YEMEN ASSURES OIL COMPANIES OF CONTINUED PROSPECTIVELY

ALGERIA, April 23 (Saba)- Yemen remains an attractive upstream investment destination for international oil companies, despite existing security threats, Oil and Minerals Minister Amir al-Aidarous has said to reporters in Algeria.

Speaking about the security threats in the country, the Yemeni Minister said that the al-Qaeda is an international challenge, adding that his country is doing a lot and oil companies are satisfied with what Yemen has done.

On the sidelines of the LNG16 industry conference held in the Algerian city of Oran, al-Aidarous said that more than 22 international oil companies are operating in Yemen.

He added that Yemen is still exploring less than 20 percent of structures, confirming that there is high potential of gas and oil, in efforts to raise the country’s profile as an international upstream investment destination.

Earlier this week security was stepped up around key oil and gas installations after clashes with al-Qaeda, with the Yemeni army sending special forces rather than regular units to guard facility perimeters.

The United States also said that it would step up its military assistance programme to the Yemeni special forces in order to strengthen their capabilities to fight al-Qaeda.

The recent start of LNG exports will mitigate the revenue decline somewhat. Yemen currently produces between 285,000-295,000 barrels a day. Despite relying on oil for about 90 percent of its government revenue, a sharp decline in oil has largely been reported in recent years, amid warning of the decline and struggle to improve non-oil sectors to compensate for decreased oil revenues.

The monthly sales of crude oil in Yemen are estimated at 4.5-5 million barrels, and oil revenues form three quarters of the state budget resources.

Last year, Yemen launched its ever LNG project, sending its first train to the South Korean markets. The project run by the French Total company, the main shareholder, is expected to bring in between USD 30-50 billion under 20-year contracts.

The government has expected about 6.7 tonnes of gas would be exported this year to South Korea, Europe, Mexico and the US.

In 2008, Yemen's total oil production was about 300,000 barrels per day. Production has been declining steadily since reaching a peak of 440,000 barrels per day in 2001.

EIA expects oil output to decrease further to 260,000 barrels per day in 2010.

Oil production in Yemen is dominated by a number of international oil companies. All production currently comes from two main sedimentary basins, Marib/ Shabwa and Say'un/Masila, out of a total of 12 basins believed to hold oil reserves.

Al Masila's Block 19 is ranked as the country's highest producer at approximately 95,000 bbl/d, or 32 percent of the total, according to the Ministry of Oil and Minerals.

There are 12 producing blocks operated by 11 oil companies and there are 31 blocks under exploration by 16 oil companies.

In September 2009, Yemen announced that it plans to explore for oil at 42 locations between 2010 and 2015.