yemen: urning to gas resources to replace oil
Yemen’s President Ali Abdallah Saleh: An urgent need for revenue sources other than oil
Yemen, a country in a constant search for alternative resources to its dwindling oil reserves, is hoping for a brighter future with a 2.5-billion-dollar gas project.
The dire situation even prompted President Ali Abdallah Saleh himself to admit recently that “our oil reserves are in danger of running out by 2012 and the government should look for alternative resources to oil”.
Yemen is seeking to exploit and market its gas reserves, currently estimated at about 10.2 trillion cubic feet -- which along with the country’s oil fields, are located in the region of Marib, east of Sanaa.
But Yemen’s total gas reserves remain minute when compared to Gulf neighbor Qatar, which has 900 trillion cubic feet.
The 2.5-billion-dollar project, the most important in the history of the country, had been planned since 1997 but was delayed owing to the sharp drop in global demand caused by the Asian crisis in that year.
The recent rise in demand however encouraged the consortium Yemen LNG, 43-percent owned by the French company Total, to launch the project after finding potential buyers.
Three contracts were signed last month for the export of between six and seven tons of liquified natural gas (LNG) annually to the United States and South Korea over 20 years starting in 2009.
Under the contracts, Korea Gas (Kogas) will start buying in December 2008 at least 1.3 million tons of LNG each year over 20 years, with plans to eventually to increase the quantity to two million tons.
The US market will absorb the remaining annual quantity of gas output from the project starting May 2009 relayed from Yemen by the Belgian company Tractebel and the French giant Total.
The project involves the construction of a 320-kilometer pipeline to transport the gas to a liquefaction factory in Balhaf on the coast of Aden, two liquefaction trains to each transport an annual production of 3.5 million tons of LNG, as well as a gas terminal.
World Bank representative in Yemen Mustafa Rouis warned that “the gas is not going to be a substitute for the oil resources”.
But Yemen LNG General Manager Jean-François Daganaud, a former Total official, told reporters that although the project would not help resolve the country’s ills, “it will give them a push for the next 20 years”.
“If this project is not implemented... in the next few years, there will be no more revenues. Imagine a country with no resources and with a rapidly-growing population. It is worrying for all Western states”, Daganaud said.
With a population of more than 20 million people, Yemen is not a member of the OPEC oil grouping and has a small production of about 380,000 barrels per day, said Deputy Prime Minister and Planning Minister Ahmad Mohammad Sufan.
As modest as the production may be when compared to other world producers, more than half of the oil produced is exported. It represents more than 90 percent of Yemen’s export revenues and more than 70 percent of budget revenues.
There are no accurate figures on the country’s reserves, which international organizations estimate will last for 20 years.
Sufan said the president’s call for finding alternative resources to the shrinking oil reserves arose from concern about the rapidly-growing population, which is expected to double in the next 20 years.
He also said that the country faced the risk of water resources drying up over the same period.
In contributing to Yemen’s economic development, the new gas project could help the fight against terrorism in a country where annual revenue per capita is just 510 dollars and illiteracy rate for women exceeds 70 percent.
“We are helping Yemen because of the risk of terrorism”, said a foreign diplomat, noting that the international community had not been generous with the impoverished country.
Daganaud indicated that security remained one of the main concerns of the project, which is located in Balhaf, near the western port of Mukalla where a terrorist attack on the French tanker Limburg killed one person.
“We will build an underground pipeline and we will take all the necessary security measures, together with the Yemeni authorities”, he said, adding that the local tribes would benefit from the project and would be “involved in the security” measures.
Besides the new gas project, experts still urged Yemen to introduce badly-needed reforms, mainly to scrap state subsidies on oil products, which cost an annual of 800 million dollars, about one-fifth of expenditures. |
