ARCO AGREES TO E&D CONTRACT WORK IN YEMEN

An ARCO unit has agreed to provide exploration and development services for a block in Yemen where a former Soviet contractor found an oil resource estimated at as much as 4 billion bbl in place. The agreement follows award of Yemen's onshore Block 4 to a group of expatriate Yemenis operating through Nimir Holding Co., Cayman Islands. Nimir, a financial holding company with no operating oil experience, signed a production sharing contract for the block last month (OGJ, Oct. 14, Newsletter).

Nov. 11, 1991

2 min read

An ARCO unit has agreed to provide exploration and development services for a block in Yemen where a former Soviet contractor found an oil resource estimated at as much as 4 billion bbl in place.

The agreement follows award of Yemen's onshore Block 4 to a group of expatriate Yemenis operating through Nimir Holding Co., Cayman Islands. Nimir, a financial holding company with no operating oil experience, signed a production sharing contract for the block last month (OGJ, Oct. 14, Newsletter).

The PSC calls for Nimir to pay the Soviets $500 million for development work and data on the discoveries. At the time of the award, Nimir was said to be seeking an experienced industry partner to undertake further exploration and complete development work.

ARCO AGREEMENT

ARCO Shabwa Inc. signed agreements, subject to Yemeni government approval, to provide E&D services to Nimir Petroleum Co. Ltd. for Block 4 work.

Nimir remains operator and sole interest owner of the block.

In addition to providing services to Nimir, ARCO has an option to acquire a working interest in the block after completion of the minimum work program.

That step also would be subject to Yemeni government approval.

Under the agreements, ARCO will begin a program to assess the block's hydrocarbon potential, including existing fields.

BACKGROUND

The Soviet agency Technoexport, former service contractor to the Yemeni government, found three fields on the block.

One of those fields has had limited production. In addition, Technoexport laid an oil pipeline to an export terminal on the Persian Gulf coast.

A proposed project to develop the three fields and lay the pipeline fell about 1 year behind schedule. The government had hoped to start production in May 1991 at about 20,000-30,000 b/d, with flow building to more than 100,000 b/d in 1992.

Delays stemmed from snafus with Technoexport as the Soviet economy crumbled and a halt in aid from Saudi Arabia and Kuwait in light of Yemen's backing of Iraq in the Persian Gulf crisis.

The delays led to a solicitation of technical assistance from western companies that included Total, British Petroleum Co. plc, and a combine of Exxon Corp. and Hunt Oil Co., with Nimir winning the block (OGJ, Apr. 15, p. 31).