SANA'A -- Economists have called for the cancellation of a contract signed between the government and French oil and gas group Total, the main shareholder of Yemen LNG.
They claim that the contract, with its fixed prices for gas exports for the next 20 years, is cheating Yemen of revenues from its natural gas reserves.
Francois Rafin, the general manager of Yemen LNG, stated to the press on Saturday that the contract for the sale price of liquefied natural gas from its plant in Balhaf, Shabwa, is fixed and cannot be changed.
Rafin spoke to the press after the president met with the cabinet last Tuesday and instructed it to review the prices in the contract for gas exports according to global prices.
However, Dr. Mohamed Ali Jubran, professor of economics at the University of Sana'a, told the Yemen Times that the contract is unfair, because it fixes the price of gas for the next 20 years.
He said that there is a chance to cancel them according to the United Nations Convention Against Corruption.
Jubran said that the UN Convention Against Corruption stipulates that if any government employee signs a contract with an international company and grants it more privileges than the government, then the contract can be deemed illegal.
"So, the Yemeni government can sue the company through its anti-corruption authority for this unfair deal that deprives Yemen of its resources," Jubran said.
Yemen depends on revenues from its depleting oil resources for 90 percent of its national budget. It was depending on partially replacing its diminishing oil revenues by those obtained from liquid natural gas exports, but experts say that under the current contract these will not help.
Yemen LNG was established in 2005 to liquefy its natural gas reserves and export them from the port of Balhaf in the Shabwa governorate. In November 2009, Yemen exported its first gas shipment.
At the beginning of this month, the government announced that the LNG plant in Shabwa had reached its full export capacity of 6.7 million tons per year. This was to bring USD 700 million to the budget per year, according to the fixed prices.
The Studies and Economic Media Center called on the government to investigate those who signed the contract despite parliamentarian's and economist's warnings against signing it.
The center said in a press release that it obtained confirmed information that 1 million thermal units of Yemen's liquefied natural gas had been sold for USD 3.12 to KOGAS during the next 20 years, whereas the same company bought the same quantity from Indonesia for USD 12.
Yemen's natural gas reserves are estimated at over 17 trillion cubic feet, according to the Ministry of Oil and Minerals.
Shareholders in Yemen LNG include the Yemen Gas Company with 17 percent of the shares, Total with 40 percent, Hunt 17 percent, the South Korean Corporation with ten percent, Korean Gas Corporation KOGAS with six percent, Hyundai with six percent and the Yemeni General Authority for Social Insurance and Pensions with five percent.
By Ali Saeed
© Yemen Times 2010
