Middle East: Yemen

MIDDLE EAST

Dr. A. F. Alhajji, Contributing Editor

Yemen

Recent economic reforms and new investment laws were designed to attract foreign investment, in general, and in the oil and gas sector, in particular. However, frequent kidnappings of foreigners and pipeline explosions by tribesmen (who are displeased with the government) are hampering officials’ efforts to attract new investment. The recent border agreement with Saudi Arabia may contribute to political stability, increase foreign investment, boost the flow of trade and lead to stronger economic growth.

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Exploration. Canada’s TransGlobe Energy Corp. reported recently that its second exploration well on Block S-1 has been drilled and cased as a potential oil well. It also reported that development work is on schedule in Block 32 – first oil production is planned for October 2000. Tulsa-based Vintage Petroleum reported a gas find last May in S-1 Damis Block in Yemen’s Alif area. The well flowed 40 Mcfgd and 1,020 bcpd.

Canadian Oxy last October struck a new oil discovery in the Masila area. The Qataban 1 encountered approximately 40 ft of net pay in the upper Qishan zone, in a 760-acre structural closure. However, Pan-Global Enterprises Inc. announced last June that the Al Haglah well on Block 43 did not find commercial quantities of hydrocarbons and will be plugged and abandoned.

Last October, Yemen announced another round of bids for seven new blocks in various areas of the country.

Indeed, since last August, Yemen has witnessed the signing of several agreements between various international oil companies and the Ministry of Oil and Mineral Resources. These new exploration concessions include Adair International, Occidental and Saba Yemen (Block 20, a $16-million investment in two phases over 5 years); Australia’s Oil Search and UAE’s al-Otaiba Group (Block 15); Italy’s Eni (Block 2, al-Mabar, in the Shabwa basin); and CanOxy last April (Blocks 11, 12, 36 and 54).

Drilling/development. There were 53 wells drilled in 1999. That figure is expected to increase to 70 wells this year.

Production from Tasour field (Block 32) was expected to begin while this report was being written. The rate of output was expected to be between 5,000 and 7,000 bopd. An expanded development plan was presented to the government last December and was approved in April. Several untested structures have been identified, and the drilling of additional wells will be evaluated as part of the development plan. Results of a seismic evaluation will be used to assess a future phase that may include construction of a spur pipeline and expansion of production to 20,000 bopd.

The development / production period will extend until year 2020, with an optional five-year extension. However, the seismic evaluation results will determine the number of wells to be drilled toward the end of this year.

Production. In first-quarter 2000, Yemeni oil production was running at 431,500 bpd from five blocks, a 5.5% increase over 1999’s level. This increase resulted from completion of a $250-million infrastructure investment in East Shabwa and Jannah fields. Production has been increasing since 1995 and is expected to grow further in the future.