WATCHING THE WORLD OIL BUILDUP FOR A UNIFIED YEMEN

With Roger Vielvoye from London Creation of a single new state, Yemen Republic, from the merger of North and South Yemen will integrate two oil ministries that have handled the Arabian Peninsula's most exciting oil play the past 5 years. Elements of oil institutions from north and south are being woven into the new organization. A single ministry of oil and mineral resources will have headquarters in Sanaa, former capital of North Yemen.
June 25, 1990
3 min read

Creation of a single new state, Yemen Republic, from the merger of North and South Yemen will integrate two oil ministries that have handled the Arabian Peninsula's most exciting oil play the past 5 years.

Elements of oil institutions from north and south are being woven into the new organization. A single ministry of oil and mineral resources will have headquarters in Sanaa, former capital of North Yemen.

WHO WILL DO WHAT

The new ministry will be headed by South Yemen's oil minister, who also is a member of a presidential council that will oversee amalgamation of the countries during the next 30 months.

Thriving exploration and production operations will be run from Sanaa through the General Corp. of Oil & Mineral Resources (Gcomr), which will take over responsibilities of the two former state companies. Exploration and production personnel from South Yemen will move from Aden to Sanaa in phases.

Oil processing will be centered in Aden through a new company, Yemen Refining Co., a subsidiary of Gcomr. It will run the 161,000 b/d Aden refinery and the much smaller Marib plant on the Marib al-Jawf producing concession in North Yemen.

First decision in this part of Yemen's industry was to shelve plans to build a refinery in North Yemen and concentrate on much needed upgrading of the Aden plant by adding cracking capacity and expanding storage.

The one operating area that will remain outside control of the new state company in the first stages of amalgamation is the former neutral zone. There the jointly owned Yemen Co. for Investment in Oil & Mineral Resources awarded rights to a group made up of Hunt-Exxon, Kuwait Foreign Petroleum Exploration Co., Total-CFP, and the U.S.S.R.'s Machinoimport and Zarughgeologia.

The multinational group faces questions about participation of the Soviet companies who agreed to meet its initial obligations to the Total-operated exploration effort with goods and services.

However, the partners are unhappy with the quality of those goods and services. So the Soviet companies will need to find hard currency. Total General Manager Pierre Vaillaud said if the Soviet partners abide by terms of the operating and financing agreement they will be welcome to remain in the group.

DELAYED TIMETABLES

The new state company also will have to cope with continuing delays in start of production from the Shabwa area of South Yemen. The pipeline from the fields to the coast, being laid by a Soviet pipelaying company and originally scheduled to start up at the end of last year, is unlikely to be ready until fall.

Holdups in delivery of equipment from the U.S.S.R. also have put Shabwa field development behind schedule, and start of production may be delayed until early 1991. Initial production will be 20,000 b/d, with an ultimate target of 100,000 b/d.

Production in the northern part of the new republic is running at about 180,000 b/d from six fields operated by Yemen Hunt Oil Co. on its Marib al-Jawf concession. Start-up of Asad al-Kamil gas/condensate field later this summer could add another 20,000 b/d to production, rising to more than 40,000 b/d next year.

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