Adding Colour to the Map

“We should be forthright and honest when we talk about the challenges that the oil and gas industry has to overcome – it’s the only way we’ll make proper progress,” said the Minister.

The National Yemen met with Mr. Al-Aidarous, the Minister of Oil & Minerals after he announced the sale of three hydrocarbon blocks earlier last week. He seemed upbeat about the prospects of the conference which will be taking place this week on the 17th and 18th October.

“We expect considerable progress from the conference, including the tenders of many hydrocarbon blocks for exploration and mineral investment opportunities, which will happen against the backdrop of the conference,” he said.

The conference event organizers revealed to the National Yemen that a number of private meetings between investors and government officials had been arranged.

Despite the promising preliminaries to the 3rd International Oil, Gas & Minerals conference, the minister was keen to use his brief time with us more effectively than simply praising the conference.

“My immediate priority is to build up our picture of Yemen’s natural resource reserves – it’s only partial at the moment, but with more investment, newer technologies, we can add more colours to the map,” he said brightly.

It is apparent as to why this is a priority – Yemen’s total oil and gas reserves is a number of great political salience, and not just a sum to gloss over in an investor’s information pack. Much of the doomsday reportage about Yemen usually includes a section on the depleting oil reserves the country is using to fund itself.

However, much of these think-tank reports, which exploit the fact that Yemen is due to exhaust its proven oil supplies in the coming decade, are short-sighted. Only a fraction of Yemen’s geographic underbelly have been properly explored, and the country has not yet promoted its vast offshore hydrocarbon blocks.

The need to ‘add colours to the map’ is highlighted by the fact that many colours on the exploration map are fading. Many prior exploratory operations did not penetrate many of the geological layers of the sedentary basins in which oil is found, and many more used technology which is now quite out-dated.

Even one big discovery, which many industry experts believe more than plausible, would dramatically change the sobering sense of realism which observers usually regard Yemen’s future with.

The country, however, lacks part of the infrastructure and the associated capital funds to conduct comprehensive oil exploration, which is why the government is reliant on investment.

Mr. Al-Aidarous and the rest of the Ministry of Oil & Minerals are endeavouring to overcome many other issues which are relevant beyond the remit of the oil and gas industry.

Mr. Al-Mutawakkel, the general director of ‘Yemenization’ for instance has institutionalized the concept that the booming energy industry here can, and must, be utilized as a vehicle to train much-needed cadres of technically skilled Yemenis to international standards and to nurture Yemeni professionals with multi-national management experience, to later become captains of industry in Yemen.

It is, nonetheless, an uphill battle. “Yemen is relatively new to oil,” the Minister said. “The industry really only took off in post-unification Yemen, so that’s only the last two decades or so.” The gas industry took off even later.

It is no surprise that the industry is suffering some teething problems. At the same time, however, it is spear-heading some creative solutions within and outside the industry.

The ministry decided that as a part of new agreements with oil operators, that producing companies utilize by-product gases. Usually such gases are simply ‘flared’ (burnt), and form the distinctive flames people associate with oil installations. The ministry, however, decided that they should be used for local power generation, to help alleviate strains on Yemen’s electricity net.

Mr. Al-Aidarous spoke of deeper problems which lay in the current set up. These frustrating problems, he said, “means that I, and my successors, would simply be walking in circles if the nature of the oil industry was not markedly transformed – something I have personally become determined to change.”

The minister went on to outline his tripartite solution.

The first step is to have strategic foresight for the industry, that is, to develop a long term development strategy instead of simply reacting to the evolving situation.

The second was to modernize and optimize the legal framework which the industry operates in – something he feels is cumbersome in the modern climate, and simply not as mutually beneficial as it could be, for both investor and Yemen.

Lastly, he advocated a full stream-lining and restructuring of the ministry.

The interview ended there, with the minister whisked away to sign documents and shake hands with delegations of the oil companies who had secured exploration rights for the three hydrocarbon blocks, whilst I was left staring at a hydrocarbon block map of Yemen which had just been shaded with new company logos. The new colours were an auspicious sign.