Total, DNO keep pumping oil and gas in Yemen after airstrikes

3/27/2015

TARA PATEL

PARIS (Bloomberg) -- Total and DNO said they continue to pump oil and natural gas in Yemen after Saudi Arabia and its allies bombed rebel targets in the nation.

“The sites where the group is present were not impacted by the military raid of Thursday morning,” Total said in a statement. Security measures are being kept at “maximum level,” the Paris-based producer said. Its offices in the capital Sana’a, which is controlled by Houthi rebels, remain closed.

Total is the largest of seven owners—with a 40% stake—in a $4.5 billion LNG plant on the southern coast that is Yemen’s biggest industrial investment. Since production began in 2009, the French company and its partners have grappled with security issues including rocket attacks and pipeline blasts.

Saudi Arabia and a coalition of 10 Sunni-ruled nations began airstrikes against Shiite rebel positions after an appeal from Yemen President Abdurabuh Mansur Hadi. Yemen’s government collapsed in the face of an offensive by Houthis, whom Saudi Arabia has said are tools of its Shiite rival Iran. It has vowed to halt their advance.

While Yemen isn't a major oil or gas producer, its location near the narrow strait where the Red Sea meets the Gulf of Aden makes it strategically significant for energy shipments. Oil prices rose on news of the airstrikes.

DNO, which has stakes in six exploration and production blocks in Yemen, is continuing to operate with “certain limitations,” said Managing Director Bjoern Dale.

Drilling Suspended

The Oslo-based company reported last month output in Yemen dropped in 2014 compared with the previous year. New drilling activities were suspended due to the security environment.

The Yemen LNG plant, with a capacity of 6.7 million tons a year, is located in Balhaf and supplied with gas from a field in the center of the country, according to the project’s website. The gas is transported to the plant through a 320-km pipeline.

The pipeline was repeatedly damaged and shut in 2012, prompting Total CFO Patrick de La Chevardiere to promise better security and “stronger collaboration” with each tribe along the installation.

The plant suffered two rocket attacks in December 2013 and January 2014. Output wasn't affected because one landed at sea and the other resulted in “slight damage,” Total said at the time.

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