In northern Yemen industry traditionally has been based on food processing, but this subsector has suffered from poor productivity of agriculture and reliance on imported raw materials. Building materials, textiles, leather wear, jewelry, and glass making are other industries in the north. The largest industry in southern Yemen is petroleum refining. Southern manufactures include clothing, processed food, metal products, soap, and perfumes. Industrial production accounts for 40% of GDP (1998 est.)
Yemen's main refinery at Aden processed 60,000 barrels of petroleum per day in 1994 after sustaining damage in the civil war. Output reached 100,000 barrels per day by the start of 1995 with the repair of the main pumping station and two tapping units. That year, the refinery produced 26.5 million barrels of residual and distillate fuel oil, 10 million barrels of gasoline, and3.5 million barrels of kerosene. In 2002, Yemen's total refinery capacity is 130,000 barrels per day, most from the 120,000-barrels-per-day-capacity Aden refinery operated by the Aden Refinery Company (ARC), and the rest from a 10,000-barrels-per-day refinery at Marib operated by Yemen Hunt Oil Company. In December 2002, the government signed an agreement with the Hadramawt Refinery Company, a Saudi venture, for the construction of a 50,000-barrels-per-day refinery at Al Mukalla costing $450 million.
Yemen's considerable natural gas reserves—estimated at 480 billion cu m (16.9 trillion cu ft), have not been developed. A liquefied natural gas project was initiated in 1995 by TotalFinaElf and several other major multinational oil companies, which established the Yemen Liquefied Natural Gas Company (Yemen LNG). To date, however, the company has not been able to locate enough credit-worthy buyers of the output that it could sign up for the period of 20 years or more generally needed to justify the large capital outlays for liquefaction and port facilities, and LNG tankers. In June 2002, two US companies, ExxonMobil and Hunt Oil, announced they were leaving the consortium. Shortly after Yemen extended approval for an additional four years.