Yemen forced to increase oil imports

National Yemen

Cash-strapped Yemen has again been forced to increase oil product imports, shipping and trade sources said on Tuesday, after its Aden refinery shut down last weekend when its crude oil supplies dried up.

The poorest Arab country has been paralysed by 10 months of popular protests, demanding that President Ali Abdullah Saleh step down, during which there have been numerous attacks on oil and gas pipelines.

Traders who supply fuel to Yemen and shipping sources said the impoverished country now faces a repeat of last summer, when three months of pipeline and refinery shutdowns caused a fuel shortage and fatal petrol station fights.

‘We are heading for a repetition of the summer,’ a Yemen-based shipping source said.

When the Aden refinery, the largest in the country with a capacity of 150,000 bpd, is fully functional, Yemen still has to import up to four cargos of fuel per month.

Now that the refinery has been forced to close because its crude oil stocks have run dry following attacks on its main feed pipeline in October, Yemen will likely raise imports again soon.

‘I think now that will have to increase significantly,’ the shipping source said, adding that there were three vessels at the Aden port waiting to be unloaded carrying a total of 140,000 tonnes of gas oil and high sulphur fuel oil.

He said three more vessels are due between November 24 and 27 – two carrying fuel oil and the other gasoline.

The refinery operators have also been in talks with companies outside Yemen to secure supplies.

‘I believe they have been asking for help from the UAE government,’ a Gulf-based trader with knowledge of the talks said.

Top oil exporter Saudi Arabia donated 3 million barrels of crude oil to Yemen earlier this year, which was used to restart the Aden refinery and helped eased the fuel shortage. The UAE and Oman also donated oil.

In a bid to maximise revenues from small and declining oil production and exports, the Yemeni government has decided not to renew Canadian Nexen’s operating licence for the Masila oilfield, home to the country’s largest proven oil reserves.

The Supreme Economic Council approved the establishment of a new company to be called PetroMasila which will take over from Nexen and start receiving all of the revenue from the field which produces 70,000 bpd, which is mostly exported.

‘There have been rumours of the government running out of cash for some time,’ the shipping source said. ‘This might provide them a brief relief.’ –Reuters