Eric Watkins
Senior Correspondent
LOS ANGELES, Jan. 29 -- China National Offshore Oil Corp. is reported to be offering $600 million to acquire Hunt Oil Co.'s stake in Yemen LNG at the port of Balhaf on Yemen's southern coast.
The two-train YLNG facility, Yemen's first LNG operation, will have a total capacity of 6.7 million tonnes/year and will be supplied with gas piped 325 km from Block 18 fields, formerly operated by Hunt, in the Marib region, 180 km east of the capital, Sanaa.
Dallas-based Hunt has a 17.22% stake in YLNG, which is developing the $3.7 billion project, with first output scheduled for yearend 2008. Other shareholders, who would have to agree to the sale, include Yemen Gas Co. 16.73%, Total SA 39.62%, SK Corp. 9.55%, Kogas 6%, Hyundai Corp. 5.88%, and Yemen's General Authority for Security & Pensions 5%.
Hunt is thought to be considering the sale due to a legal battle it is conducting with Yemen, which expropriated Hunt's operation of Block 18 in November 2005 despite the extension of a production-sharing agreement between Yemen and Hunt 20 months earlier.
Hunt Oil has since filed for arbitration against the Yemeni government, seeking remuneration for what it calls an unwarranted action, and a decision on the case reportedly is expected within weeks.
In February 2006, Total reported that YLNG had signed heads of agreement with three companies for LNG sales: Tractebel EGI (Suez) for 2.5 million tonnes/year, Total Gas & Power Ltd. for 2 million tonnes/year, and with Kogas for 1.3-2 million tonnes/year.
Contact Eric Watkins at [email protected].