Yemen has an integrated network of pipelines for transport of the crude oil and natural gas produced in three central areas. This 560-mile network connects with four longer pipelines that transport oil to several major export terminals. The 263-mile Marib-Ras Isa pipeline is the longest of the domestic pipelines, transporting oil from the Marib basin to the Ras Isa offshore export terminal on the Red Sea. The pipeline has a capacity of 225,000 bbl/d. The Masila-Shahir pipeline, capable of transporting 300,000 bbl/d, has the largest capacity of pipelines in Yemen. It runs approximately 93 miles from Masila to the export terminal at Ash Shahir. The Shabwa-Rudhum pipeline carries up to 135,000 bbl/d from the Eyad-Shabwa block to the Rudhum terminal on the Gulf of Aden. Jannah-Safir, built in 1996, carries 120,000 bbl/d to production facilities in the Marib region.
In July 2002, the government of Yemen approved of an agreement in principle with the Saudi Arabia for studies to be made on the first international pipeline (oil, liquefied natural gas, or liquefied petroleum gas) from Saudi southern oil fields to the Yemeni port at Hadramout. The two governments are conducting further negotiations on this project. The pipeline will be used for exports from exploration and production (E&P) ventures in the Saudi portion of Rub Al Khali involving a Shell-Total partnership, LUKoil of Russia, Sinochem of China, an Agip-Repsol partnership.
Yemen currently has a crude refining capacity of 130,000 bbl/d from two aging refineries. The refinery in Aden, operated by Aden Refinery Company (ARC), has a capacity of 120,000 bbl/d, while capacity at the Marib refinery, operated by Yemen Hunt Oil Company, is 10,000 bbl/d. The Aden refinery, which had a design capacity of 170,000 bbl/d, sustained significant damage during the countrys 1994 civil war, but was later partially rebuilt. The Yemeni government has backed away from a 2001 plan to privatize the Aden refinery, but may offer a partial stake to private investors in the future.
Yemen signed an agreement in December 2002 with the Hadramout Refinery Company, the countrys only private refining company, to construct a 50,000-bbl/d (rising to 100,000-bbl/d) capacity at Al Mukalla. The facility is scheduled to be completed by 2006. Another refinery is planned for Ras Isa.with a capacity of 60,000 bbl/d and completion by 2007. Refinery output would be targeted for domestic use rather than export, despite the fact that according to the MOMR, domestic growth in demand for oil products, especially subsidized diesel fuel, has been sluggish over the past several years. The slow demand growth is mainly attributed to high import tariffs on fuels and to the smuggling of cheap (subsidized) Yemeni oil products across borders, where fuel prices are higher (leading to domestic shortages).