France’s Total, the last foreign oil company operating in Yemen, said on Tuesday that it had halted operations at its gas exporting plant because of the worsening security situation.
The liquefied natural gas plant at Balhaf, located on the coast 400 kilometres east of Aden, will go into “preservation mode” until the situation improves sufficiently to allow normal operations to resume, Total said.
On Tuesday, three weeks into an offensive by a Saudi Arabian-led coalition against Iran-backed Houthi rebels, Saudi Arabia moved additional tanks, artillery units and troops to its border with Yemen, according to newswire reports.
The coalition action has so far involved air strikes against the rebels, who have taken control of large parts of the country and forced the president Abdrabu Mansur Hadi to flee.
The LNG plant has a capacity to process nearly 7 million tonnes a year of gas sourced from the Marib area. The operator Total has a share of just under 40 per cent in the Yemen LNG Company. Total’s Dubai-based Middle East spokesman said: “We have been informed by Yemen LNG that, due to the further deterioration in the security situation around Balhaf, Yemen LNG has decided to further reduce its staff and put the plant into preservation mode. Consequently production has been stopped.”
The plant will, for the time being, be looked after only by local staff. The statement added: “Only essential staff required to maintain the assets at Balhaf in this mode are remaining on site. No expatriate personnel remain on site.”
Other shareholders include Hunt Oil, with about 17 per cent, four Korean companies – Samwhan, Korea National Oil, Kogas and Hyundai – collectively own just over 20 per cent, with Yemen Gas and a Yemeni civil service pension fund holding about 17 per cent and 5 per cent, respectively.
Yemen recently began producing natural gas at a rate of about 300 billion cubic feet a year, with 90 per cent of that exported via the Balhaf LNG terminal.
Yemeni LNG gas exports account for less than 3 per cent of the global seaborne gas trade and the disruption comes at a time of LNG glut, so is unlikely to have any price effect on the market.
Although oil exports have declined by nearly two-thirds since the turn of the century, oil and gas exports remain important to the country, making up almost 90 per cent of export revenues and two-thirds of government revenues.
Other foreign companies that had been operating in Yemen before recent evacuations include DNO, which is 42.8 per cent owned by RAK Petroleum, OMV, part-owned by Ipic, as well as Occidental Petroleum, China’s Nexen and Korea National Oil.
amcauley@thenational.ae
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