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Energy and Petroleum Affairs

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Energy and Petroleum Affairs

Stages of Crude -Oil Discoveries in Yemen

Yemen remained for a long period far away from any activity and since the second half of the 20th century that is related to the petroleum and mineral industries. It was only as from the 1962 Yemeni Revolution that the real activity of the petroleum sector started its initial steps of existence and /or evolution. The first step in formulation of the petroleum sector started in the first few years of the sixties when what used to be known at that phase by the "Yemeni fuel- products Company " was established to undertake the responsibility of importing foreign petroleum products; been as respective to satisfy the demands of the "moderate" and " limited -range" markets; in the Republic. The company's activity started in Hodeidah with small-sized administrative personnel and modest patterns of storage units, from which other towns were being supplied by their needs of the oil products. Within a short period of time after the rise of the blessed Revolution 1962, the company witnessed, on a yearly basis, some rapid developments. The expansion in the volume of services executed by the company, and establishment of its sub-units and establishments in a number of the Republic provinces was a natural matter to occur, to the rapid changes and openness to the world, caused as effective consequences of the Revolution. These came into being after the elapse of many centuries witnessed by Yemen's isolation from the outside world. The expansion accounted also for a yearly increase in the consumption of these petroleum products. This company; with its name later changed to "Yemen Oil Company "; did survive till the year 1973 as the only state entity, or existing institution, representing the petroleum sector in Yemen. In that Year, however, the Mineral Wealth Authority was established. It represented another link within the chained -activities of petroleum's' and minerals' sector. Being previously a section of the Ministry of Economy, this Authority had since then been entrusted to undertake research and excavation works related to the petroleum and mineral resources. At that time, the establishment of Mineral Wealth Authority was necessary due to availability of a number of related factors such as return of a substantial number of Yemeni graduates from pre-U.S.S. R and Egypt on one hand, and initial concerns and interests on the other of some foreign petroleum companies (Algerian Soundtrack and Shell) in obtaining oil exploitation contracts. Despite the limited technical and financial resources of that Authority, it did what was possible within its responsibility of implementing some office and field studies in a number of regions within the Republic, and through either self financing, or, by obtaining assistance and loaned funds from the regional and international organizations. Moreover, the Authority engineers participated and supervised the exploration activities, that were conducted at that time by some foreign petroleum companies, operating in the Republic.

The overall activities undertaken by the Authority since its creation led to bringing major concern of the policy-makers, in the sense of necessity to have an institutional body that to incorporate the various activities of oil and minerals, instead of its scattering within the responsibility of various bodies. These interests by the beginning of 1978 led to the formulation of YOMINCO, which was entrusted with responsibility of all matters related to the oil and mineral affaires. Being in existence as a holding corporation, it incorporated within its framework three different units. These were: -Yemen Oil Company, Geological -Aerial Mapping Authority (in place of the Mineral wealth Authority) and Al-Salif Company for production and marketing of Salts and gypsum powder. Once established, YOMINCO immediately made preparations for projects on research and exploration. Such initial works depended on the piles of data and information being added to the previous studies -whether were related to the oil firms, or the Yemeni technical cadre. It also managed the signing of numerous agreements of co-operation with the brotherly and friendly countries. Those projects were the initial corner stone for the organized work in the fields of oils and minerals exploration and research. It also played; at a letter date; an essential role within the aspects of oils and minerals discoviers. Perhaps one of most distinguished projects of such was the "Aero-Magnetic Survey", which YOMINCO had contracted for its execution with the French "CGG" Mareb in -Al-Jawf zone. The project's results indicated the existence of a hollow residual basin that contained in-particular rocky-leveled surfaces, caused for generating and reserving large amounts of crude oil. As result of this survey, the Corporation proceeded for the promotion of the region whereby numerous European and American firms placed their tenders for the granting of exploitation prospects. In Sept.1981, Hunt Company -an American firm-won the bid of participating with the government in the production process. Approval of this joining venture was granted in January 1982, when the firm started its exploration program. By taking due considerations that all other activities of research and exploration of the oil form their initial stages till the early years of the eighties; as done by more than eleven oil firms at different periods and on various terrestrial and sea levels of the territorial lands had not led to any prospects; the American Hunt company reached in exploring oil within Mareb -Al-Jawf Zone (Sector 18). The first oil discovery was within the geological formulation named (A) (Summer 1984) Discovery of oil and gas in Mareb -Al-Jawf Zone thus represented; together with the further other discoveries in Ayyad region of Shabwa province in 1987; an important turning point in the course of developing the oil sector, and its speedy progress during later stages. In fact, the basic franchise of the various aspects was founded: discovery -production refinery, transportation, storage and reserves, marketing of crude oil. This progress was also not confined to construction of establishments and units but for one of quantity and quality of the institutional foundation, and the caliber quality -grade of the operating personnel. Thereafter, this sector became today one of the largest economically, and essentially the stream of funds for the national economy, in particular, the foreign currency. In addition to that, it is the source of covering the local market requirement of the locally-refined petroleum products .The following is a brief bio-data on the country's aspects of the oil sector's activities:

Exploration and Discovery Activities

A-Preceding Works:

The first trial in exploring oil in Yemen dates back to 1938 when the Iraqi petroleum firm IPC, that were of originally a British identity, executed some geolo-physiological studies related to its plan of discoveries in north Hadramout - Al Mahara Zone .It exploration phase extended till the mid-fifties, though on a discontinuing basis .It then left the area without managing to dig a single well.

As a fact in noting such first trials that took place in Yemen even before the break of the Second World War, it is important to indicate its cause. This was because of the success achieved by some western petroleum companies in exploring oil during the second and third decades of the twentieth century, in the Arabian Peninsula and Gulf states on one hand, and their interests, on the other hand, to expand their exploration activities to other new regions.

The second trials worthy of mentioning took place during 1952-1954 by a German GmbH called "Brackla and Deilaman ". This oil group did some geological and geo-physiological survey (cross-sectional and magnetic survey works only) in Al-Saleifcoastal line. Again, they left the area with no success.

Around various and distant dry and. coastal regions of the Yemeni territory, petroleum firms of a world -wide fame began since the early sixties, and thereafter, numerous activities of crude -oil explorations. Their works in a concise form can be outlined by the following systematic order: -

An indication of the activity related to discoveries1969-1984

Though the exploration activity implemented before the sixties had not carried any substantial value as to any yield on a commercial basis, yet Hunt Company was the first to bring about around summer 1984 oil amount of a commercial value. This was effected through its digging of the first explored well in Mareb region (Sector18)

Such discovery in Mareb Zone remained the basic factor, which represented a force of attraction in stimulating the interests of the foreign oil firms. During the eighties a number of them began placing their request for granting of oil exploitation privileges in Yemen. Moreover, another discovery in 1987 took place in the Ayyad /Shabwa Zone (Sector 4). This was attributed to one Soviet team working within the sphere of bilateral co-operation between Yemen and pre-USSR. Thus, by the mid-eighties, more than eleven oil firms were seen to have had signed separate agreements of mutual co-operation in several oil production projects with the government of the Yemen Republic, through their undertakings of oil explorations in various parts of the country.

From the preceding outline, it is clear that the second half of the eighties was distinguished from its preceding phase by an intensive activities of exploration by a number of companies operating in various parts of the country ... This beside Hunt company which became an oil producer since 1986.

Despite the results reached by some operating firms working within the sectors offered to them, yet these results were positive in some of these sectors, and were achieved in different phases. These may be outlined as follows:

Technoexport of Russia: - it started its oil explorations in the western region of Shabwa province during the end of 1985. It had three discovery achievements, which were declared in April 1987 (Western Ayad, Eastern and Amal within sector 4)

-Canadian Occidental: It operated in Sector 14,Al Maseela region of Hadramout.

- Total of France: It operated in the region lying east of Shabwa / Hadramout (Sector 10). -Jannah Consortium: working through the operating firm Hunt-Jannah in the Jannah region (Sector5). Thereby, the total exploration and discoveries from its beginning till 1990 were as follows: a) The surveys: measuring lengthwise 43000 Kilometers. It included both the one implemented by Hunt company in Mareb (Sector 18) and Canadian Occidental in Al -Massela (Sector 14), till the year 1990. b) Digging of rigging wells: with the total of 320 wells for the period 1961-1990 executed in the following manner: - -50discovered rigs in Mareb (Sector 18) -69 discovered rigs in Mareb distributed in the various sectors. -160 developing rigs in Mareb region (sector 18), and developing rigs in Ayad fields situated within Shabwa Sector 4.

C) Oil discoveries 1990-1996 On the day Yemen's unity (22/5/90), there were five oil firms working in the Republic of Yemen. They were: 1-Hunt Company in its production phase, 2- Techno export of Russia in its production phase, 3-Canadian Occidental in Al Maseela region of Hadramout (Sector 14) in its exploration discovery/ phase 4-Total of France in East Shabwa of Hadramout (Sector 10) in its exploration /discovery phase. 5-Phillips company in the upland valley of Al-Jawf (Sector 20) in its exploration /discovery phase. Within the elapse of few months for the unity, the Yemeni lands; in particular the eastern and southern -east regions; became persuasive to the largest firms of an international standard, due to the fact of being not explored by such, and the possibility of finding oil in-within. The concerned bodies in the Ministry of Petroleum and Mineral Resources took their care of such regions through preparing studies and evaluating works on one hand, and its division of the Republic into 40 sectors distributed throughout, with a total area ranging between 3000-9000 Kilometers, on the other hand. Promotion of these sectors were later left open for those companies wishing in executing their exploration /discovery works. For twenty-two sectors out of these; most of which concentrated in Shabwa, Hadramout and Al-Mahara provinces; eighty offers were received. Consequently, twenty-two oil production agreements of mutual participation came into existence with the largest and known oil firms during the first three years of Yemeni unity. These were: -Five, been signed and approved in the year 1990; -Eight, been signed and approved in the year 1991; -Five, been signed and approved in the year 1992; and -Four, been signed and approved in the year 1993. Later on, five more agreements additionally took effect, thus making the total twenty-seven. Thus, 27 petroleum firms had signed with the government of Yemen during the period 1990-1994 for working in 27 various sectors of the territory. These represented the golden era of oil exploration activities in Yemen. During the first half of the nineties, the total sum of oil exploration /discovery activities in general led to accomplishing of oil presence in some sectors, which can be described as follows: - · Discovery of seven oil and gas fields (out of 18) in Mareb Zone by Hunt and its associates. · Discovery of thirteen oil fields in Al Maseela region of Hadramout (Sector 14) by Canadian Occidental. · Discovery of six oil and gas fields in Jannah region (Sector 5) by Jannah Consortium which comprised the followings: Hunt, Exxon, Kofbik and Russia's Machino- Import, and · Discovery of three oil fields in east Shabwa region of Hadramout (Sector 10) by Total of France. In addition, there were preliminary, but encouraging, indications that appeared in some rigs being dug during the first stages of exploration within the areas granted for the other sectors, and for purposes of assessing their oil potentials e.g.: - -Damis/Shabwa region by Shell Company (Sector51); -Al-Aklah/Shabwa region by Canadian Occidental (Sector 52); -Gardan /Shabwa region (Sector 3) by Chiveron /Agip; and -Al-Hajr/Shabwa (Sector 9) by the Gas company of Britain known as BP

Production Sectors and Production

Till now, a brief outline of these oil productive sectors may be put as follows: -

I- Mareb region

-Sector name: Mareb Al-Jawf region, Sector 18

-Operating Company: Hunt Oil Company of USA

-Starting date of operations: January 1982. -Date of first oil discovery: July 1984 -Currently discovered oils and gas rigs: 18 -Number of digged rigs: 446, out of which 104 exploration- type and the remainder of developing scale. -Production range: 10,000 bpd since April 1986, : 150,000 bpd as from November 1987, : 120,000 bpd during year 1991,and : 150,000 bpd as from the first half of 1997. -Estimated reserves: 1,380 million barrels of oil and 15-17 trillion cubic feet of natural gas. -Associated establishments: Crude petroleum units (CPU), : Crude gas units, :Refunit of capacity 10,000 bpd : 440 meters length of a pipe-line with four discharging pumps, and : Safer floating reservoir for exporting oil form Ras-Issa depot. 2-Al Maseila region /Hadramout: -Sector Name: Al-Maseila / Hadramout (Sector 14).

-Operating Company: Canadian Occidental -Starting of the Operation: September 1986. -First oil discovery: January 1991. -Currently total oil fields discovered: 13 -Numbers of digged rigs: 131 -Start of their production and average -level: -120,000 bpd as from sept.1993 -Later increases to 200,000 bpd, and till now. Estimated reserves: 1,580 million oil barrels. Associated units /establishments: A crude- oil assembly unit, a 138-kilometer oil pipeline, exporting tankers located in Al-Shehr depot. The Partners working In this sector: Canadian Occidental (52% share), Occidental (20% share), Pectin (18% share) and the internationally -Known Consolidated Contracting Company- (CCC) with 10% share.

3- Shabwa region -Sector name: /Shabwa province (Sector4) -Operating oil firm: till mid 1990, the Russian company Machino Import was working there - Since Second half of 1990 till now, it have been offered to Al-Namer Petroleum Company. -Work start: since 1986 by Machino-Import of Russia -First oil discovery: April 1987 -Number of oil fields discovered : 3 -Start of production and average level: as from October 1987, by Machino-Import at the average level of 15,000 bpd. The production stopped in February 1990 due to the company's withdrawal. The production Te-continued in September 1992, with an average estimates 8,5000 bpd. It depreciated till reaching 3,5000 bpd, around May 1994. It then stopped about two-years. The production again started in June 1997, with an average of 2000 bpd. -Associated Units /Establishments: One crude- oil assembly unit; a pipeline 204 Kilometer long for oil exporting, and extending to Beir Ali on the Arabian Sea; and storage depots in the port of export. Estimated reserves: 520 million oil-barrels.

4- Jannah region: - -Sector name:- Jannah region /Mareb -Shabwa (Sector 5) -Operating firm:- incorporation of companies comprising of: Total, Hunt, Exxon, Kovinpeck, and Russian Machino Import. -Starting of Work:-March 1990 -First Oil Discovery:- In October 1991 -Number of digged rigs:- 63 explorative and developing wells. -Start of production:- October 1996 -Average level of production:- Started by 15,000 bpd. Currently reaching 25,000 pbd. -Estimated reserves:-750 million barrels of oil, and 1,6 trillion Cubic feet of natural gas.

Production and refining of Crude -Oil in figures

Source: Economic horizons Magazine( local)

Issue No.22 of August month 1997

We give below a summary total of estimates on oil extraction in the Republic of Yemen, with another similar total on the refining of oil's by-products.

Production and Out/ flow operations: -

table (I

Crude -oil Produced quantities Mareb-Al-Jawf (sector180) 4,624,008 Jennah- Hunt (sector 5) 761,330 Al- Maseela (sector 14) 5,824,001 Shebwa province (sector 4) 35,710

Total quantity produced 11, 245 , 049 barrels of crude - oil

Daily average production (bpd) 362, 744 barrels per day of crude -oil

As there are two refineries of crude - oil in the Republic, the following table indicates thereby -products as follows: -

Refining of Crude - oils' by -Products Table (2)

Classified by -products Aden refinery Mareb refinery

Benzene

Diesel

Kerosene

Masote (high density)

Mazote (low density)

Others

Lessage

Quantity (Metric Tons) Ratio % Quantity (Barrels) Ratio %

73,400

67,700

20,100

---

57,000

---

---

33,64

31,03

9,21

---

26,12

---

--- 108,508

102,143

---

60,079

---

23,016

16,262

35

32,95

---

19,38

---

7,42

5,25

Total 218,200

(metric Tons) 62,12 39,278

barrels 12,67

However, from the total figure shown by table (2), Yemen oil Co. withdraws; for local consumption's and utilizing; the quantities of refined oil are shown by the table below: -

Table (3)

Withdrawals by Yemen Oil Company of refined Oil

Product type Aden Refinery (in Metrictonnage) Mareb Refinery (in barrels)

Benzene Diesel Mazote (Low Density) Mazote (High Density) Kerosene

72,020

69,213

---

62,933

21,570 107,672

84,757

27,560

---

---

Total 225,742 Metric Tons 219,982 barrels

________________________________

Source: Saba Yemeni News Agency Half-Monthly "Economic"-Issue No.93 of 15/9/97


Last changed: September 15, 2002