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Published: Tuesday, May 01,
2007
Yemen's oil and minerals
minister, Khalid Mahfoudh Bahah, has issued a
clarion call for Calgary-based energy companies to
participate in the Gulf state's next international
oil and gas bidding round, set to unfold later this
year.
"We are looking to open up
nearly 10 offshore blocks and are targeting to
conclude the bidding process in six to eight
months," Bahah told the Herald Monday.
With an annual average oil
output of 350,000 barrels per day and a
decline-in-production rate of nine per cent,
non-OPEC member Yemen is soliciting the assistance
of international oil companies to "significantly"
boost its production capacity over the coming few
years.
Khalid Mahfoudh Bahah,
Yemen's minister of oil and minerals, was at
Calgary's Petroleum Club on Monday to ask Alberta
oil companies to participate in his country's next
oil and gas bidding round, slated for later this
year.
The blocks are located along
the Red Sea, Gulf of Aden and the Socotra basin.
"There are a lot of requests
from IOCs to go offshore. Onshore areas are our
hinterland, but there is a need to balance the
geographical spread. The offshore prospects are good
and our target will be shallow to ultra-deep areas.
Some seismic surveys have been carried out and a few
exploratory wells have already been drilled," Bahah
said.
However, he did not give a
production target for the fourth bid round, stating:
"We can't put numbers until drilling commences."
Pre-bidding response has been
healthy, with France's Total, Norway's Statoil and
Calgary-based Nexen Inc. -- among other companies --
showing interest to participate in the bidding
process, Bahah said.
Ali Mohamed Sohaiki, executive
director of Nexen in Sanaa, said his company is
likely to bid for the next round, although no final
decision has been taken. Similar views were shared
by Ross Clarkson, chief executive of TransGlobe
Energy Corp.
Both Nexen and Trans Globe
account for a total of about 160,000 bpd or 47 per
cent of Yemen's total production through Masila,
East al-Hajr, Howarine and Damis blocks. Another
Calgary-based company, Calvalley Petroleum Inc., is
in the final stages of a contractor selection for a
245-kilometre, 300,000-bpd pipeline covering its
Malik block, said its chief executive, Ed Shimoon.
Output from Malik is projected
to reach 30,000 bpd by late 2007/early 2008, from
current levels of 5,000-9,000 bpd.
Bahah is hopeful of a positive
response from Calgary-based firms. Independent
estimates indicate that with oil-in-place of 10.4
billion barrels, untapped discoveries can add
another 150,000 to 200,000 bpd production to Yemen's
production.
"Calgary, Houston and Dubai
are a triangle of oil companies we are targeting. If
you are not an operator it will not be a handicap,
as you can team up with others.
"But, we would advise that you
do not come in with an agent. The government is keen
on a (direct) partnership with IOCs," Bahah said.
Bureaucracy and red-tape will
be cut substantially for the new bidding round and
the tendering process will be "fair and
transparent," Bahah added.
"A good road was built by
Nexen in the 1990s when Yemen was under the
socialist regime. Since then, two other Calgary
firms (Trans Globe and Calvalley) have come in, but
we need new firms," Bahah said, adding that from a
security viewpoint the risk of operating in Sanaa is
low.
"We never stopped production
in the past 20 years," he said.
"Yemen has a fairly attractive
fiscal regime," commented Praveen Martis, a Middle
East analyst with Edinburgh-based Wood MacKenzie.
"The state, however, is less prospective when
compared to its neighbours. Canadian companies have
a good track record, with Nexen being the
single-largest foreign oil-producer."
"Existing producers will
attempt to increase production from producing fields
by in-field drilling and bringing marginal oil pools
onstream. But, Yemen needs to find new reserves to
stem the production decline."
Memet Kont, with Calgary-based
UBS, felt that the bid round will draw a lukewarm
response from new Canadian companies.
"They (Yemen's Oil Ministry)
could have done a better job in promoting the bid
round," he said. "Yemen is still largely unexplored
and they are desperate for capital, technology and
skills."
Al-Humaidi informed that 2007
will be a "high year" of prospecting, with 142 new
exploration and development wells to be drilled in
11 producing blocks.
adutta@theherald.canwest.com
Yemen: Fact File
- 1961, first well drilled;
- 1982, first oil discovery at
offshore Sayhut with a production rate of 3,000 bpd;
- A total of 83 production
sharing agreements signed until
December 2006 with
international oil companies in
previous three international
bid rounds;
- Current oil production is
351,000 bpd;
- A total of 1,824 wells
drilled, of which 1,423 are development wells and
421 are exploration wells;
- In 2007, target is to drill
142 new wells, of which 87 will be development wells
and the remaining 55 exploration wells;
- Total oil-in-place until
December 2006 is 10.4 billion barrels;
- Total gas-in-place is 18.2
trillion cubic feet;
- 10 companies are engaged in
production blocks, including Nexen Inc., Calvalley
Petroleum and TransGlobe Energy Corp.;
- Yemen LNG plant with a
production capacity of 6.7 million tonnes per year
is under construction, aimed at selling processed
gas to Korea Gas Corp. and Suez LNG Trading.
Source: Petroleum Exploration
& Production Authority, Yemen
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