Keep Us Strong WikiLeaks logo

Currently released so far... 51122 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Browse by classification

Community resources

courage is contagious

Viewing cable 06SANAA916, POST SUPPORTS OPIC INVESTMENT IN YLNG

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06SANAA916.
Reference ID Created Released Classification Origin
06SANAA916 2006-04-03 09:35 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Sanaa
VZCZCXRO0235
PP RUEHDE
DE RUEHYN #0916 0930935
ZNR UUUUU ZZH
P 030935Z APR 06
FM AMEMBASSY SANAA
TO RUEHC/SECSTATE WASHDC PRIORITY 3441
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEKDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
UNCLAS SANAA 000916 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
PLEASE PASS TO OPIC FOR SENIOR INVESTMENT OFFICER, MARK 
SPROLES. 
 
E.O. 12958: N/A 
TAGS: PREL EINV EPET ECON YM
SUBJECT: POST SUPPORTS OPIC INVESTMENT IN YLNG 
 
REF: A. SECSTATE 45831 
     B. SANAA 843 
 
1. SUMMARY: In this cable, Post provides comments on the 
Overseas Private Investment Corporation,s (OPIC) support for 
the Yemen Liquefied Natural Gas (YLNG) project, as requested 
in Ref A.  YLNG is crucial for Yemen's economy, with 
considerable benefits for American companies.  The ROYG has 
generally honored contracts with foreign companies, with the 
possible exception of an ongoing dispute with Hunt Oil over 
Block 18.  Post does not believe this will affect the future 
of YLNG, but strongly encourages an OPIC project team to 
evaluate the current legal and management status of Block 18 
and its gas reserves.  Security remains a major concern in 
Yemen, but Post does not anticipate specific problems that 
will derail YLNG.  END SUMMARY. 
 
2. YLNG is critical to Yemen's economy, especially in the 
face of declining oil reserves.  With expected government 
profit of approximately USD 1 billion per year for twenty 
years, YLNG is the largest available source of new revenue 
for the ROYG.  It is also an important project for American 
jobs and companies, with an estimated total of USD 400 
million of the initial investment paid to contractors in the 
United States. In addition, over fifty percent of the gas is 
intended for U.S. markets.  (Ref B) 
 
3. Post recognizes the critical role played by OPIC in 
financing the deal, and strongly backs OPIC's support for the 
project.  The ROYG has a strong track record in honoring 
contracts with U.S. and foreign investors in the oil and gas 
sector, and can be expected to do the same in YLNG. 
Considering the importance of the project to Yemen's future, 
the ROYG cannot afford to lose the confidence of 
international investors. 
 
4. The one significant exception to Yemen's positive history 
in the sector is the dispute with Hunt Oil over Block 18. 
Hunt contends that the ROYG violated its five-year extension 
agreement with Hunt, and the case is currently under 
arbitration in Paris.  Post expects that the ROYG will 
respect the court's ruling, no matter what the outcome.  This 
case is unlikely to be resolved before the OPIC board of 
directors makes its decision on financing YLNG, but continues 
to affect the project in several ways. 
 
5. The current operator in Block 18, the major source of gas 
for YLNG, is the government-owned Safir Company.  Several 
observers have expressed doubts about Safir's competence in 
this role.  There is also a secondary legal dispute involving 
Hunt and the ROYG, in which the American company contends 
that the Marib Services Company -- and not Safir -- is the 
legal caretaker of the upstream gas facilities.  Post hopes 
that the OPIC mission can help clarify the overall situation 
in Block 18, and reassure investors in the feasibility of the 
YLNG project. 
 
6. The security of YLNG facilities is, and will remain, a 
major concern.  The planned pipeline traverses some of 
Yemen's most remote tribal regions, which have been the 
target of violent attacks in the past.  The ROYG is working 
closely with the YLNG company, however, to ensure maximum 
security, as it has on other major oil and gas facilities.  A 
project of this magnitude will require constant vigilance, 
but post does not anticipate that security concerns will 
disrupt the operation of YLNG at this time. 
Khoury