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While the search for oil in Yemen began in 1961, the first commercial strike was made by Hunt Oil (1984) with the discovery of the Alif Field in the Marib-Jawf-Shabwa Rift Basin (proven recoverable reserves 500 MMBBL). This area is currently producing 176,000 BOPD. In December of 1991, Calgary-based Canadian Occidental Petroleum announced a significant oil discovery in the Masila area of the Shabwa-Hadhramaut Rift Basin. Since that time, Canadian Occidental has made several additional discoveries, and boosted proven and probable recoverable reserves to over 546 MMBBL. In 1994, CanOxy (now Nexen) produced an average of 140,000 BOPD, or 40% of Yemen’s entire daily production. As that time, Yemen’s proven reserves stood at 1.4 billion barrels of oil and 17 TCF of gas. Yemen’s crude is low in sulphur and is comparable to Arabian light crude, which requires little refining and attracts premium prices.
The country’s pipelines have enough capacity to carry current volumes from the main producing areas to loading facilities for export. However, the infrastructure is lagging behind exploration and development activities, particularly for the huge volumes of associated gas. The government is pursuing strategies to increase gas usage and expand gas exports, probably as LNG.
Yemen was formed in 1990 when the former Yemen Arab Republic (YAR or North Yemen) and the People’s Democratic Republic of Yemen (PDRY or South Yemen) were united. With the conflicting historical, political and religious development of these countries, unification was viewed with skepticism. In May 1994, when South Yemen’s oil and gas reserves were re-evaluated and significantly upgraded, civil war broke out and foreign exploration companies either withdrew completely or left only a skeleton staff. The situation is far from resolved, but a coalition government has been established, and the government of North Yemen has moved to appease the South.
Exploration contracts in Yemen are in the form of Production Sharing Contracts. Current terms appear onerous, but the government is willing to negotiate and eager to promote investment. In recent years, Yemen’s economy has become increasingly dependent on petroleum revenues generated by foreign investment, and the transfer of technology and expertise. The country has issued a new investment law which provides ample opportunities for foreign investment and participation. (Note – when evaluating ROC Oil’s interest in a Yemen exploration block in 1999, Petrel Robertson found the fiscal terms quite onerous compared to many other countries).
For more information contact:
Petrel Robertson Consulting Ltd.
500, 736- 8th Avenue S.W.
Phone: (403) 218-1618
Fax: (403) 262-9135
This summary, part of Petrel Robertson’s 1995 summary of exploration and development opportunities in 31 countries around the world, has not been updated. Some of the information, particularly relating to political and economic issues, is thus out of date. It is included, however, to demonstrate the breadth and depth of Petrel’s work in each of these nations.