DNO Oil Company Plays Politics More Than a Force Majeure Suspension

By the editor

DNO Yemen has been doing business in Yemen for two decades and has issued force majeure notices to the Ministry of Oil and Minerals in Sana’a for both Blocks 32 and 43 in Wadi Hadhramout. This is not the first time for DNO to announce a force majeure; it had previously invoked a force majeure for Block 47 South Hood in September 2013.

The ongoing labor force strike have pushed the company to temporarily suspend production from Block 32 and 43 Howarime (Hadhramout). The average production of each block was 1,600 bopd prior to suspension.

DNO has chosen the wrong time to discuss the difficulties and challenges of the operational process on those blocks since late last year. The company said in its letter that the movement of equipment, logistic supplies, and contracts are very limited with the regular blockades by local groups in the company’s operational areas.

The company has not talked to any local media about the employment case since June 22 of last year, which could be the core point of the company latest notice of force majeure oil operation suspension. The company has leaked news to the international media accusing labor unions of initiating unilateral actions that have led to work stoppages at Blocks 32 and 43, including administrative staff.

In its statement, the company said the declaration of force majeure has been made in accordance with the provisions of the production sharing contracts for these blocks and suspends DNO’s obligations until the impediments to safe, secure, and sustained operations are removed.

On the same matter, staff working at the company rejected the unprofessional action made by the company in an excuse of the current fragile situation. “The company’s oil operation goes very smooth in both Blocks 32 and 43, and nothing serious has happed yet to make the company do so. It is escaping the legal rights of the dismissed staff of last year,” said DNO staff. This month, the company has been the actually with a remarkable deduction that may reach 10% of the staff regular payment.

Why has DNO come to face these challenges now and remained calm during the serious crises of the Harik movement (al-Haba al-Sha’abiah) early in 2014? DNO is operating in Yemen and it should respect the Yemeni law rather than creating excuses that may harm its future investment opportunities local and internationally. “DNO was supposed to look to the surrounding oil companies doing oil business in the same area like TOTAL, DOVE, NEXEN and Petro Masila and discuss with them the reasons of its request,” said DNO staff.

A DNO spokesman said the company is committed to resume oil operations in the country where it has been active since 1998 and it is engaged with the government and the union to resolve the outstanding issues.

The Ministry of Oil and Minerals has not interfered yet to solve the existing issue between the labor syndicate, dismissed employees, and the company. “Ministry involvement is very weak and the company is playing politics more than doing business, otherwise it would negotiate the positive and negative points like how other national oil companies are doing,” said Abdulwahab al-Washali. DNO should listen to these words of wisdom, and the concern of one employee or two should not lead to the direct suspension when the Yemeni government needs its modest oil production. “The Yemen state budget depends on oil production and DNO is one of those international companies who contributes to the state budget and by doing this in this critical time it aims of doubling the suffering of the President, government, and its employees,” said al-Washali.  Who knows what are the ultimate goals of the company toward the force majeure notice? Does it aim to draw the attention of international companies that the investment in oil industry is not safe in Yemen?  Or is it trying to put pressure on the Ministry to accept its requests and do business the way it likes?