Yemen Declares Force Majeure, Ban on Maritime Navigation

On Monday, Yemen declared force majeure on the country’s sole liquefied natural gas plant, citing security concerns. In an emailed statement on Monday, Yemen LNG Co. stated, “Due to further degradation of the security situation in the vicinity of Balhaf, Yemen LNG has decided to stop all LNG producing and exporting operations and start evacuation of the site personnel. The plant will remain in a preservation mode.” Tribal fighters seized posts outside the city of Balhaf in south-eastern Yemen near the plant after soldiers fled. Yemen LNG processes and exports gas from the Marib area. The project has three long-term sales contracts with GDF Suez SA, Korea Gas Corp. and Total SA. With a stake of nearly 40 percent, Total is the biggest shareholder in the project. Others include Hunt Oil Co. and SK Innovation Co., the website shows.

Houthi fighters have seized areas near the LNG facility, however they have not attacked the plant itself, according to residents. Yemen’s LNG output comprises nearly 2.2% of the world’s total liquefied natural gas, according to data from the International Group of LNG Importers. The halt of operations is expected to have any immediate, significant impact on the market. More worrying is the transport of oil through Yemen’s strategic location on Bab el-Mandab Strait, which at its narrowest point is 18 miles wide. The strait is a critical chokepoint in international shipping; according to US figures, over 3.4 million barrels of oil per day passed through the waterway in 2013.

As of Monday, Yemen has banned entry into its territorial waters. Commercial and military vessels cannot enter the designated zones without authorization from the Yemeni government. Currently, only emergency goods and medical aid vessels will be allowed entry into Yemen, and must submit to search and approval by the coalition forces.

The decision came after several Iranian attempts were discovered to smuggle aid to Houthi rebels and militias loyal Saleh, according to Yemen’s Defence Minister. The ban is being enforced by the Saudi-led, anti-Houthi coalition, which is blocking access to ports in areas believed to be under Houthi control. BIMCO has advised all vessels to transit the Gulf of Aden and Red Sea at least 12 nautical miles outside Yemeni territorial waters when possible.

Marine insurer Skuld has stated that a significant number of reports have indicated that the Saudi-led forces have begun are enforcing the blockade, with emphasis on ports which may be under the control of the Houthi-led forces in the north and west of Yemen. There is a blockade of vessel traffic from Bab Al Mandab to Yemeni territorial water, with particular focus on vessels that may have recently called at Iranian or Iraqi ports.

An urgent member advisory from Skuld P&I Club yesterday warned: “Members with vessels at Yemen, or proceeding to Yemen need to urgently review the situation in the light of this development.” They have further advised any vessel currently berthed in a Yemeni port to consider raising its ISPS level to 3. Ships still intending to go to Yemen should review their charterparty terms and inform hull, war and P&I insurers.

Coalition warships are particularly focusing on vessels that may have called recently at ports in Iran or Iraq. UK P&I Club said that coalition forces had boarded several of its members’ vessels. Shipowners and operators – including Maersk, MSC, CMA CGM and Evergeen are diverting to safer ports in the region. Container ships, bulkers and tankers are all said to be affected.

Last week, BIMCO stated, “If a port is taken/held by the Houthis and a ship is seen to be supplying the rebels, the ship could be at risk from air strikes or indeed naval action from the coalition.” Insurers are said to be refusing to cover vessels berthing in Yemen’s ports. Dryad Maritime has recommended shipowners, operators, and masters give Yemen “as wide a berth as possible”. Skuld told its members to “instruct the master to prioritise the safety of the crew and vessel”.

The escalating tension has increased the likelihood of an incident at sea between Iran and the coalition or international forces. MS Risk advises merchant vessels to be aware and vigilant to this threat – these tensions have led to increased naval boardings and inspections with little or no notice. MS Risk continues to advise vessels to avoid all Yemen ports until further notice. We continue to advise vessel operators to notify their insurers prior to sailing through the Bab el-Mandeb. Any vessels currently in the Gulf of Aden are advised to remain vigilant at all times. Pirate Action Groups (PAG’s) are likely to continue to operate in this region and may easily be mistaken for refugees fleeing the chaos in Yemen.