WATCHING THE WORLD ARCO ENTERS YEMEN

With Roger Vielvoye from London Operatorship of Yemen's potentially prolific Shabwa Block 4 probably was the most prized prospect on offer on the, Arabian Peninsula during 1991. The acreage formerly was under control of Technoexport of the Soviet Union, which found and partly developed West Iyad, East Iyad, and Amal fields. Despite completing a pipeline to the coast, the Soviets failed to get oil flowing. Earlier this year the Yemeni government lost patience with its Soviet contractor and

Dec. 23, 1991

3 min read

Operatorship of Yemen's potentially prolific Shabwa Block 4 probably was the most prized prospect on offer on the, Arabian Peninsula during 1991.

The acreage formerly was under control of Technoexport of the Soviet Union, which found and partly developed West Iyad, East Iyad, and Amal fields.

Despite completing a pipeline to the coast, the Soviets failed to get oil flowing. Earlier this year the Yemeni government lost patience with its Soviet contractor and sought a new owner for the acreage.

The prospect of taking over fields with a potential to produce 120,000 b/d and possibly finding other reservoirs nearby focused the attention of veteran Middle East operators on this region of Yemen.

YEMEN'S AWARD

The Yemeni government sprang a surprise on the industry by awarding the acreage to Nimir Petroleum Co., a newcomer to the oil scene, which is controlled by Saudi Arabian financiers of Yemeni extraction.

The award was made with the understanding Nimir would bring in experienced outside help to start production and run an aggressive exploration campaign on the block.

It was then Nimir's turn for innovative thinking with the appointment of ARCO Shabwa Inc. to act as operator, at first on a service contractor basis but with an option to take an equity interest in the acreage later (OGJ, Nov. 11, p. 25).

The ARCO award ruffled feathers among more experienced Middle East operators. By its own admission, ARCO is not a major force oh the production scene either in Europe or the Middle East, with its only experience of Arabia coming from a small liquids operation in Dubai.

Nimir's choice has been confirmed by Yemen's Ministry of Oil and Mineral Resources, which also has told Nimir it can conclude an equity farmout agreement with ARCO without further reference to the authorities.

WHAT HAS TO BE DONE

The first ARCO people are on the ground in Yemen. The first priority is to get oil from the three fields flowing through the 130 mile, 20 in. pipeline to Bir Ali on the Gulf of Aden, where storage and export facilities have been built.

ARCO teams are involved in detailed evaluation of the facilities on the ground left by Technoexport and are identifying the problem areas that caused long delays in starting production. At the same time, ARCO is working on new exploration programs for the block.

Technoexport installed central processing units in West Iyad, but gas separation capacity is limited. It also has been discovered that the Soviets undertook very little work in East Iyad and Amal, neither of which is linked to West Iyad and the pipeline.

New reservoir engineering studies will be required, and the lack of reservoir simulation studies must be rectified.

The Yemeni government hopes the new field manager will have production flowing by mid-1992 and are talking about an initial level of 20,000-30,000 b/d. But that must remain a strictly unofficial estimate until ARCO has a better handle on the situation.