Declining oil proceeds lead to decline in financial exchange reserves

National Yemen

Drilling oil rig at oil company site

By NY Staff

According to government data, crude oil exports have fallen to about $87 million dollars at the end of last January, to $214.77 million in FY 2013, compared with $301.68 million in the same period last year.

The report by Central Bank of Yemen pointed out that lower revenues led to overall decline. The government’s share of total oil production to fell to 1.95 million barrels in FY 2013 from 2.6 million barrels in FY 2012. As a result, Yemen’s foreign currency reserves declined to $5.23 billion, a decline of $1 billion including $120 million in December alone.

The Undersecretary of the Ministry of Oil and Minerals, engineer, Shawqi al-Mikhlafi emphasized that the drilling of a second exploratory well in al-Jawf governorate will tackle these problems.

“The second well is located in Bani Marwan, the Directorate of Al-Hazm which is within the scope of block 18, operated by Safer Oil Company.”    

Al-Mikhlafi added that three weeks will be needed to assess the area’s potential for oil and gas extraction. Initial tests were positive, and hydrocarbon layers close to the earth’s surface indicated that the area contains natural gas.

The government continues to import oil derivatives due to repeated attacks on pipelines in Marib, al-Jawf, and Masila. These derivatives reached 18.4 million barrels, worth $2.93 billion, and were necessitated by the needs of local markets.

Yemen is considered a small oil producer, with production of between 280 and 300 thousand barrels per day, which is a decline of over 400 thousand in previous years. However, crude exports account for much of Yemen’s revenue, and forms about 70% of the state budget, 63% of its total exports, and 30% of its GDP.