Yemen seeks changes to oil production sharing agreements

SANA'A, Dec. 28 (Saba) - Yemen is moving towards changes to approved production sharing agreements for oil-associated gas through negotiations with petroleum companies operating in the country, an
official at the ministry of Oil and Minerals has said.

The changes to be approved would be sent to the Supreme Economic Council, the
Cabinet and Parliament for final approval, the official said, adding the move is
mainly aimed
at encouraging investment in exploring, producing and developing gas and boosting
national reserves.
Since the beginning of this year, the government has been working on appropriate
measures to determine oil and gas reserves in Yemen, signing agreements that
contained,
for the first time, the principle of gas production and use sharing in an incentive
to boost gas exploration and development.
Negotiations have also started with the Occidental Petroleum Corporation (Oxy) over
the matter as will be with other firms.
Meanwhile, the ministry has said that the next period will see technical and
financial amylases on offers presented by international companies qualified to
study Yemen's
oil and gas reserves and the need for petrochemical industries by 2012.
Tender documents have been sent to qualified companies and in the near future
technical and financial analysis bids would be announced after references for
competing firms
were readied and sent to the Supreme Tender Committee.
Moreover, the official said the ministry is working hard to establish good
opportunities to attract oil firms, starting with the arrangements for the third
oil and gas conference
that will take place in mid 2010 and the final preparation for announcing the 5th
international tender for open oil blocks coinciding with the conference.
An agreement would be signed with the organizer over arranging and bring to the
light the conference as w ell as announcing the tender and inviting companies.
The ministry will also receive offers from firms interested in petrochemical
industries and other gas and oil industries and they would be studied, with the
suitable to
be chosen by the third quarter of 2010.
The official also pointed to a feasibility study on collecting gas and establishing
petrochemical industries, saying an agreement for the project would take place in
mid
2010 and identifying the project components and reaching an agreement to start it in
mid 2011.
In September, the Dana Gas and Crescent Petroleum (Naft Al-Hilal) Companies in the
Untied Arab Emirates announced they had signed a memorandum of understanding with
Yemen
to set up a gas city in the country.
In a statement, the two companies said the Gascities Ltd, a joint venture by the
Dana Gas firm and its parent company Crescent Petroleum, signed the deal to explore
the
possibility of developing the concept of gas city inside Yemen.
The project could attract investments worth $ 15-20 billion over 25-30 years,
doubling foreign investment in Yemen and providing 15.000 direct jobs and 75.000
indirect jobs.
According to chairman of the Gascities, Badr Ja'afer, the first phase of the
project includes preparing a report on gas crude materials as well as finalizing
the process
of identifying the site for the project.
The Yemen gas city will consist of a chemical industries section and other
facilities for the project to be self sufficient of all needed services.The project
will help
Yemen cope with the effects of its declining oil output on its fragile economy.
Minister of Oil and Minerals Amir Al-Aidrous, for his part, said that the project
will encourage foreign investments into Yemen.
In October, the Liquefied Natural Gas Company announced the start of producing LNG
at the Balhaf Plant in southeastern Yemen.
Weeks later, the firstfruit headed to South Korea and then further shipments were
said would flow to world markets according specific schedules.
Minister of Oil and Minerals Amir Salim Al-Aidrous commented on the launch of LNG
production saying it was a major accomplishment and landmark that translated the
effective
partnership between Yemen and international shareholders.
The $ 4.5 billion Balhaf LNG Plant is deemed one of the biggest investment ventures
in Yemen's history as it was designed to pump natural gas from the block 18th in
Mareb,
in the east, through a 320-km-long pipeline to the Liquefaction Plant in Balhaf,
Shabwa, along the Gulf of Aden.
LNG production has now started with the first train, while the second train is
still under construction.Yemen will export 5.7 million cubic meters of LNG a year.
The company will export produced LNG quantities by the plant under three 20-year
contracts signed with the French Total Company, the Swiss GDF Company that will
carry shipments
to the U.S., and the Korea Gas Corporation (KOGAS) which will transport LNG to South
Korea.
The construction of the project started in 2005, creating almost 10.000 jobs at the
liquefaction plant site and 3000 jobs during the construction of the pipeline.
The company attracted and qualified local employees for three years to run and
operate the project and now seeks to Yemenize the workforce at various technical
and administrative
sections by 90 percent to help promote economic development in Yemen.
Over the next 20 years, the project is expected to bring in $ 30-50 billion that
will help accelerate development and attract more world companies to invest in the
country.
Total is the leading shareholder of Yemen LNG with a 39.62% interest, alongside the
state-owned company Yemen Gas Company (16.73%), Hunt Oil Company (17.22%), SK
Energy
(9.55%), Korea Gas Corporation (6%), Hyundai Corporation (5.88%), and GASSP1 ( 5 %).
FR