Yemen is important to world energy markets because of its oil and natural gas resources as well as its strategic location overseeing the strategic Bab el-Mandab strait linking the Red Sea and the Gulf of Aden, one of the world's most active shipping lanes.
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Since the end of a civil war between the northern and southern parts of the country in mid-1994, Yemen has
been ruled by a sometimes uneasy coalition between the
General People's Congress (GPC) party, led by
President Saleh, and the Islamic fundamentalist al-Islah
party, led by pro-Saudi Arabian Sheikh Abdullah al-Ahman. Political instability in the country, which is
split along tribal, religious, and ideological lines,
remains a serious problem. While northern Yemen is
dominated by Shi'ites (of the Zaidi sect), for instance,
the southern, formerly Marxist, part of the country is
made up mainly of Sunni Muslims (Shafei sect).Yemen's economy, already one of the world's poorest, suffered an estimated $7 billion in damage from the country's 1994 civil war. To help attract foreign investment and spur economic growth, Yemen's government is attempting -- despite internal political opposition -- to push ahead with an economic reform program. In early 1996, Yemen's government reached agreements with the International Monetary Fund (IMF) and the World Bank to open up its economy and help reduce the country's budget deficit. These agreements involve: 1) privatizing 70 percent of state-owned companies by the year 2000; 2) reforming trade law and eliminating import bans; 3) moving towards a freely traded, convertible currency; 4) reducing subsidies on fuel (in January Yemen raised the price of gasoline by 75 percent and propane by 95 percent), flour, and other goods; and 5) paring employment in the public sector. In exchange, the IMF is expected to release $300 million during 1996 and early 1997, while the World Bank is set to contribute $450 million in project loans.
A top economic priority for Yemen is revitalization of the ancient port of Aden (considered one of the best natural deep-water harbors in the world) as a major trans-shipment center and free-trade zone. To this end, an international consortium was established in early 1996, with partners in the project including the Saudi Economic and Development Co., the Yemen Industrial and Development Co., U.S.-based Alliance Development Corp. and Meneren Corp., U.K.-based AES Services Ltd., and P&O Australia. Plans call for modernization of the existing Ma'alla terminal and construction of a new port terminal on Caltex Island. In addition, the port channel is to be dredged, the Aden International Airport will be refurbished, a World Trade Centre building will be constructed, as well as a 120 megawatt oil-fired power plant.
During December 1995, Yemen and Eritrea fought briefly, but fiercely, over control of two Red Sea islands - Greater and Lesser Hanish. Both nations claim sovereignty over the islands, located roughly equidistant from each country's coast near the strategic shipping lanes of the Bab el-Mandab straits, as well as near potentially sizeable offshore oil deposits. Since December, diplomats from the United Nations, Arab, and African states (particuarly Ethiopia) have worked to mediate an end to this conflict.
In addition to its problems with Eritrea, Yemen has a border dispute with Saudi Arabia dating back 60 years. In January 1995, talks with Saudi Arabia to settle a dispute over a potentially oil-rich border area were facing difficulties as President Saleh accused the Saudis of massing troops along the border. In February 1995, however, the two sides signed a memorandum of understanding, laying the foundation for the agreement in June 1995 to eliminate all obstacles to bilateral trade, investment, and transport. Nevertheless, the border with Saudi Arabia has yet to be officially demarcated.
Saudi Arabia once was Yemen's main financial and
political backer, having provided Yemen with about
$100 million per year before 1990, but it cut aid to
Yemen in 1990 when Yemen appeared to sympathize
with Iraq after Iraq's invasion of Kuwait. Relations
were strained further in 1994 when northern Yemeni
leaders accused Riyadh of backing the southern
secessionist bid. In a recent sign of improving relations,
Saudi Arabia agreed to allow Yemeni workers back into
the Kingdom on a limited basis.
Yemen's current oil output of 330,000-360,000 b/d
provides the country's main source of income.
Production is split about evenly between U.S. Hunt Oil's
Marib field and Canadian Occidental Petroleum's
(CanOxy) Masila block. Proven oil reserves of about 4
billion barrels are concentrated in five areas: Marib-Jawf in the north, East Shabwa and Masila in the
south, and the Jannah and Iyad blocks in central
Yemen.
CanOxy's production at Masila began in 1993.
Facilities include 36 producing wells, gathering lines, a
central processing facility, 90 miles of pipeline to a
storage site, and export terminal for tankers at Ash
Shihr on the Gulf of Aden. When the civil conflict
peaked early in May 1994, CanOxy employees were
evacuated, but oil kept flowing at its 150,000 b/d Masila
block owing to CanOxy's contingency plans. CanOxy
was able to protect its interests in Yemen by designing
Masila field facilities to ensure continuous production.
For example, wells in the sparsely populated, remote
area (about 330 miles northeast of Aden) are
widespread and have significant spare production
capacity. Processing and storage facilities have
redundant systems to ensure continued operations, and
the crude oil pipeline from Masila wells to the Ash
Shihr terminal is buried in a deep trench and covered
with tons of rock.
Currently, 26 foreign oil companies are active in
Yemen. Exploration is focused in particular on the
Marib and Masila fields, and to a lesser extent in the
eastern Hadhramaut and Hehara regions, but the success
rate of exploratory drilling is declining in other regions,
notably the Shabwa, where operators are less hopeful of
new discoveries. Most new oil discoveries in recent
years have been in southern Yemen. Exploration along
the northern border has been hindered partly by Saudi
claims to sovereignty over areas which include
exploration blocks awarded to private companies.
Overall, companies have revised downwards their
assessment of oil resources in Yemen, no longer
regarding it as a major oil province but at best as an
intermediary zone. To help remedy this situation,
Yemen's government reportedly is planning to offer
additional incentives to foreign oil companies, including
allowing them to recover a greater share of costs for
marginal discoveries.
Current expansion plans for Yemeni oil production are
centered primarily around the East Shabwa and Jannah
blocks. Between 15,000-20,000 b/d of new oil
production is scheduled to come online at East Shabwa
by September 1997, according to Yemen's oil ministry.
East Shabwa is being developed by Total, along with
Kufpec, Unocal, and Australia's Coplex Petroleum.
Also by the fall of 1997, an additional 40,000-50,000
b/d of production is expected from the Jannah block,
which is being developed by Hunt, Total, Exxon,
Russia's Machinoimport, and Yemen Investment.
In late May 1996, Yemen announced a plan to construct
a $20 million car and engine lubricants plant in a joint
venture between 2 private Yemeni companies (who will
own 70 percent of the venture), and 2 foreign
companies -- Shell Oil Co., and Mobil Corp.-- who will
own the remaining 30 percent. The plant is to produce
60,000 tons per year of lubricants, and is designed to
meet local needs until the year 2025.
In early 1996, a $5 billion liquified natural gas
(LNG) joint venture between Total and Yemen's
General Gas Corporation was ratified by Yemen's
parliament and signed into law by President Saleh.
The venture, Yemen's largest single energy project,
is to develop natural gas in the Marib field, transport
it via pipeline to natural gas processing plant and
export terminal in Balhaf on the coast of southern
Yemen, and export 5 million tons of LNG per year
for 25 years beginning in 2000 or 2001. Hunt Oil,
Exxon, and Yukong of South Korea also have agreed
to participate in this project. Marib is believed to
contain between 9 and 15 trillion cubic feet of
recoverable natural gas reserves.
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File last modified: June 1996
Contact:OIL
In June 1995, President Saleh appointed Mohammed
Said al-Attar, formerly Deputy Prime Minister and
Minister of Industry, as Minister of Oil and Mineral
Resources, in a move to tie the oil ministry closer to the
President's office. Al-Attar replaced Faisal bin
Shamlan.Refining
Yemen has a major refinery at Aden and a 10,000 b/d
capacity unit at Marib. Both refineries are managed by
the Yemen Refining Company (YRC), which is
controlled by the state-owned General Corporation for
Oil & Mineral Resources. The Aden refinery, which had
a design capacity of 170,000 b/d, sustained significant
damage during the country's 1994 civil war. Currently,
the plant produces about 100,000 b/d of oil, although a
$260-$360 million, 2-year plan is under consideration
to renovate the facility and raise its capacity to 150,000
b/d. In late February 1996, Iran agreed to help Yemen
refurbish the Aden refinery.NATURAL GAS
With natural gas reserves of at least 15 trillion cubic
feet, Yemen has considerable potential as a gas
producer. The bulk of these reserves, in the form of
both associated and non-associated gas, are
concentrated in the Marib-Jawf fields, operated by
the Yemen Exploration and Production Company
(YEPC). However, few facilities for recovering and
using associated gas have been installed. The rest of
the country's natural gas is located in the Jannah tract
operated by Total.ELECTRIC POWER
Yemen generated 1.8 billion kilowatthours of electricity
in 1994 on installed capacity of about 800 megawatts
(MW), most of which oil-fired with the rest fueled by
natural gas. Many of the rural and mountainous parts of
the country are not connected to the national
transmission and distribution grid due to the high cost
of doing so. Despite this, electricity demand is
growing at a rapid 15% annual rate, state-owned Public
Electricity Corp. (PEC) is raising rates and offering up
to 1.4 gigawatts of new capacity to the private sector on
a build-own-operate basis. PEC's main priorities
include new plants at Dhahban, Sayun, Makalla, Marib,
Aden, Sanaa, and Hodeidah.
COUNTRY OVERVIEW
Head of Government: President Ali Abdallah Saleh
Independence: May 22, 1990 (reunification)
Population (1996E): 15 million
Location/Size: Southwest corner of the Arabian
Peninsula/527,790 sq. kilometers (203,730 sq. miles);
approximately the size of Wyoming and Colorado
Major Cities: Sanaa (capital), Aden, Al Hudaydah, Taizz
Language: Arabic
Ethnic Groups: Arab, Afro-Arab, South Asian, European,
Somali refugees encamped near Aden
Religions: Sunni and Shiite Muslim, 99%; Other, 1%
Defense (1995): Army (65,000), Central Security Force
(50,000), Republican Guard (6,000)
ECONOMIC OVERVIEW
Currency: Yemeni Rial (YR)
Exchange Rate (2/96E): US$1 = YR140 (free-market rate)
Gross Domestic Product (GDP) - purchasing power parity
exchange rate(1994E): $23 billion
Real GDP Growth Rate (1995E): 2.0%
Inflation Rate (consumer prices) (1995E): 175%
Major Trading Partners (1994): Italy, United States, Jordan,
United Arab Emirates, Japan, Saudi Arabia, Kuwait
Merchandise Trade Balance (1993E): $905 million
Major Export Products (1994): Crude oil, cotton, coffee,
hides, vegetables, dried and salted fish
Oil Export Revenues (1995E): $560 million
Major Import Products (1994): textiles and other
manufactured consumer goods, petroleum products, sugar, grain,
flour, other foodstuffs, cement, machinery, chemicals
Unemployment Rate (1993E): 30%
Total External Debt (1995E): $8 billion (owed mainly to the
former Soviet Union for previous arms deals)
ENERGY OVERVIEW
Minister of Oil and Mineral Resources: Mohammed Said al-Attar
Proven Oil Reserves (1/1/96): 4 billion barrels
Oil Production (1Q96E): 330,000 barrels per day (b/d)
Oil Consumption (1996E): 80,000 b/d
Net Oil Exports (1996E): 250,000 b/d
Crude Oil Refining Capacity (1/1/96): 120,000 b/d
Natural Gas Reserves (1/1/96): 15 trillion cubic feet (tcf)
Electric Generating Capacity (1994): 0.8 million kilowatts
Electricity Generation (1994): 1.75 billion kilowatthours
ENVIRONMENT OVERVIEW
Total Energy Consumption (1994): 0.15 quads
Energy Consumption per Capita (1994E): 10 billion btu
Energy-related Carbon Emissions (1994E): 3.3 million metric
tons (0.04% of world carbon emissions)
Carbon Emissions per Capita (1994E): 0.22 metric tons
Major Environmental Issues: Scarcity of natural freshwater
resources; overgrazing, soil erosion; desertification
OIL and GAS INDUSTRIES
Major Companies: Yemen Petroleum Company (YPC) -
production and refining; General Corporation for Oil and
Mineral Resources (GCOMR) - investment and holding
company; Yemen Refining Company (YRC) - refining; General
Department of Crude Oil Marketing (GDCOM) - handles
government shares of exports; Yemen Exploration and
Production Company (YEPC) - contracts
Major Oil Fields: Masila, Marib, Shabwa, Alif
Major Refineries (Capacity): Aden (170,000 b/d), Marib
(10,000 b/d)
Major Ports: Aden, Hisn an Nushaymah, Al Khalf, Mocha,
Nishtun, Ra's Isa, Ra's Kathib, Salif
Major Pipelines: Marib-Ra's Isa Pipeline (pipeline between the
Marib fields and the deep sea port of Ra's Isa on the Red Sea),
Shabwa-Rudhum Pipeline (pipeline linking the Shabwa fields to
the Rudhum terminal on the Gulf of Aden at Hisn an
Nushaymah)
Links to other sites:
Latest EIA Detailed Annual Data (1994)
CIA World Factbook - Yemen
The Center for Middle Eastern Studies - Yemen
Douglas MacIntyre
dmacinty@eia.doe.gov
Phone: (202)586-1831
Fax: (202)586-9753
URL: http://www.eia.doe.gov/emeu/cabs/yemen.htm