Yemen LNG halts production as fighting worsens security at plant

AARON CLARK

TOKYO (Bloomberg) -- Yemen halted output and exports from the country’s sole LNG plant as fighting in the area worsens.

Yemen LNG Co. declared force majeure, a legal clause meaning circumstances make it impossible to meet contractual obligations, according to an emailed statement Tuesday.

“Due to further degradation of the security situation in the vicinity of Balhaf, Yemen LNG has decided to stop all LNG producing and exporting operations and start evacuation of the site personnel,” according to the statement. “The plant will remain in a preservation mode.”

Saudi Arabia is leading a coalition of predominantly Sunni nations against Shiite Houthi rebels in Yemen, saying the aim of the military campaign is to restore the legitimate government of President Abdurabuh Mansur Hadi and force the rebels to resume talks. Airstrikes against the Houthis and their allies began last month and the coalition has refused to rule out the deployment of ground troops.

Tribal fighters seized posts outside the city of Balhaf in southeastern Yemen after soldiers fled, according to Abu Bakr al-Awlaki, a local resident who witnessed the clashes. Rebels seized equipment including tanks from brigade headquarters and haven’t attacked the LNG plant, he said.

Yemen LNG processes and exports gas from the Marib area and has two trains with a total capacity of 6.7 million metric tons a year, according to the company’s website. The project has three long-term sales contracts with GDF Suez, Korea Gas and Total.

Total is the biggest shareholder in the project, with a stake of almost 40%, according to the website. Others include Hunt Oil and SK Innovation, the website shows.