YEMEN - The Oil Refining Sector.

Yemen has an oil refining capacity of 120,000 b/d from two ageing plants. The refinery in Aden, operated by Aden Refinery Co. (ARC), has a capacity of 110,000 b/d. Capacity at the Ma'rib refinery is 10,000 b/d. The Aden refinery, which had a design capacity of 170,000 b/d, sustained significant damage during the country's 1994 civil war, but was later partially rebuilt. Both refineries are state-owned under the control of the Ministry of Oil and Mineral Resources (MOMR).

The government has backed away from a 2001 plan to privatise the Aden refinery, but may offer a partial stake to private investors in the future.

San'a' signed an agreement in December 2002 with the Hadramout Refinery Co. (HRC), a private firm, to have a 40,000 b/d plant built near Mukalla on the Arabian Sea coast. The plant has been designed to have a 100,000 b/d capacity at a later stage. In the spring of 2004, HRC signed a $200m EPC contract for this with a South Korean consortium of Samsung Corp and SK Engineering & Construction. It was then said that the contract was to come into effect after financing for the project has been secured.

In August 2003, Samsung had signed a $1.2 bn agreement with HRC to take the refinery's output. It was to lift a total of 8.8m tons over a 10-year period. But later the Korean firm cancelled the contract, reportedly after "certain preconditions" had not been met. In May 2004, it was reported that HRC had signed a new offtake agreement with an unidentified company. No progress has been reported since then. HRC shareholders are said to include businessmen from the UAE and Saudi Arabia.

There are two different refining projects proposed to be built at the Ras Issa crude oil terminal, near the Red Sea port city of Hodeidah. The terminal handles the export of crude oil coming by pipeline from Ma'rib oilfields.