Saturday, February 26, 2011

China, S. Korea to dominate Yemen LNG exports

China, S. Korea to dominate Yemen LNG exports

SEOUL- Feb 26, 2011- Yemen LNG's dependence on the Asian market is set to increase still further in 2011 with the company planning to increase exports to South Korea and start exporting to China.

The Total-led Yemen LNG consortium has announced that output of liquefied natural gas (LNG) at its eponymous facility will reach full capacity in around August 2011.

Speaking on the sidelines of a Seoul LNG seminar on February 24, Yemen LNG's commercial and shipping manager, Jean-Pierre Cave, said that the company expects production to reach full capacity in around six months' time, up from 95 per cent currently.

He said that he does not expect protests in Yemen to disrupt the facility's activities, with its 100th cargo due to be shipped towards the end of March.

Under sales agreements signed in 2005, Yemen LNG supplies gas to Korea Gas (Kogas), GDF Suez and Total Gas & Power, the French major's distribution division.

In October 2010, GDF Suez agreed to supply 2.5mn tonnes - 3.45bn cubic metres (bcm) - of its own LNG allocation to Kogas by 2013. The company has also signed a four-year supply deal with China National Offshore Oil Corporation (CNC) starting in 2013. China is already scheduled to receive 11 cargoes from Yemen LNG in 2011 as part of a mid-term agreement lasting around three years.

The deals with China will increase Yemen LNG's reliance upon the Asian market, in part prompted by collapse of US demand for LNG imports and political opposition to Yemeni shipments in the US.

According to current schedules, deliveries to Asia will increase from 43 in 2010 to 57 in 2011. Of these, 44 are due to be sent to South Korea.

Cave said that Yemen LNG could increase its market share in Korea from 5.6 per cent in 2010 to up to 10 per cent in 2011 as a result of the increased numbers of cargoes. According to Cave, however, Yemen LNG intends to renegotiate the current low gas prices stipulated under the contract with Kogas.

The Yemen LNG terminal is located at the port of Balhaf on Yemen's southern coast and consists of two trains, with a total capacity of 6.7mn tonnes per annum (tpa), equivalent to 9.25bcm. The terminal is fed with gas from the Yemeni government-operated Block 18 in the Marib Basin via a 320km pipeline.

Total holds 39.6 per cent in the terminal, with other shareholders being US-based independent Hunt Oil (17.2 per cent), South Korean companies SK Energy (9.5 per cent), Kogas (6 per cent) and Hyundai Corporation (5.9 per cent), and Yemen Gas (16.7 per cent) and the Yemen General Authority for Social Security and Pensions known as GASSP (5 per cent).

Source: (Saba)

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