. Earlier efforts to find customers for the long-awaited project were hampered by economic slowdown in the Far East and by growing competition from other regional LNG suppliers.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications