Former Oil Minister Outlines Change in Future Oil Industry

Dr. Rashid Saleh Ba Rabba’, Member of the Shura Council and Former Minister of Oil & Minerals, said that 2011-2015 will witness the end of two significant product sharing agreements for ‘producing’ hydrocarbon blocks which are currently held in partnership between the state and Canadian Nexen in the Al-Masilah Block, Total, in the East Shabwah Block and Dove in the East Sar Block in the government of Hadramout.

Ba Rabba’ said these blocks are considered to be “the key blocks, as production in them constitutes a majority of overall oil production in Yemen.” Oil is produced in both blocks from sedimentary rocks and foundation rock layers.

He stressed the need to accelerate the finalization of a specific schedule and selection of a good team that will occupy the highest administrative positions for these companies, as part of the ‘Yemenization’ standards.

Ba Rabba’ pointed out that the oil sector faced several challenges, and outlined them as: the lack of a clear national strategy for promotion; lack of schedules for approval of product sharing agreements; deficiency of managing petroleum operations; non-developed institutional management of various petroleum activities; duality of authorities; lack of coordination between the various bodies for implementation of the agreements issued by a special law; deficiency of making decisions at the right time, deficiency of following up implementation due to weak institutional performance; fear of casting aspersions on the decision-maker intentions; lack of research data available; and development and building of the technical and institutional cadre and capabilities in order to keep up with and monitoring operations.

Ba Rabba’ said that Yemen is one of the regions attracting geo-petroleum investment, as it lies near rich oil fields of petrol and in the vicinity of some of the biggest oil reserves in the world, as well as its geographic location overlooking both the Red Sea and the Arabian Sea.

Geologically speaking, Yemen is considered among the more promising oil regions, whose sedimentary basins contain a complete petroleum system, in addition to flexibility and moderateness in partnership agreements of production.

On oil and gas exploration and production, Ba Rabba’ said that the area of the Republic of Yemen is divided into exploration and production blocks, there being 12 production blocks with a total area estimated at around 22,000 km2. There are 37 exploration blocks at current, with an area estimated at 200,000 km2.

In addition, there is one block currently awaiting approval, and a further 50 open blocks whose size ranges from just 731 km2 to approximately 400,000 km2.

As of December 2009, it was recorded that over 2000 wells had been dug; 474 for oil exploration and almost 1600 for production.

Over 174,000 km2 of 3-D seismic surveys have been conducted recently to support investment.

Ba Rabba’ pointed out that the number of production blocks have reached 12 blocks so far, on which ten companies operate: nine foreign and one national.

Oil production started in Yemen in 1986 from Marib-Al-Jawf block, where the annual production back then reached 2,650,000 oil barrels.