Yemen LNG, in whichFrance's Total S.A. (TOT) is a shareholder, may see the loading of the first liquefied natural gas, or LNG, cargo from its new Balhaf facility pushed back into the fourth quarter due to delays on the project's onshore portion, a person familiar with the project said.
After months of delay, the loading of Yemen LNG's first cargo may slip further and is likely to happen "realistically by year-end," the Yemen-based person, who declined to be named, told Zawya Dow Jones.
The latest delay is mainly related to a pipeline on the project's upstream portion that will provide the natural gas for Yemen LNG but which is not under control of the company, the person added.
Natural gas for the plant will be sourced via pipeline from block 18 in the country's Marib area,which is operated by Yemen's state-owned Safer Exploration and Production Co., or Sepco. The LNG facility is located in Balhalf, southeast of the capital Sana'a on the country's southern coast.
Sepco wasn't immediately available to comment when contacted by Zawya Dow Jones.
"There's little left to do at the Balhaf site itself, just a few pumps and valves aren't ready," the person said, adding that some initial tests at the facility were being carried out.
The $4 billion Yemen LNG plant was originally scheduled for completion in late 2008 with first LNG shipments in January but has been running behind schedule.
"It's really difficult to give an exact estimate of when the first cargo should leave the Balhaf terminal. According to our plans and best estimates, the first cargo should leave the Balhaf terminal around mid-September 2009," a company spokesperson told Zawya Dow Jones in an emailed statement.
"Coordination with the upstream operator is permanent and is addressing issues as they arise and we don't see that as having potential for future impact of delays," the spokesperson said.
PROJECT START UP CLOSE?
Yemeni Deputy Oil Minister Ahmed Abdullah Dares last week was quoted by the official Saudi SPA news agency as saying the project would start up in the next few weeks.
Yemen LNG plans to export some 6.5 million metric tons of LNG a year for at least 20 years. It has term supply contracts with Total and Korea Gas Corp. (036460.SE) for 2 million tons a year each of LNG, and will also sell 2.5 million tons a year to Franco-Belgian utility GDF Suez SA (GSZ.FR).
LNG is gas cooled down so it becomes liquid and can be transported in special vessels.
Total and GDF Suez, both of which are shareholders in Yemen LNG, plan to export the liquefied gas to North America. Kogas will ship the LNG to South Korea.
The project is being commissioned at a time of slowing global energy demand triggered by a recession in the world's main economies, which are also heavy gas consumers.
Due to market conditions, "some customers are happy (about the delay) because of the economic situation," the person said.
Technip SA of France, JGC Corp. of Japan and the U.S.' KBR are the main contractors on the LNG plant.
Yemen is one of the Middle East's poorest countries in terms of per capita income and is located in the southwest of the Arabian Peninsula on the Red Sea and the Arabian Sea.