Recovery in the pipeline as Yemen plans major lift in oil, LNG exports

A Yemeni oil worker looks out at the Aden refinery after it was reactived in 2016. The port city is key to Yemen’s plans to boost crude production. (AFP)
Updated 11 February 2019
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Recovery in the pipeline as Yemen plans major lift in oil, LNG exports

  • Yemen produced an average of 50,000 bpd of crude in 2018 compared with around 127,000 bpd in 2014. Last year it exported some quantities of oil

NEW DELHI: The legitimate government in Yemen hopes to scale up its crude production to 110,000 barrels per day (bpd) in 2019, with exports touching about 75,000 bpd, the country’s oil minister said on Sunday.
The government of Abed Rabbo Mansour Hadi controls the southern port city of Aden and areas holding Yemen’s oil-and-gas fields. The Iranian-aligned Houthi group controls the capital Sanaa and the oil terminal of Ras Issa on the western coast.
Yemen’s oil output has collapsed since 2015 when the Arab-led military coalition intervened in Yemen’s war to try to restore Hadi’s government to power.
“We will maintain production from four blocks and are planning to build a pipeline to the Arab Sea (Arabian Sea) to resume exports from these blocks,” Aws Abdullah Al-Awd, Hadi’s oil minister, said in an interview.
The conflict has choked energy output and shuttered a key export terminal and pipeline.
Yemen produced an average of 50,000 bpd of crude in 2018 compared with around 127,000 bpd in 2014. Last year it exported some quantities of oil.
The country has proven oil reserves of around 3 billion barrels, according to the
US Energy Information Administration (EIA).
The oil minister said Yemen also wanted to resume production of LNG, which had been halted as a result of the conflict.
“Our country has been affected by the war for the past three years, but now things are coming back. Hopefully, 2019 will be good for Yemen,” he said.
He predicted that LNG output would rise in 2019 to 6.7 million tons and half of that amount would be exported.
“In 2020, we hope to export all of our LNG production, mainly to customers in Asia,” he said.
He noted that companies including Total, US-based Hunt Oil and Korean companies operate the LNG project.


Lufthansa profit warning spooks European airline sector

Updated 17 June 2019
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Lufthansa profit warning spooks European airline sector

  • Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called ‘attritional fare wars’

FRANKFURT: Germany’s Lufthansa sent shockwaves through the European airline sector on Monday as it cut its full-year profit forecast, with lower prices and higher fuel costs compounding the effect of losses at its budget subsidiary Eurowings.
The warning follows gloomy comments last month from Irish budget airline Ryanair, which vies with Lufthansa for top spot in Europe in terms of passengers carried. Air France-KLM also reported a widening quarterly loss last month.
In a statement issued late on Sunday, Lufthansa forecast annual EBIT of between €2 billion and €2.4 billion, down from the previously targeted €2.4 billion to €3 billion.
“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.
European airlines are locked in a battle for supremacy, with a surfeit of seats holding down revenues and higher fuel costs adding to the pressure. A number of smaller airlines have collapsed over the past two years.
Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning.
“The group expects the European market to remain challenging at least for the remainder of 2019,” it said.
It also pointed to high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.
Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called “attritional fare wars” and said four or five European airlines were likely to emerge as the winners in the sector.
“No signs that anyone is prepared to reduce capacity, therefore we would anticipate the wave of consolidation in European short haul is not over,” said analyst Neil Wilson, analyst at London-based broker market.com.
Earlier this month global airlines slashed a widely watched industry profit forecast by 21 percent as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.
Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations, especially on transatlantic and Asian routes.
Eurowings management is due to implement turnaround measures to be presented shortly, Lufthansa said, adding that efforts to reduce costs had so far been slower than expected.
Lufthansa’s adjusted margin for earnings before interest and tax (EBIT) was forecast between 5.5 percent and 6.5 percent, down from 6.5 percent to 8 percent previously, it said in a statement.
Lufthansa also said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.