Yemen LNG Project (Balhaf)

The Yemen LNG Project (Balhaf) is a major liquefied natural gas (LNG) development located on the Gulf of Aden coast in Shabwah Governorate.¹ The project represents one of the largest industrial and energy infrastructure investments ever undertaken in Yemen.² Initial site screening began in 1995, followed by feasibility studies, with construction commencing in March 2006 and commercial LNG production starting in November 2009.³
The vision of the project is to serve as a financial catalyst for the country’s economic growth and modernization by commercializing natural gas reserves through the largest industrial investment in Yemen’s history.⁴ The project aims to produce and export 6.7 million metric tonnes per annum of LNG from the Marib gas field reserves.⁵ Additionally, it seeks to generate employment opportunities, develop local technical skills, and contribute to broader industrial and economic growth through natural gas utilization.^{6 7} In August 2005, Yemen LNG signed long-term 20-year gas sales agreements with major international buyers, including GDF-Suez (France), Kogas (South Korea), and Total Gas & Power Ltd, thereby securing stable export markets for the project.⁸

To implement the vision, the Yemen LNG Project (Balhaf) occupies an area of 20 square kilometers at Balhaf coastal site in Shabwah.⁹ The project includes several key components:
– A liquefaction plant based on the proven APCI C3/MR process, consisting of two parallel processing trains with a total guaranteed capacity of 6.7 million tons per year¹⁰
– Two LNG storage tanks, each with a capacity of 140,000 cubic meters^{11 12}
– A 322-kilometers main gas pipeline with 38 inches connecting the Marib gas processing facilities to the LNG plant at Balhaf¹³
– A 20-inch diameter transfer line extending approximately 25 kilometers between the Central Processing Unit and the Kamil Processing Unit¹⁴
– Marine loading port facilities capable of accommodating LNG carriers with capacities ranging from 70,000 to 205,000 cubic meters¹⁵
– Ancillary infrastructure, including on-site power generation, desalination, wastewater treatment, and steam generation facilities.¹⁶

In terms of sustainability, the project incorporated a World Bank-compliant Environmental and Social Impact Assessment (ESIA) and comprehensive Environmental and Social Management Plan (ESMP) designed to minimize environmental and social impacts.¹⁷ Site selection criteria prioritized reducing disturbance to sensitive ecosystems and local communities, with pipeline routing largely passing through the desert and sparsely populated areas.^{18 19} During construction, the project employed 12,000 workers at peak activity, with a construction period of approximately 39 months and a total investment value of around USD 4 billion.²⁰

The project is managed and implemented by Yemen LNG Company, a joint-venture shareholding company composed of seven partners.²¹ Shareholders include Total (39.62 percent) serving as Project Technical Leader, Hunt Oil Company (17.22 percent), Yemen Gas Company (16.73 percent) ,²² SK Innovation Co., Ltd. (9.55 percent), Korea Gas Corporation (6.00 percent), Hyundai Corporation (5.88 percent) and the General Authority for Social Security & Pensions (5.00 percent).^{23 24} The EPC (engineering, procurement and construction) activities were executed by a consortium comprising JGC Corporation, Technip, and KBR, with the project completion in 2009.²⁵ Financing was provided through international lenders including Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Citigroup, ING, Royal Bank of Scotland, Société Générale, and SMBC, supported by a USD 1.44 billion financing facility and an additional USD 1.2 billion loan backed by Total, bringing total project costs to approximately USD 4 billion.^{26 27} Project implementation was structured into different phases:²⁸
– Phase 1 (1995-2004): Preliminary studies and site surveys, including evaluation of six pre-selected sites and detailed assessments for three shortlisted locations before selecting Balhaf.^{29 30}
– Phase 2 (March 2006 – 2009): Construction phase,encompassing pipeline installation, liquefaction plant construction, and development of port facilities, with Train 1 completed in 2009 and Train 2 scheduled to commence operations five months later.^{31 32}
– Phase 3 (November 2009 onwards): Operational phase, marked by the loading of the first LNG cargo in November 2009.³³

Currently, the project remains suspended following the declaration of force majeure by Yemen LNG in April 2015, due to deteriorating security conditions. Since that time, the facility has maintained in preservation mode.³⁴ Upon potential resumption of operations, the Yemen LNG Project (Balhaf) is expected to resume LNG exports to Asian, European, and American markets under existing 20-year sales agreements.^{35 36}

The project is managed and implemented by Yemen LNG Company, a joint-venture shareholding company composed of seven partners.21 Shareholders include Total (39.62 percent) serving as Project Technical Leader, Hunt Oil Company (17.22 percent), Yemen Gas Company (16.73 percent) ,22 SK Innovation Co., Ltd. (9.55 percent), Korea Gas Corporation (6.00 percent), Hyundai Corporation (5.88 percent) and the General Authority for Social Security & Pensions (5.00 percent).23 24 The EPC (engineering, procurement and construction) activities were executed by a consortium comprising JGC Corporation, Technip, and KBR, with the project completion in 2009.25 Financing was provided through international lenders including Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Citigroup, ING, Royal Bank of Scotland, Société Générale, and SMBC, supported by a USD 1.44 billion financing facility and an additional USD 1.2 billion loan backed by Total, bringing total project costs to approximately USD 4 billion.26 27 Project implementation was structured into different phases:28
– Phase 1 (1995-2004): Preliminary studies and site surveys, including evaluation of six pre-selected sites and detailed assessments for three shortlisted locations before selecting Balhaf.29 30
– Phase 2 (March 2006 – 2009): Construction phase,encompassing pipeline installation, liquefaction plant construction, and development of port facilities, with Train 1 completed in 2009 and Train 2 scheduled to commence operations five months later.31 32
– Phase 3 (November 2009 onwards): Operational phase, marked by the loading of the first LNG cargo in November 2009.33

Currently, the project remains suspended following the declaration of force majeure by Yemen LNG in April 2015, due to deteriorating security conditions. Since that time, the facility has maintained in preservation mode.34 Upon potential resumption of operations, the Yemen LNG Project (Balhaf) is expected to resume LNG exports to Asian, European, and American markets under existing 20-year sales agreements.35 36