The other major success story within the past three years is that the Yemen LNG project finally secured approval to proceed. The project is often characterized as a phoenix rising from the ashes after spending more than a decade of seeking liquefied natural gas (LNG) buyers. The main shareholder, Total, and its partners took the final investment decision in 2005 and revenues are due to start flowing into government coffers at more than $300 million a year starting in 2009. That will increase once the second of two 3.45 million ton/year trains comes on stream later next year.
Almost as miraculously, the project company succeeded in closing a $2.8 billion limited-recourse financing scheme for the second quarter. This is the biggest project financing the country has seen. Virtually unthinkable now (thanks to the credit crunch) the country’s sparse track record and perceived high political risk.
Outside the hydrocarbons sector, however, major projects continue to suffer the notorious delays inflicted by the country’s politics and bureaucracy. The largest foreign investment in civil infrastructure, the 30-year concession to own and operate Aden Container Terminal (ACT), provides a sorry example. Government-owned Dubai Ports International, now part of the Dubai World stable, was selected for the contract back in 2005. That was controversial because the ACT was in competition with Dubai World’s flagship Jebel Ali seaport, sparking rumblings of corruption. However, the final deal was only signed in July 2008, and the handover is only now taking place.
Under the first investment phase, some $220 million is to be invested to more than double ACT’s capacity to about 1.5 million 20-foot equivalent units (TEUs) by 2012, from around 700,000 TEU at present.
An acute threat to shipping in the Gulf of Aden has developed due to piracy bred in lawless Somalia, a situation that harkens back to the original reason for the international tender. The previous operator withdrew after the loss of transshipment traffic provoked by the terrorist attack on the USS Cole in Aden harbor in 2000.
Once again, security problems threaten to hold back broader economic development as well as the tourism sector, where the psychological effects of attacks against high-profile political targets such as the US embassy have been compounded by a number of assaults targeting overseas visitors. AQY claimed responsibility for a suicide bombing that killed eight Spaniards at the Queen of Sheba temple in the central Marib region in July 2007, while two Belgians were shot dead in January 2008 near Shibam. Yemen hosts a wealth of unspoiled historic sites that make it a dream destination for cultural tourists and render tourism an industry with enormous potential to drive economic growth, especially compared to the weaker natural draws of most GCC states.
However, until security and government rule improve, the Kingdom of Sheba being built from scratch as part of Dubai’s Palm Jumeirah resort is, gallingly, set to attract more visitors for the foreseeable future than the queen’s true home.

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