Yemen LNG may supply gas for South Korea [Archives:2004/772/Business & Economy]

September 13 2004

By Peter Willems
Yemen Times Staff

Yemen LNG plans to bid for a contract to supply South Korea with around $23 billion of liquefied natural gas (LNG) for up to 25 years.
In August, Korea Gas sent invitations to bid to 11 gas suppliers in nine countries and expects proposals by September 20th. Korea Gas plans to choose suppliers in November and sign an agreement in December. The new agreement would replace Korea Gas's contract with Indonesia's PT Arun NGL.
Hugues Montmayeur, Chairman of the Marketing Committee at Yemen LNG, said at a function carried out to celebrate the 20th anniversary of Yemen's Marib oil project, “We are definitely going to bid for the Korean contract. We have prepared for it for a long time.”
Korea Gas is looking to buy up to 6 million tons of LNG each year, for between 20 and 25 years after the contract with PT Arun expires in 2007. State-run Korea Gas plans to buy from a number of different suppliers.
Yemen has roughly 16 trillion cubic feet of natural gas underground. Jean-Francois Daganaud, General Manager of Yemen LNG, recently told the Yemen Times that Yemen can produce and export 6.2 metric tons of natural gas annually for the next 25 years.
Yemen Hunt Oil Co. currently extracts more than 3 billion cubic feet of gas per day, strips out 22,000 barrels of liquids to add to crude oil, then re-injects gas back into the ground in the Marib area.
When Yemen LNG captures a market, it will build a 320 kilometer pipeline that will carry gas from Marib to Bal Haf, a site on the west coast of Mukalla where a liquefaction plant will be built. Partners in Yemen LNG will invest $2 billion in the project, and the pipeline and plant will take around $43 million to be completed.
France's Total has a 43% stake in Yemen LNG, followed by state-owned Yemen Gas owning 23%, followed by Texas-based Hunt Oil with 18%, then South Korea's largest oil refiner SK Corp. having 10% and lastly Hyundai owning 6%.
“We are optimistic about the bid in South Korea,” said a representative from one of the companies that has a stake in Yemen LNG. “South Korea would be a good market and Yemen would be a very good supplier.”
Yemen LNG is in talks with four US companies with the goal of supplying natural gas to the US market, and is also aiming at the Indian market.
Other countries that received invitations for bids sent out by Korea Gas last month included Indonesia, Malaysia, Qatar, Brunei, Oman and Australia.
Taha Al-Ahdal, Director General of the Gas Division of Yemen's Ministry of Oil and Minerals, recently said that South Korea would be a very good market for Yemen to tap into. According to Al-Ahdal, the fact that two South Korean companies – SK Corp. and Hyundai – are shareholders in Yemen LNG will help Yemen LNG to enter the Korean market.
The demand for natural gas in South Korea is expected to rise 5% annually over the next 10 years.