THE YEMEN LNG PROJECT

LE PROJET GNL YEMEN

Jean Paul Azalbert
Dr. Khaled Muhsin
Frank Kern
Yemen LNG Company
Republic of Yemen

ABSTRACT
The Yemen LNG Project is on its way now for two years. The paper focuses on the
technical part of the substantial efforts carried out so far by Yemen LNG Company, from
Project Definition through the Call for Tenders Documents.

RESUME
Le projet GNL Ymen est maintenant ltude depuis deux ans. La prsentation est
centre sur la partie technique de limportant travail ralis par la Ymen LNG Company,
depuis la dfinition du projet jusquaux documents dappel doffre.

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THE YEMEN LNG PROJECT

1. BACKGROUND
The valorization of the gas reserves of Marib fields in Yemen under the form of LNG
has been envisaged now for six years. After several attempts to materialize this project,
Yemen sent in 1994 a call for tender to various possible Project.
On February 1, 1995, the Yemeni Council of Ministers designated TOTAL as the Lead
shareholder of the Yemen LNG Project. Shortly thereafter, in early 1995, negotiations
were initiated with the Marib field shareholders, for their affiliates joinder to the Project,
i.e., EXXON YEMEN LNG COMPANY Ltd (EYLNG), YEMEN HUNT LNG LLC
(YHLNG), and YUKONG LIMITED (YUKONG). In September 1995, the Ministry of
Oil and Mineral Resources (MOMR), Yemen Gas Company (YGC) and TOTAL signed a
Gas Development Agreement to be further approved by the Parliament of the Republic
of Yemen. As a consequence, the YEMEN LNG COMPANY (YLNG) was incorporated
in Bermuda, for the purpose of implementing the project; its initial shareholders were
YGC and TOTAL YEMEN LNG COMPANY (TYLNG).
The YLNG Company has been created to process, to export and to sell LNG for a
period of 25 years after commencement of Commercial Production, transporting the feed
gas from the Marib fields to the LNG Plant, and delivering feed gas to YGC in the North
of Sanaa area, through a Spur Line, and to construct all corresponding facilities.
A Project Definition study was performed by the Lead Shareholder from July 1995
to March 1996: the design criteria of the facilities were defined and the selection of the
LNG Plant site and of the pipeline routes were made.
For that purpose, a data acquisition campaign was launched on the different potential
sites, with topographical and geo-technical surveys.
Out of six potential sites surveyed in June 1995, Bal-Haf was selected on the Gulf of
Aden coast, approximately 160 km West of Al-Mukalla, 320 km south east of the gas
producing field of Marib and 450 km east of Aden. The pipeline routes between the Marib
area and the delivery points in Bal-Haf and near Sanaa were also identified.
The selections of both the pipeline routes and the Bal-Haf site were endorsed by
MOMR.
As part of the Project Definition studies, after various feasibility scenarios, a Statement
of Requirement was developed with identification and selection of all governing principles
of the facilities, the selection of the base processing case with Air Products and Chemicals,
Inc. (APCI) and the definition of the scope of the Front End Engineering Design phase
which commenced in March 1996.

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In January 1997, MOMR, YGC and TOTAL in conjunction with EYLNG, YHLNG,
and YUKONG, plus associates of some of these companies, signed 7 Agreements as
applicable:
The Gas Development Agreement (GDA)
The Upstream Facilities and Services Agreement
The Subscription & Participation Agreement
The Shareholders Agreement
The Upstream Operating Agreement
The Upstream Joint Venture & Shareholders Agreement
The Feed Gas Delivery Agreement
Both the Gas Development Agreement and the Upstream Facilities and Services
Agreement were ratified by the Parliament of the Republic of Yemen, prior to the issue of
a Presidential Decree in March 1997.
The final closing between the initial and new shareholders also took place in March
1997.
As of year-end 1997, the Front End Engineering Design was complete as was the
preparation of the calls for tender packages. The lists of potential tenderers have been
approved by the Board and MOMR, based on completed prequalification process.

2. SHAREHOLDERS
YLNG current shareholders are:

TOTAL YEMEN LNG COMPANY LTD (lead shareholder)

YEMEN GAS COMPANY
YEMEN HUNT LNG COMPANY LLC
EXXON YEMEN LNG COMPANY LTD
YUKONG LIMITED

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15.1
14.5
8.4

3. PROJECT PHASES
The project will be implemented in three phases :

Phase 1 : The Preliminary Phase, comprising the conceptual design work and the Front
End Engineering Design and preparation of the calls for tenders

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Phase 2 : Construction Phase

This phase extends from the date on which YLNG notifies Ministry of its decision to
proceed with Phase 2 until Commencement of Commercial Production and shall include
all works related to engineering, procurement and construction.

Phase 3 : The Commercial Production Phase

That phase extends from the date of Commencement of Commercial Production,
i.e., the date at which the first regular export of LNG occurs, and shall last at least
25 years.

4. PROJECT DESCRIPTION
4.1. The Fields / The Upstream Facilities
Under a Production Sharing Agreement(PSA) with MOMR, Yemen Exploration and
Production Company (YEPC) - the Upstream Operator - is currently operating the fields
of Block 18 , located in the Marib area, approximately 190 km East of Sanaa.
The gas is processed for LPG extraction and condensate C5+ recovery, prior to reinjection, at the production units located at Alif Central Processing Unit (CPU) and at
Kamil Processing Unit (KPU).
Out of the 26 000 bpd of LPG currently produced, 11 000 bpd supply the current local
market, and the surplus is re-injected with the treated gas.
The field reserves have been certified by the certifying independent agent DeGolyer
and MacNaughton, who confirmed that the reserves were ample to support the Project.
A gas analysis campaign performed during the 1996 spring has shown a gas of good
quality, ideal as liquefaction plant feed:

low nitrogen
low carbon dioxide
no hydrogen sulfide nor sulfur components
no mercury

A total of about 2 100 MMscfd (stream day) of gas are currently produced from 15
fields in the Marib area, with the great majority (95 %) coming from major fields: Al Raja
(condensate gas field), Kamil (oil field), Azal (oil field) and Alif (oil field). Some other
smaller gas accumulations, already delineated but not developed yet, will be put on
production at a later stage according to a Long Term Gas Delivery Plan which is being
performed.

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Out of these 2 100 MMscfd, approximately 2 000 MMscfd are re-injected into
different dedicated reservoirs, of which:
1600 MMscfd are processed through four Natural Gas Liquids (C3+) extraction
plants: one lean oil absorption plant and one cryogenic extraction plant at the CPU and
two cryogenic extraction plants at the KPU
400 MMscfd are by-passing these NGL plants.
All along the project life, upstream facilities will be installed and/or modified to meet
the LNG project requirement with respect to the quality and quantity of the feed gas.

At the early stage of the project, the required new Upstream Facilities were identified
as follows:

drying of the NGL Cryogenic plant by-pass (mole sieve unit) in order to avoid any
water condensation in the main line,
minimization of C5+ in the LNG feed gas by processing all or a portion of currently
by-passed gas.
letdown stations in order to deliver the feed gas at the delivery point at sufficient
pressure to enter the mainline,
2 metering stations for custody transfer,
flaring facilities,
all necessary ties-in, manifolding and interconnecting piping.

The studies / modifications to the upstream facilities are performed by YEPC, but at
YLNG costs. Currently, YEPC is performing the studies which are part of the approved
YEPC 1997 Work Program.
4.2. The Pipelines
The project will include three pipelines that will traverse widely varied topography and
elevations:

For the 2 liquefaction train LNG Plant, the 320 km long, 36 diameter Main Line
will transport feed gas from KPU to Bal-Haf at an initial flow rate of approximately
900 MMscfd. Additional flow rate for a potential third liquefaction train at Bal-Haf
can be obtained with the installation of an intermediate booster compression station
located near Mikrab, 40 km North East from Ataq.

Associated with the Main Line, the 26 km long, 20 diameter Transfer Line
transports gas between CPU and KPU through a flat desert area of sand dunes at a
flow rate corresponding to the requirements of the two train LNG plant.

The 200 km long, 14 diameter Spur Line will transport, for MOMR use, gas from
CPU to a delivery point North of Sanaa at an initial flow rate of 100 MMscfd and
with an ultimate potential flow rate of 250 MMscfd by installing future intermediate
compressor stations.

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These three pipelines will be:

operated dry, free of any liquid hydrocarbons and water,

designed according to ASME B 31.8 code requirements, including sectionalization block
valves,
buried,
of grade API 5L, X 70 steel,
and externally protected with a polyethylene coating.

The pipeline parameters and block valves will be controlled by a System Control And
Data Acquisition (SCADA system); a fiber optic cable installed parallel to the pipeline will
provide communication links.
The electrical power needed for emergency shut down valves, SCADA system, and
permanent cathodic protection by impressed current, will be supplied, for the extremity
sections, respectively from CPU, KPU and the Bal-Haf plant. For each intermediate block
valve station, thermo electric generator units will be installed.
4.3. The LNG Plant
The LNG Plant will be constructed on a 120 hectare site at Bal-Haf.
It will be fully self supporting, independent of any local infrastructure and will include
administrative buildings, process facilities, utilities, offsites and a marine terminal.
Admin Zone
The administrative zone includes a group of buildings, among which are:

administrative building
canteen
medical center
training center

and other infrastructure needed to support plant operations.

Process Area
The plant will be designed for minimum capital cost within the limits set by efficiency,
reliability, safety and environmental impact. Based on 335 stream days per year, two
liquefaction plants in parallel will be installed to achieve an annual guaranteed production
of 5.3 million metric tonnes per year, FOB.
The two train LNG Plant will have the following major process / product handling
facilities, as listed here below:

Feed gas reception facilities

Acid gas (CO2) removal

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Dehydration
Liquefaction system
LPG Fractionation for refrigerant make-up and C5+ removal.

Prior to liquefaction, the carbon dioxide content of the natural gas will be reduced to
50 ppmv in an amine type acid gas removal unit. Water content will be reduced to 1 ppmv
in a molecular sieve unit to prevent any freeze out in the cryogenic sections of the plant. A
mercury guard bed will be installed to ensure removal of any trace amounts of mercury,
although none has been detected in the feed to date.
The liquefaction process is based on Air Products and Chemicals, Inc. (APCI)
Propane / Multi Component Refrigerant (MCR) process, which requires a propane
refrigerant cycle multistage centrifugal compressor driven by a Frame 7 - size gas turbine
and a centrifugal / axial compressor for the mixed refrigerant liquefaction cycle, also
driven by a Frame 7 - size gas turbine.
The overall refrigerant power required for a train of 2.65 Mtpa is approximately
115 MW, of which 66 MW are required for the liquefaction cycle.
As a component of their license, APCI are also supplying the spool wound Main
Cryogenic Heat Exchanger (MCHE) for gas liquefaction.
Utilities Area
To support the operation of the LNG Trains, the following common facilities are
required:

Flare systems
Electrical power generation - main and emergency
Cooling media
Heating media
Fuel systems
Nitrogen generation
Compressed air
Fire protection systems
Fresh water
Telecommunications
Surface drainage

Direct sea water cooling will be used, with a sea water flow of 60 000 m3 per hour, for
the two trains. Low pressure steam will be used as heating medium.
Three Frame 6 power generation sets will be installed to supply the power required for
plant operations. The fuel gas required will be supplied from the LNG trains and by the
boil off gas from the storage area. Fuel gas demand represents 10 to 12 % of the total gas
feed to the plant.

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Storage
LNG produced will run down to two storage tanks at a temperature of - 162 degree
Celsius, with a higher heating value (HHV) in the 1 050 / 1 110 Btu/scf range.
The LNG net storage capacity, based on transportation studies, is 250 000 m3. Two
125 000 m3 tanks will be installed.
For safety reasons, we have selected above ground full containment tanks with either a
concrete outer shell and a free standing 9% Nickel alloy inner tank, or a stainless steel
membrane in a concrete outer shell.
Marine Facilities
All the components of a self sufficient LNG marine terminal will be installed, including
a turning basin, a service vessel / tug berth and a marine base. A single berth will be
installed to accommodate LNG carriers in the 45 000 / 140 000 m3 range.
The location, orientation and design of the berth have been considered with due
attention to weather, sea and meteorological conditions, mooring breasting, tug assistance,
access and departure in case of emergency.
Marine Off-loading facilities (M.O.F.) will also be installed for unloading of equipment
for the LNG plant during the construction period.
Off Plot Facilities
In addition to the above, an air strip for Dash 7 type planes, available take-off
950x45 m, for normal day light shift rotation, will be installed at a short distance, North
West of the Plant.
An access road will link the main Al Mukala / Aden road to the LNG Plant and to the
Permanent Camp
Pre investment for a Third Train
In view of a potential 50% increase in the capacity of the liquefaction plant, the
possibility of installing a third process train and a third LNG storage tank, with associated
utilities and plant layout is taken into account in the current design.
Permanent Camp
Its location is on the Bal Haf North Rock situated to the West of the access road to
the LNG Plant, at the crossing with the main AL Mukalla / Aden road, close to the
Construction Camp area of the LNG Plant.
The Operating Organization is not yet finalized, but for current design purposes, it is
assumed that approximately 700 persons will be accommodated in the Permanent Camp,
with 23 000 m2 floor space on a 58 hectare area.

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The personnel to be accommodated in this Camp is YLNG Payroll personnel for

normal operation, routine maintenance and support services.

5. CONTRACTING/IMPLEMENTATION
One of YLNG objective is to finance the Project through non recourse, Project
financing credits and Export Credit Agencies (ECAs).
5.1. General
During the preparation of the call for tender for the Front End Engineering Design
(F.E.E.D.) of the whole facilities (pipelines and liquefaction plant), the following
contracting strategy was envisaged for the construction phase of the works:

construction contracts will be lump sum,

contracts will be awarded by installations, and not by disciplines,
number of contracts will be kept to a minimum,
some Early Contracts (LNG storage, refrigeration compressors, Main Cryogenic
Heat Exchangers,) will be prepared during the F.E.E.D. period, and ultimately
assigned to the selected Main contractor,
constraints of non recourse financing will have to be considered,
monitoring and control will be made by the Project Task Force.
YLNG Contracting Strategy aims to fulfill 3 objectives:

to select EPC contractors who will provide their specific LNG experience to design,
procure, supply, erect and commission fit-for-purpose facilities,
to obtain cost effective implementation through competitive bidding,
to maximize non recourse financing by providing to the banking community the
comfort of a frozen project cost guaranteed by sound and capable contractors.

In order to reach these objectives, the following actions have been / will be
implemented:

launching a pre-qualification exercise to ensure that the most experienced

construction contractors are selected (done),
providing calls for tender dossiers with an adequate level of engineering and data
acquisition details to allow for all inclusive lump sum quotes .
defining a minimum number of bid packages to limit to a bare minimum the potential
claims and corresponding increase in investment costs, by reducing interfaces
between contractors and between YLNG and the construction contractors (done).
The contracting strategy was endorsed by the Board of Directors.

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5.2. Action plan

Pipeline
A pre-qualification questionnaire was issued, answers analyzed, recommendation
endorsed by YLNG Board and approved by MOMR.
In order to obtain, from the various potential EPC pipeline laying contractors,
comprehensive quotes without any qualifications relating to soil conditions and to route
changes, an aerial survey of the routes has been performed and precise mapping of all
areas has been completed. In addition, a geo-technical survey of the entire pipeline routes
has been made. This will allow the incorporation of all pertinent data into the pipeline
alignment sheets.
The call for tender dossier for the installation of the pipeline consists in the base case
of a single package with the Main Line + Transfer Line as one sub package (to be installed
first), with the Spur Line as a second sub-package to be sequentially installed. As an
option, independent quotes will be solicited for the Main Line + the Transfer Line on one
side, and the Spur Line on the other side.
Taking into account the importance of the supply of the line pipe, a pre-qualification
exercise has been implemented to identify potential steel mills. The line pipe supply could
be considered as a Long Lead / Critical Item to be assigned to the EPC contractor(s),
or, as the supply of the line pipe is not on the critical path of the Project, could be directly
incorporated into the scope of supply of the EPC contractor(s), depending upon the best
interest of the Project.
LNG Plant
A pre-qualification questionnaire was issued, answers assessed, recommendation
endorsed by YLNG Board and approved by MOMR.
Long Lead / Critical Items
A few parts of the facilities have a major impact on cost, schedule and / or on the
technical content of the Project; accordingly, Long Lead / critical Items have been
identified. The calls for tender, evaluation and pre-award, and possibly award, will be
directly performed by YLNG prior to the award of the main construction contract.

LNG storage: pre-qualification questionnaire was issued, answers analyzed,

recommendation endorsed, MOMR approval obtained. The issue of this call for
tender will be coordinated with the issue of the LNG Plant call for tender.

refrigeration compressor manufacturers have already been pre-qualified and the call
for tender is in preparation; the issue of this call for tender will be coordinated with
the issue of the LNG Plant call for tender. It is envisaged that separate quotes will be
requested from the turbine manufacturer and from the compressor suppliers, but
with a complete guarantee of the whole package from the compressor supplier.

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the call for tender for the supply of the Main Cryogenic Heat Exchanger (APCI) is
under preparation. The issue of this call for tender will be coordinated with the issue
of the LNG Plant call for tender.

a questionnaire has also been sent to line pipe manufacturers, before issuing the
corresponding call for tender.

In order to minimize the interfaces between YLNG and contractors, these early
contracts will be assigned to the corresponding main EPC contractor.
Permanent Camp
Due to the characteristics of an urban type development, the design and construction
of the Permanent Camp will be done independently of the lump sum EPC contract for the
LNG Plant.
This will allow for taking full benefit of the existence of local resources, with an
evolutive contractual strategy, depending upon the findings of the local contractor surveys
still to be performed, and upon the results of the different calls for tender. Contracts will
be awarded per trade or through a Main Construction Contractor. This will be assessed
during the Detailed engineering / Tender period.
A step like approach will be implemented for the Permanent Camp development:

first, a Project Definition period for finalizing YLNG Statement of Requirements

then a Building Permit Dossier / Tender Period with detailed construction
engineering and subsequent calls for tender / clarifications / negotiations.
and last, the construction period.

These different periods will be managed and controlled by the Project Task Force,
with the help of ad-hoc consultants, i.e., 2 Architects / Urban Planners and their
specialized engineering associates. There will be one consultant for Design and Detailed
Engineering, and another, drawing on Yemeni cultural resources, for providing
architectural support, cultural and local inputs, and for assisting YLNG in construction
supervision.
LNG Carriers
Options are being considered by the Marketing Committee for sale of LNG, F.O.B,
C.I.F. and ex ship basis (refer to corresponding definitions in the narrative to be developed
by the shipping group).
For the C.I.F sales, it will be the responsibility of the Shipping committee to develop
the corresponding implementation strategy and determine the organization, resources,
schedule and budget required.
E.P.C. Contract Implementation and Oversight
In addition to their normal EPC activities, contractors will have to implement all the
actions detailed in the Procedures which will be part of the E.P.C. contracts, in particular
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those related to Quality Assurance (QA), Health, Safety and Environment (HSE) and
Project Control.
Although it is contractors responsibility to guarantee and to demonstrate that the
installations they design and construct meet the specified specifications and standards, the
Project Task Force will monitor all their activities through detailed engineering,
construction, pre-commissioning and commissioning. In addition, and according to the
Inspections and Quality Assurance Plans, the Project Task Force will perform audits
relative to such activities.
All commissioning activities will be performed by systems, with a specific hand-over
mechanism whereby such systems, and relevant documentation, are handed over by the
contractor to the Project Task Force, with YLNG Operation team as a witness. The whole
facilities will be transferred to YLNG (Operations) care and custody when the last handover certificate is signed.

6. QUALITY ASSURANCE
Quality Assurance (QA) addresses the implementation of a disciplined approach
toward all activities affecting quality, including verification, where appropriate. It ensures
that each task has been satisfactorily completed, that there is documentary evidence that
the required quality has been achieved and that this level of quality has not been
inadvertently undermined by subsequent change(s).
The concept of quality is normally associated with fitness for purpose, as
evidenced by demonstrable compliance with an approved specification.
Since QA involves all activities affecting quality, very few activities are exclusive to
QA personnel. But the primary responsibility for quality rests with the party responsible
for the work.
To avoid duplication of QA functions within the Project Task Force and with
contractor organizations, and to encourage contractors to exercise fully their contractual
obligations in respect of QA, the Project QA function and its degree of intervention in the
main contractors QA business will be reduced to the minimum consistent with
establishing and maintaining effective quality systems and effective Company auditing
activities.
This requires that only contractors with strong, independent and suitably staffed QA
functions will be considered for the Project. All major contractors will be required to
submit quality plans showing their proposed QA system, the procedures to be used, the
responsibilities and authorities inherent in them and the quality activities and resources to
be allocated. This includes QA/QC of all design activities and change control.
Such plans must include the contractors own schedule of internal reviews and audits,
which will be monitored by the Project QA for both performance and effect.

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7. SAFETY AND ENVIRONMENTAL IMPACT

It is the objective of the Project Team to execute the work in a safe manner, in
accordance with the relevant Policies on Health-and-Safety-at-Work and Environmental
Conservation.
Relevant policy on both these subjects is not only to comply with safety (loss
prevention), health and environmental impact measures required by law, but to act
positively to prevent injury, ill health, damage, loss and pollution arising from its
operations.
At all stages of the Project, all operations, whether performed by, or on behalf of
YLNG, will conform to the requirements of the relevant statutory regulations and
established Company Practices and Policies on Safety and Environmental Impact.
In order to ensure that the above policy is effectively implemented, the Project Task
Force will develop and maintain a Safety and Environmental Impact Plan.
This plan will cover all phases of the Project through design development, detailed
design, construction and pre-commissioning, commissioning, start-up and hand-over to
Operations; the Project Task Force will be responsible for safety until inerting and handover to Operations.
The following subjects will be addressed in the Plan:

safety objectives
environmental quality objectives
acceptance criteria
legislative requirements
statutory / non-statutory requirements
risk assessment
environmental impact assessments
safety requirements
management of changes

The Project Team has already completed, with the help of various survey contractors
and consultants (both for the Pipelines and for the LNG Plant) the Environmental Base
Line Surveys and the Environmental Impact Assessments. Mitigation measures have been
identified and incorporated into the design.

8. PROJECT COST & SCHEDULE

Studies based on past experience, current trends and Shareholder data bases lead to an
estimation of overall cost of the Project for Phase 1 and Phase 2 close to 2.5 billion US
dollars (1997)
A period of 40 months is planned between the launching of Phase 2 and the first
shipment.
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9. CURRENT ORGANIZATION
Incorporated in Bermuda in 1995, YLNG opened Company Offices in Sanaa in 1997
where staffing will be greatly expanded for management of activities relating to Phase 2
(the Construction Phase) and for Phase 3.
During Phase 1, certain services are being provided for YLNG through the lead
shareholder with a team consisting of secondees from the various shareholders under the
direction of a General Manager.

10. YEMENISATION PLAN

All the policies and procedures related to the operation of the Company in Phase 2 and
Phase 3 are being currently finalized. Among these, the Yemenization plan occupies a
significant place. From the very beginning, Yemeni senior and junior staff have been
involved within the Paris team, holding responsibility positions.
This is to be further extended at quite a significant scale for the years to come.

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