In Yemen, natural gas was discovered accompanying oil in 1984 on block 18 Ma’reb/Al-Jawaf basin. Both types of gases, the petroleum and natural (dry), were found at this block. As exploration operations in different blocks and expansion of fields and developing them continued, potential energy increased through the increase of oil and gas reserves in various blocks of the country. To June 2006, Yemen’s gas reserves in oil blocks amounted to 17,026 trillion cubic feet.

Actually, gas plays a very crucial role in enhancing the growth of the domestic economy. It is a stimulant factor for domestic industries and households’ and service purposes and a guarantee for engendering financial resources geared for achieving a socio-economic development in Yemen. Because of all that, the MOM has and is still doing its best to promote this sector.

The discovery of great gas quantities stimulated the MOM to increase gas utilization. The MOM is working on encouraging investment in this sector through constructing LPG (liquefied petroleum gas) production plants, and availing all requirements, tools, apparatus etc for transporting LPG. The aim is to make gas substitute traditional energy resources, such as wood, petrol and kerosene.

In bid to ultimately exploit the abundant natural gas reserves, in 1997 the Liquefied Natural Gas Project Agreement was signed. This project is among the 20 projects in the whole world. It is one the largest and firs-rate investment project representing an extraordinary partnership between the private and public sectors in Yemen. Its capital amounting to $7.3 billion, the LNG project constitutes the biggest financial source for Yemen for the coming 20 years. Its total revenues would amount to $17 billion. The shareholders of the LNG Company are as follows: the Yemeni Government represented by the Yemeni Gas Company, 16.73%; the General Social Security and Pension Corporation, 5%; Total, 39.62%; Hunt Oil Company, 17.22%; SK Corporation, 9.55%; KOGAS, 6%; and finally Hyundai Company, 5.88%.

The marketing of the LNG relied on a mixture of sales, that is, the Asian markets which give a fixed price and the American markets which give unstable prices depending on different changes especially immediate sale prices. Accordingly, the Sale Agreement of the Yemeni LNG was signed in 2005 with the following customers: KOGAS to buy 2 million tons; SUEZ-TRACTABLE SA, to buy 2.5 tons and eventually Total to buy 2 tons