Yemen LNG is the first 'natural gas liquefaction

Liquefied natural gas

Liquefied natural gas or LNG is natural gas that has been converted temporarily to liquid form for ease of storage or transport....

 (LNG) project in Yemen

Yemen

The Republic of Yemen , commonly known as Yemen , is a country located in the Middle East, occupying the southwestern to southern end of the Arabian Peninsula. It is bordered by Saudi Arabia to the north, the Red Sea to the west, and Oman to the east....

. The LNG plant is located in Balhaf

Balhaf

Balhaf is an industrial port town and an oasis in an area of coastal dunes in the Burum Coastal Area of Yemen. It has palm trees and white sand, which gives way to fields of black lava and to the fishing port of Bir-Ali...

.

History

Yemen LNG Company was incorporated in 1995 to develop the LNG plant. In 1997, the development was halted because of the Asian economic crisis. The project was launched only in August 2005 after signing three LNG supply contracts. On 29 October 2007, Yemen LNG and Yemen state-owned oil and gas company Safer Exploration and Production agreed a 20-year contract, according to which Safer grants the LNG plant with supply up to 12.5 billion cubic meter (bcm) of gas per year from the Block 18 of the Marib-Jawf field. The production started on 15 October 2009.

Technical description

The project comprises upstream gas processing facilities including a transfer line linking processing units, a spur-line for transporting gas to the Ma'bar area and a 320 kilometres (198.8 mi), 38 inches (965.2 mm) pipeline connecting the gas processing facilities to the LNG plant. The plant consists of two LNG train

LNG train

An LNG train is the term used to describe the liquefaction and purification facilities in a liquefied natural gas plant.In order to make it practical and commercially viable to transport natural gas from one country to another, its volume has to be greatly reduced...

s with the total capacity of 6.7 million tonnes per year. The contractors for the construction of LNG trains were Technip

Technip

Technip is a provider of project management, engineering, and construction services for the oil and gas industry, headquartered in Paris, France....

, JGC, and Kellogg Brown & Root. The project is one of the country's first big project financing

Project finance

Project finance is the long term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors...

 with total cost of US$4 billion, involving US$3 billion in debt being raised from a syndicate of banks. Bank of Tokyo-Mitsubishi UFJ, BNP Paribas

BNP Paribas

BNP Paribas S.A. is a global banking group, headquartered in Paris, with its second global headquarters in London. In October 2010 BNP Paribas was ranked by Bloomberg and Forbes as the largest bank and largest company in the world by assets with over $3.1 trillion. It was formed through the merger...

, Citigroup

Citigroup

Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...

, ING Group

ING Group

The ING Group is a global financial institution offering retail banking, direct banking, commercial banking, investment banking, asset management, and insurance services. ING is the Dutch member of the Inter-Alpha Group of Banks, a cooperative consortium of 11 prominent European banks...

, Royal Bank of Scotland

Royal Bank of Scotland

The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

, Société Générale

Société Générale

Société Générale S.A. is a large European Bank and a major Financial Services company that has a substantial global presence. Its registered office is on Boulevard Haussmann in the 9th arrondissement of Paris, while its head office is in the Tours Société Générale in the business district of La...

, and Sumitomo Mitsui Banking Corporation

Sumitomo Mitsui Banking Corporation

is a Japanese bank based in Yurakucho, Chiyoda, Tokyo, Japan. It is a member of the Sumitomo Group and Mitsui Group. As of the year 2009, SMBC was the second largest bank in Japan in terms of assets.-History:...

 are the initial mandated lead arrangers and bookrunner

Bookrunner

In investment banking, a bookrunner is usually the main underwriter or lead-manager/arranger/coordinator in equity, debt, or hybrid securities issuances. The bookrunner usually syndicates with other investment banks in order to lower its risk. The bookrunner is listed first among all underwriters...

s on a loan.

Project company

The consortium is led by Total S.A.

Total S.A.

Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...

 (39.62%) in cooperation with Hunt Oil Company

Hunt Oil Company

Hunt Oil Company is an independent oil and gas company headquartered in Dallas, Texas. It has its main oil production activities in the United States, Canada, and Yemen. It also participates in the liquefied natural gas production projects in Yemen and Peru .Together with Magnum Hunter Resources...

 (17.22%), Yemen Gas Company (YGC; 16.73%), SK Corp. (9.55%), Kogas (6.00%), Hyundai Corporation

Hyundai Corporation

Hyundai Corporation is a South Korean company founded in 1976 as part of the Hyundai Group. It is composed of five divisions: Automobile and Electrical Equipment, Ship and Machinery, Steel, Brand Licensing and Commodities, and Natural Resources...

 (5.88%), and the General Authority for Social Security & Pensions of Yemen (5.00%). On 30 June 2010, Russia's government announced that Russian gas company Gazprom

Gazprom

Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...

 may buy Hunt Oil's stake, possibly together with Saudi Arabia

Saudi Arabia

The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...

.

LNG exports

Yemen LNG has SPAs to supply:

• Suez — 2.5 mtpa,
• Total S.A.
  Total S.A.
  Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...
  
   — 2.0 mtpa,
• Kogas — 2.0 mtpa.

All SPAs last from 2009–2029.