Reuters/Milan/London

Yemen has declared force majeure on liquefied natural gas (LNG) deliveries from its Balhaf plant due to deteriorating security following the collapse of the government, trading sources said.
The 6.7mn tonne per year Balhaf gas export terminal is run by France’s Total and ships LNG, primarily to Asia and to some European countries.
Total was not immediately available to comment.
Earlier in the week Yemeni President Abd-Rabbu Mansour Hadi resigned, after Houthi rebels battled their way into his presidential palace, plunging the unstable Arab country deeper into chaos.
“Due to the political circumstances, on Monday there were skirmishes around the presidential palace and the government instructed Yemen LNG not to shut down the plant but to prepare to lower production and ... declare force majeure,” a source familiar with the matter said. Asian LNG prices were not impacted by the issue as it was expected it could be quickly resolved if a new government were to be installed in the next few days, the source said.
The terminal delivers gas under long-term contracts to South Korea’s Kogas and France’s Total and GDF Suez.
“When you reduce your production, the next cargoes will be delayed. Then you reschedule your offtakes with your buyers, Kogas did that already,” the source said.
Force majeure is a clause in contracts that allows buyers or sellers to renege on commitments due to events beyond their control.
Oil and gas generate the vast majority of government revenue in one of the poorest Arab countries.
“The crude oil and natural gas business is crucial to the government coffers, that’s why they look at (monitor) what’s happening, they want the best safety and security for the people working in their country,” the source added.