Ambitious project in quest of global marketsMarketing liquefied gas [Archives:2003/629/Business & Economy]

March 31 2003

Mahyoub Al-Kamaly
Yemeni gas marketing project is still suspended despite the Yemeni government's efforts it has exerted for renewing an agreement for development and exportation of liquefied gas for four years extending to 2006 beginning from June 2002 managed by the French oil company Total and other group of companies.
Despite that Yemen has completed the significant activities related to utilizing the project in favor of development and obtaining annual revenues to support the public budget that is suffering from a deficit exceeding YR 43 billion in thin year's budget. The project is still floundering.
Yemen possesses around 16 trillion metric tons of natural liquefied gas and exports limited quantities to South Korea, Japan, Turkey and a number of Asian countries, among them India, China and Thailand. This has placed the Yemeni gas at the top of the new competing liquefied gas projects. These markets however, do not commit themselves to purchasing Yemen's gas and promised to negotiate for marketing the Yemeni gas.
Prices fluctuation and slowness in economic growth in the Asian markets led to delay of concluding agreements with buyers of the Yemeni gas, a process associated with the financial trouble in Asian markets till the beginning of 2001. Marketing team dose, however, study at present a plan for development of a plan for implementation of a strong strategy aimed at finding suitable market for the gas. This is expected to be done after finishing an agreement on the development of gas production and the renewing of an agreement for exportation purposes.
The present problem of blocking exportation emerged from renewing the agreement on Yemeni gas with a group of investing companies that expressed a desire for continuation in investment of the project. With the continued decline in prices of hydrocarbon materials and weakness in their demand for them, the expected growth became slower, a matter that would cause hindering of any serious attempts for negation on export according to the terms concluded between Yemen and the group of investment companies.
This situation pushed the participants in Yemeni gas investment to harbor doubts and non-confidence in the Yemeni side and made them impede the success of the investment project. The government of Yemen seems to be an annual loser for the delay of exporting the liquefied gas by $ 500 million. It is a big amount of money which otherwise could have helped bridging the gap in the public budget deficit of the state.
Experts say that not exporting Yemeni gas at these troubled circumstances is better than if it has been exported in a speedy and unstudied way. Yemen can now gain guaranteed revenues with investing companies.