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 YEMEN
Arabia/Persian Gulf
The Republic of Yemen comprises North Yemen, formerly
an Islamic state, and South Yemen, formerly a Marxist State. In 1990,
after the fall of communism and the discovery of oil on both sides of
the border, the two countries merged. Hopes were high that the Marib
desert in North Yemen and the Shabwa Governate in South Yemen contained
substantial oil reservoirs.
 Oil was discovered in North Yemen in 1984 by Hunt Oil
and, with estimated reserves of 500 mm Bbls, the Alif field began
production in 1987 through a pipeline across the mountains to the Red
Sea.
In
South Yemen Technoexport, a Soviet company, had success locating fields
on trend with Alif during 1987 and 1988. They claimed 3 Bn Bbls but the
reservoirs turned out to be poor and the volumes were found to be
grossly exaggerated. Nimir Petroleum, who licensed the fields, abandoned
operations in 2000.
Canadian Occidental licensed a large area in the east and
in 1991 a pipeline was built to carry 120,000 Bbls per day initially
from 3 fields to the Gulf of Aden.
 The departure of the Soviets opened up the country and
foreign companies flocked to the region. A series of PSCs were
negotiated on the basis of limited data or considerable cost of purchase
of data and facilities. Shell, for example, paid over US$70 mm. As a
result of the competition, terms were tough with high work commitments
and large bonuses.
During 1993 and 1994 exploration activity increased, well
over half the blocks saw drilling activity and all but 3 of the 24
operators were active. But, due to the remoteness, the terrain and lack
of infrastructure, exploration costs were high. By 1996 most of the
operators had pulled out.
The prospectivity of Yemen had been over-estimated and
only Hunt, Canadian Occidental (now Nexen) and later Total were truly
successful. However, small oil companies with realistic aims are now
exploring the country especially after Yemen’s Oil Ministry began
promoting its first licensing round in late 1999. Some successes have
been achieved.
Yemen has significant associated gas reserves and
resources mostly located in the northwest but no commercial utilisation
has been established and all gas is either flared or re-injected. Small
amounts are used locally. A project is planned to construct an LNG plant
with a capacity of 6.2 million tonnes of LNG per annum at Bal Haf on the
southern coast to receive gas and sell LNG to India. Local gas power
stations are also planned.
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