Yemen Oil Industry Loses Ground

National Yemen

Fakhri al-Arashi

The deteriorating security situation in Yemen has pushed some international oil companies to recalculate their working strategies. Canadian Nexen Petroleum Yemen, in East Alhajr Block 51, has announced the temporary shutdown of its oil operation including its labor force and subcontractor companies. Some of the employees were sent back home with full payments, while others were sent to work from the head office in Sana’a.

A reliable source at the company who preferred not to be named said that al-Qeada has sent a cable of threating messages and for this the company has decided to prioritize the safety of its employees ahead of the commercial production. The source continued to say that the international drop of oil prices has nothing to do with company closure. The average oil production of Block 51 is 3000bpd, shared with the Yemeni government.

In separate news, Dove Energy, the operator of Block 53, has submitted a request to the Ministry of Oil and Minerals asking for an early handover of its oil block. “The international lower oil prices has pushed the company to address the government with its interest of handing over the block one year before the production sharing agreement (PSA) is over.” Dove energy has requested the hand over by January 31st, 2015. Block 53 produce 3200bpd in partnership with Yemen Oil and Gas and DNO-Yemen. The Yemeni government has not replied yet if it will receive the block according to the company request or if it will force the company to complete the contractual agreement, which was set for 15 years production and operation.

SEPOC, Yemen’s first national oil and gas producer has also shared a press release with National Yemen stating that the company operation is going smooth. Late last week a group of armed militants representing Ansar Allah invaded the company, requesting the immediate leave of the general manger and the deputy general. As soon as this happened, Mohammed bin Nabhan, the new Minister of Oil and Minerals made a sudden visit to Safer to cease any chaos that may have happened as a result of the move made by Ansar Allah. Shortly after, a press statement was made by SEPOC condemning all of the press and media releases that have fostered rumours of the interruption and stoppage of operations. The company also called on the press and media to investigate credibility and professionalism in their news.

SEPOC confirms that all production and operations are running normally. SEPOC is committed to fulfilling its obligations with respect to crude oil production & export, LPG production, natural gas delivery to YLNG, and natural gas to the Public Electricity Company.

The suspension of the oil production and operations of Canadian Nexen Petroleum Yemen, and the request of Dove Energy to hand over Block 53 may push Total Yemen, the operator of Block 10, to consider the operation of the two blocks in case Canadian Nexen does not resume its operation with the on-going security threats. Another local operation, Petro Masila the operator of Block 14, is seeking the opportunity to operate the Maisla basin, which contains more than five international oil companies. Petro Masila may face financial troubles as it is government owned, while Total has no problem financially.