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First Phase of The Yemen LNG Project: the Story of the 1002nd Night

It was heartening to witness the arrival of notable figures from the business communities of France, the US, Korea, the U.K, Belgium, and other well known countries on the industrial world map arriving at Sana'a International Airport before heading off to the barren region of Balhaf in the east of Shabwa.

A delegation of project partners, officials and members of the media, headed by the Minister of Oil and Minerals, the Governor of Shabwa, and Mr. Joel Fort, General Manager of the Yemen LNG Project, attended the ceremony of the LNG Project Balhaf site on 24 September, 2005.

The initiation of the Yemen LNG project represents a milestone in Yemen's development, signifying a promising future for the investment sector.

The timing has been fortunate, despite the 13 years of postponement. Yemen has now obtained the best price and the most reputable client in the world market, and this will bring the country to the attention of international loan organizations and increase for similar future projects.

The arrival of the delegation, which provided a remarkable sign of how far the region has developed and was also a promising omen to the people of the area, gave the all parties the opportunity to view the site where the pipeline will be connected to the plant. The pipeline stretches from Marib, where drilling will occur, to Balhaf, from where it will be exported.

The Minister of Oil and Minerals, Mr. Joel Fort, the Governor of Shabwa and other dignitaries, gathered to cut the ribbon and draw back the curtain to reveal an inaugurative plaque at the Balhaf site.

Mr. Joel Fort, delivered the following speech, addressing His Excellency Ali Al-Rassas, Governor of Shabwa, ministers and members of Parliament, the Shoura Council, governors and other notable guests:
"It is a great honor for me as General Manager of Yemen LNG to welcome you all in Balhaf today to celebrate the launch of the works leading to the building of a world class hi-tech LNG plant in Yemen. "Your Excellencies, may I first take this opportunity to ask you to accept the most sincere congratulations of Yemen LNG to the Yemeni community on the occasion of the September and October revolution celebrations.

"At a time when we are celebrating the approval of this enormous project it is perhaps not superfluous to remind ourselves of the complex and oftentimes challenging journey which has led to today's celebration.

"And yes this is a complex story indeed: dare I say that it has a flavor of a new addition to the stories of the 1001 nights, with the difference that this 1002nd night was a long night, starting in 1992 with a concept, and ending up in 2005 with a final investment decision taken by the government and Yemen LNG shareholders on August the 26.

"Thirteen years is a long night, populated by the dream of putting Yemen on the world map and in the exclusive club of LNG suppliers, the dream of attracting investments, cutting-edge technology and the attention of industrialists and bankers to Yemen, and the dream of creating value and jobs for Yemen.

"But it has also been a night populated by some nightmares, such as the Asian gas market crisis in the late 90s, strong competition from other projects and countries, among others.

"But at the end of the 1002nd night came the light of success leading to the decision to launch the projects.

"On behalf of Yemen LNG and its shareholders (YGC,the Total Group, Hunt Oil , SK Corp and Hyundai Corp, to be joined soon by KOGAS), I would like to take this opportunity to congratulate all those who have made this vision, this dream, a reality, and the Ministry of Oil and Minerals in particular which has kept an unwavering trust in this project and in the teams working on it, as well as YGC and its continuous support, the various committees, above all the marketing committee, which managed to secure valuable long-term gas sales contracts for Korea and the US, respectively with gas buyers KOGAS, SUEZ and TOTAL Gas and Power.

"Today is a day of celebration. Today is a day of transition between the preparatory work and the implementation phase, between 13 years of intense negotiation work, and 3.5 years of construction work, ahead of 25, and hopefully more, years of safe and profitable production.

"This project is truly a fantastic opportunity for Yemen. Not only the creation of thousands of construction jobs between now and 2009, and hundreds of highly qualified jobs in the plant in the long term, but also during the production phase the generation of direct revenues for Yemen, several billion dollars over the 20-year lifespan of the presently signed contracts, by utilizing gas otherwise stranded in remote areas, and finally an opportunity to develop domestic projects through the funding by Yemen LNG of gas from Marib to Ma'abar.

"This is not to mention the high visibility for Yemen on the worldwide scene of attractive investment potential.

"The task ahead is immense: to invest 3.7 billion dollars in 3.5 years, which translates into an average of 3 million dollars for each calendar day, requires dedicated and highly professional teams.It also requires reactivity from all the players involved, and close collaboration between them.

"I wish to thank in advance all parties involved within the Yemeni Government for their co-operation and support to make this project a success.

"Our duty in Yemen LNG is to deliver the installations on time and within budget, and to operate them over 25 years afterwards. "Building this huge plant, in a remote and breathtakingly beautiful area of Yemen, laying a 38" diameter, 320 km-long pipeline from Marib to Balhalf, will be no easy task.

"Be sure, your Excellencies, that Yemen LNG is committed to doing it in a caring manner, caring for people in terms of local employment, caring for people in terms of security and safety standards, caring for the environment.

"I would like to conclude by thanking His Excellency President Ali Abdullah Saleh and the Yemeni government for their continuous support of this project and renewing once more Yemen LNG 's commitment to making it a world class success that Yemen and Yemen LNG shareholders can be proud of."

Mr. Fort's was followed by the Minister of Oil and Minerals, Dr. Rasheed Baraba'a:
"It is a great honor to welcome you to the celebrations organized by the Ministry of Oil and Minerals and Yemen LNG Company. We are celebrating the inauguration of the first phase of the YLNG Project for which we have waited a long time. The inauguration of the project coincides with the Yemeni revolution anniversaries of September, October, and November.

"It's a practical outcome of the Yemeni revolutions to enhance the economic and development situation of the people all over the Yemen unified by His Excellency the President of the Republic of Yemen.

"This has led to the achievements of huge projects that will help the economy of the country. This project will replenish the income of the state budget with billions of dollars, create more than ten thousand direct and indirect benefits such as:
1- Creating socioeconomic benefits through increased international and regional traffic and transport activity by land, sea and air.

2- The project will improve the infrastructure to the gas industry in Yemen and encourage investment and more exploration of gas in Yemen.

3- It will enhance the confidence and credibility of Yemen in the eyes of international donors, and this will be reflected in the investment climate by funding different future development activities.

"The achievements of this project require particular efforts from the government and the people of the local areas in the first phase of construction to support YLNG in implementing different activities.

"With cooperation and coordination we will achieve with the company the most accomplished project in the region.

"Finally I would like to thank the President in particular for his continued support for the gas project. Only great leaders make dreams come true.

"On behalf of the Yemeni government I would like to congratulate YLNG , Hunt Oil , SK Corp Hyundai Corp, and thank the purchasers from KOGAS, SUEZ and TOTAL Gas & Power for the success and implementation of the project. We wish them all great success in achieving their goals according to the scheduled plan and map."

The Governor of Shabwa, Ahmed Al-Rassas, welcomed guests to the event and described himself as honored with the opportunity to inaugurate the project in the district of Rakhan, saying:
"This project will be built on an area of 20km2 and will include a number of technical facilities and entertainment buildings at a total cost of 3.7 billion US dollars.

"We are celebrating the beneficial results of unity, one of which is the YLNG project.

"Nobody can ignore the achievements in the development process of our country and the benefits to all Yemeni citizens and the company.

"The project has been established and based on scientific studies from professional experts led by Ministry of Oil and Minerals staff and the YLNG team. We ask God that the project is achieved according to plan and we hope for prosperity in the economy."

By Fakhri Al-Arashi

© Yemen Observer 2005