LNG Project Waiting for Markets [Archives:1998/39/Business & Economy]

September 28 1998

Yemen has become one of the countries which discovered huge quantities of natural gas. Exploration activities carried out so far have confirmed this fact, and the potential for more discoveries exists.
Ismail Al-Ghabiry of Yemen Times interviewed the man in charge of the gas industry in this country. Mr. Anwar Salem Hassan is the Executive Managing Director of the Yemen Gas Company.
Mr. Hassan graduated with a degree in chemical engineering from Kuwait University, 1984. After working outside Yemen in oil companies for five years, he joined the Ministry of Oil and Mineral Resources in 1990. In the beginning, he worked in the technical division as acting general manager of technical affairs in the gas sector. A presidential decree in 1996 promoted him to his present post.
Q: How much natural gas are we talking about in Yemen?
A: Gas was discovered in 1984 in association with oil. From that time on, our commercially recoverable reserves have been rising. Now, we are talking about 14 trillion cubic feet, mainly in Block 18 which is a Yemen Hunt concession. Most of the gas discovered so far is dedicated to the Yemen Liquefied Natural Gas (LNG) project.
The oil-associated gas is extracted in special facilities in Mareb into two parts. The residue gas, which is mainly natural gas, is re-injected into the reservoirs to maintain the pressure. That gas is allocated to the project. The second part is Liquefied Petroleum Gas (LPG) which is produced at a rate of about 26,000 bpd. More than 60% of that gas is delivered to the local market for local consumption as household fuel.
Q: What kind of facilities do you have?
A: In the LPG industry, we have an LPG loading station in Mareb, supervised by the Yemen Gas Company. That facility is ready to handle more than 70 LPG trucks daily, loading LPG from the Safer field and taking it to all over the country.
We also have more than 31 LPG plants and filling stations all over the country, distributed according to the size of the population and distance from the loading station in Mareb.
Q: What exactly is the mandate of the Yemen Gas Company within the Ministry of Oil and Mineral resources?
A: The Yemen Gas Company is one of the organs of the Ministry of Oil and Mineral Resources. We are responsible for all gas activities, including LPG and natural gas.
As one of our main objectives we are now working on projects for the LPG section, including the substitution of LPG for other kinds of fuel such as diesel and other industrial fuels.
The Yemen Gas Company is a 21% shareholder in the Yemen energy project, alongwith other shareholders like Total, Exxon, SK and Hyundai. We’re working with the other share holders to fulfill all of our obligations.
Q: Is Yemenization of manpower an objective for the Yemen Gas Company?
A: All of the 350 or so employees at Yemen Gas Company are Yemenis. As a shareholder in the Yemen LNG project, the Yemen Gas Company is working hard to push forward a Yemenization plan. A certain number of employees from the Yemen Gas Company will be seconded to the LNG company.
Secondly, we aim to bring the Yemenization plan to life as one of the main objectives in the LNG project. For example, one of our objectives is that after five years of the Yemeni LNG project, more than 90% of the employees must be Yemeni.
Q: When do you expect to start exporting LNG?
A: Phase 1 of the Yemen LNG project has been completed. The company is ready to go ahead with Phase 2. The shareholder market committee is working hard to secure markets for our gas. Before starting the construction of the project, we have to secure the long-term market contracts. Once that is done, the next step is to secure the financing. If markets are secured, financing will come easily. This activity will take from 6 months to one year.
After that, decision will be taken by the board of the Yemen LNG company to commence the construction phase. So we can say, if we are able to secure market contracts by the end of this year, it means that we could start production by the year 2000 or 2001. LNG market is different from the oil market. The problem is not with the oil prices, but the economic crisis in South-East Asia and the Far East – the main markets for LNG.
Q: Could you tell us about the 1st oil & gas conference, to be held in Yemen during September 28-30?
A: The conference is divided into plenary sessions, discussion sessions and summit sessions. The main themes include the following:
– future trends in oil and gas markets,
– development of petroleum fields in Yemen,
– privatization and the economic reform program in Yemen,
– regulatory structures and fiscal incentives for foreign private companies,
– power projects development,
– strategies for financing oil and gas projects,
– oil and gas exploration,
– LNG projects,
– building public and private partnerships,
– petrochemical and refining projects,
– project finance and investment,
– development and technology,
– Yemen energy sector vision for the future.
As you can see, the conference topics include almost all activities in the oil and gas sectors in Yemen. We are expecting 250 participants.