Global Market Forces Yemen to Divert 35 LNG Shipments

This past Sunday in a press conference marking the first anniversary of international exports of Yemeni liquefied natural gas (LNG), the general manager of Yemen LNG, Mr. Rafin, discussed the current challenges the company faces in the global LNG market.

“The cost of gas in the year 2008 and 2010 has been decreased due to the economic crises which has created complications in finding suitable buyers,” said Mr. Rafin.

These challenges have prompted Yemen LNG to divert 35 LNG shipments intended for United States to Asia next year to take advantage of higher demand and prices for LNG.

«Our strategy at Yemen LNG is to exploit the difference of prices between the United States and Asia” Mr. Rafin stated. The 35 shipments represent 30 per cent of the 6.5 million metric tones that will be produced next year.

In addition to the global economic crisis, LNG demand in the United States, which was expected to be a major importer, has fallen due to massive increases in domestic supply from shale gas. He said the company has already diverted 25 shipments to Asia out of 85 shipped this year from its plant at the Arabian Sea port of Balhaf.

«The growth in Asia continues to be very strong, the appetite for clean fuel is there,» Mr. Rafin said. Yemen not only ships LNG to Asia and the United States but to many other countries such as India, Mexico, Kuwait, among others.

The $4.5 billion LNG project is the largest industrial project in the history of Yemen . The Balhalf plant created in last October is contributing to the increase in capacity from the current levels of 5 million metric tonnes of LNG, to the projected 6.5 million tons next year.

Income from gas exports has become an important revenue source for the impoverished country of Yemen as it struggles to compensate for falling crude oil revenues. Yemen, which lacks the vast resources of its neighbor Saudi Arabia, has seen a large decrease in crude oil exports in the past decade.

The changes in Yemen LNG exports come as Yemen is facing heavy pressure from Washington to crack down on al-Qaeda militants who have previously targeted Yemen›s energy industry.