Yemen's oil minister urges Iran to halt Houthi support as it eyes exporting gas again

Yemen's oil minister asked that Iran halt support to the Houthi rebels as the war-torn country looks to resume exports of natural gas.

Violence had cooled in the protracted war in the lead-up to April 2023 peace talks between the Saudis and Iran-backed Houthi rebels, but escalating regional tensions have seen the Houthis ratchet up attacks on shipping lanes in the Red Sea and the Gulf of Aden which the group claims are a campaign to defend Palestine from Israel's war on Hamas in Gaza.

Despite a ceasefire in Gaza and an initial pledge from the Houthis to limit attacks, the Houthi commander threatened on Feb. 14 to escalate attacks in the Red Sea if Israel fails to uphold its agreement to pause fighting and Gazans are displaced.

With Iran's backing, the Houthis' arsenal continues to develop and expand, improving its weapons systems range and accuracy, and US President Donald Trump has re-designated Yemen's Houthis as a terrorist organization, which analysts say has ruined any prospect for peace talks.

"We're calling upon Iran to stop the problems and fights so we can regain our position and enjoy our natural resources," Minister of Oil and Minerals Saeed Suleiman al-Shamasi said through a translator on stage at the EYGPES conference in Cairo on Feb. 17.

Yemen, which sits on key international shipping lanes, exported 9.9 Bcm of gas at its peak in 2013, primarily to South Korea and other northeast Asian states.

Yemen has 3 billion barrels of crude and 17 Tcf of gas, according to the US Energy Information Agency. Oil production peaked at 450,000 b/d in 2001 but has collapsed since then. It fell to 197,000 b/d in 2013, according to BP, and a combination of maturing fields, underinvestment and the war, which pitted a Saudi and UAE-backed coalition against the Houthis and has left hundreds of thousands dead.

Al-Shamasi said the country has a strategy ready to manage and produce its oil and export gas, but the country has faced "a lot of problems" in the last 10 years, including the comprehensive destruction of infrastructure from airstrikes.

Yemen's civil war began in 2014 when the Houthis ousted the internationally recognized government from Sanaa and the rebels have also seized territory in the north.

The Houthis have long attempted, without success, to capture the fields at Marib, where Yemen's gas reserves are concentrated. Gas was historically exported from the Shabwa governorate, but in 2015, Yemen LNG, the country's only gas exporting company, declared force majeure as the Houthis took control. Another group, Al Qaeda in the Arabian Peninsula (AQAP), has also conducted strikes around Shabwa.

The LNG export facility at Balhof was shuttered, stopping all exports of LNG. Crude exports also ground to a halt in 2015.

Yemen LNG's two-train Balhaf facility has an export capacity of 6.7 Mmtpa annually. According to the company's website, it used to supply gas under long-term contracts to Korea's Kogas, Total Gas and Power, and GDF-Suez, which became Engie in 2015.

Total has a 39.6% stake in the Balhaf facility, which is operated by Yemen LNG. US-based Hunt Oil, a group of three South Korean firms, and Yemeni state institutions also hold stakes.

In 2017, the government resumed oil production, but exports fluctuated month-to-month between 18,000 and 81,000 b/d, according to S&P Global Commodities at Sea. When a truce expired that October, the Houthis targeted the Bir Ali and Ash Shihr loading terminals on the Gulf of Aden, reducing exports to zero.

Before the war, oil made up about 60% of government revenues, but that has fallen dramatically. Oil and gas revenue could possibly be used for reconstruction, but determining how the warring parties vying for those resources divvy up control will be a major challenge.

The Houthis have demanded the lion's share of future oil revenues to pay public sector and military salaries and have also warned foreign oil companies not to sign deals with the internationally recognized government.

"We wish this problem will be erased and we will turn back to natural gas export and prosperity for the Yemeni people," minister al-Shamasi said.