2024-01-17 21:11:57
The Yemeni Oil Minister told Asharq Al-Awsat: We plan to establish refineries in Shabwa and Hadramaut
The Yemeni Minister of Oil and Mineral Resources, Dr. Saeed Al-Shammasi, confirmed the full readiness to resume the process of exporting crude oil and liquefied gas, immediately following the announcement of the expected peace agreement under the auspices of the United Nations, in a way that enhances and supports the state’s general budget.
In an extensive dialogue with Asharq Al-Awsat, Al-Shammasi revealed the discussions he held with the Saudi side to help restart the Aden refineries, indicating that the support of the Kingdom of Saudi Arabia during the last period by granting oil derivatives has greatly reduced the burden on the state’s general budget and the import bill.
The Minister of Oil explained, following participating in the International Mining Forum hosted by Riyadh last week, that Yemen contains many minerals that the world needs, especially those that are used in the solar energy and alternative energy industries, such as lithium and silicon in large quantities.
The minister spoke regarding final discussions to establish an oil refinery and an integrated industrial zone in the Al-Dhaba region in Hadramaut Governorate, in addition to a domestic gas project in the Masila sector, and studies to establish an oil refinery in Shabwa.
While Dr. Saeed refuted the news that spoke regarding the withdrawal of OMV from Yemen, indicating that the company has a global trend to shift from exploration and production to specializing in the production of alternative energy and marketing of crude oil, stressing that the company still exists, and the government has rejected two offers to transfer shares to them. Not having the technical capabilities in the field of exploration and oil.
The Yemeni Minister of Oil and Mineral Resources also spoke regarding many important files, including production capabilities and expected investments, in addition to the status of the new tanker to which Safer oil was transferred.
Participation in the International Mining Conference
Dr. Saeed Al-Shammasi reported that Yemen’s participation in the International Mining Forum, which was held in Riyadh, came to show the extent to which Yemen contains rare and very large mineral resources, indicating the presence of large reserves, but they were not presented positively in international exhibitions and conferences.
He said, “This year, following a stagnation of regarding 10 years, during which Yemen did not participate in any exhibitions on a large scale and provide samples of the great mineral resources possessed by the Yemeni earth’s treasures, we focused in the conference on some of the minerals that the world needs today, especially those involved in the solar energy and alternative energy industries.”
He continued, “We focused on switching from fossil fuels to alternative energy in order to preserve the environment and people. This trend is important, especially in light of the discoveries of some materials that are used in these industries, such as lithium, and Yemen owns these fields. We presented them at the conference and we visited many Arab and European companies, especially the British ones.” To take samples of materials found in Yemen, especially industrial materials used in alternative energy.
The minister pointed out that the conference witnessed “the launch of the Arab Mining Organization platform to collect data and information regarding mineral resources in all Arab countries and display it on the platform, along with the factories’ needs for materials and equipment, so that there is integration between countries.”
Mineral wealth in Yemen
The Yemeni Minister of Oil and Mineral Resources indicated that the Ministry has conducted several preliminary studies of the needs in most of the liberated areas for each of these materials, indicating that Yemen has only displayed what it possesses of wealth.
During the forum, companies applied to establish a cement factory with an investment of up to 200 million dollars in one of the southern governorates (Abyan, Shabwa, or Hadramaut), according to the minister. He added, “We also have a request from one of the Kuwaiti companies for the stage of exploring copper, silver, and gold in Wadi Mudon in the Broum District of Hadramaut, and there are requests.” We are waiting for some companies to present it, especially following the Yemeni exhibition received visits from major international companies in the field of mining.”
Al-Shammasi pointed out that “there are old gold mines in Hadramaut in Wadi Mudon in Broum Mayfa, since the seventies, and the companies are still in the previous exploration stage.”
Exporting two million barrels
Dr. Saeed Al-Shammasi confirmed that the oil sector is one of the main pillars of the economy and contributes more than 70 percent of the state budget, but it has been greatly affected by the war since March 2015.
Production began to decline – according to the minister – significantly during the period from 2010 to 2011, while it stopped in 2015 for a full year. He continued, “We began to resume production in August 2016 at the PetroMasila Company so that other companies might be reassured regarding their return, and in 2018 two companies (OMV) and (Kalbali) have returned to production, along with (Hunt) Company in Sector 5, but this production needs to be gradual as a result of the stoppage of the wells and the impact of the existing reservoirs on the land that possess these reserves.”
He added, “In the national companies (PetroMasila) and (Safer), we started production directly and were exporting regarding two million barrels from Hadhramaut every two months, with a production rate of regarding 40,000 per day, and the production of Shabwa and Ma’rib. We were exporting regarding 600,000 barrels every 21 days, and this was before entering the sector.” 5, in the year 2022, when this sector began work and production reached between 15-20 thousand in the first months and might have developed, but the (Houthi) threats began in October and in November the Houthis struck the port of Dabbah and exports stopped. We are looking forward to an alternative export plan and program for crude oil, and we will see solutions very soon.”
Saudi support to restart Aden refineries
The Yemeni Oil Minister revealed advanced discussions regarding Saudi support to restart Aden’s refineries, which represents a major priority for the ministry in 2024, he said. He said, “We have received great support from our brothers in the Kingdom of Saudi Arabia regarding supplying power stations with oil derivatives, and regarding exploration and production of oil that has not yet been achieved.” No discussions are taking place because the situation is stagnant, but there are discussions that have taken place to help us restart the Aden refineries, and God willing, these consultations will culminate in providing specific support to restore the Aden refineries.”
Al-Shammasi pointed out that “the brothers in Saudi Arabia and the Emirates have spared no effort in supporting Yemen with oil derivatives since 2015, specifically the large support for electricity from the brothers in Saudi Arabia, the last of which was three payments in 2018 and 2019 provided to Yemen in a large way to support the electricity of Aden and the liberated areas.”
He continued, “In 2021, the Kingdom provided regarding $450 million to support oil derivatives. All of this undoubtedly reduced the burden very significantly on the state’s general budget and the import bill, which exhausted the electricity bill and imported derivatives.”
Foreign oil companies
Minister Al-Shammasi admitted that foreign companies quickly react to any security impacts that occur and declare force majeure, but at the same time he explained that the situation has changed since the liberation of the liberated areas in the south, and parts of Marib, Taiz, and Hodeidah.
He added, “In 2018, we tried to return the producing companies. OMV returned in 2018, Calvalli returned in Sector 9, and Hunt with its group of partners in Sector 5, in addition to the national companies (Petro Masila and Safer).”
Dr. Saeed pointed out that “the investment situation in Yemen still requires the creation of a safe investment environment for these investments, and no investments will come to any country without security, safety, and political and security stability.”
Withdrawal of the Austrian company
The Yemeni Oil Minister reiterated that the Austrian company OMV has not withdrawn, pointing out that it has a general trend in the world to shift from exploration and production to producing alternative energy and marketing crude oil.
He said, “The company still exists, and the production sharing agreement when selling shares or transferring its ownership to other companies specified the basis for the transfer process. There are two basic conditions: the financial capacity of the company that will operate the sector, and the technical capacity and experience in the field of oil exploration and production and field development.”
The minister spoke regarding the occurrence of “confusion, as the state does not sell because it does not own these shares. The state’s shares are fixed, while other companies that own shares sell their shares, whether on the stock exchange or directly. This is normal in the oil sector and is not new in Yemen. Some companies are exposed to setbacks or It changes its activity and sells its shares in any country to another company. Pointing out that “all campaigns are raised due to a lack of understanding of the nature of global oil activity and oil contracts in the world.”
He continued, “With regard to OMV, two companies were offered to us, and the two companies refused. The first because it does not have the technical capabilities in the field of exploration and oil, and the second refused for the same reasons. We follow international standards and cannot accept a company operating in a sector that does not possess the financial and technical capabilities. A few days ago, they talked regarding Sector 4, that the Yemeni Investment Company had sold it, and this is not true. Yes, we need investors, but serious investors who have the financial and technical capabilities to operate these sectors.
Ready to export oil and liquefied gas
Dr. Saeed Al-Shamasi confirmed that the ministry is ready to export crude oil and gas immediately following announcing any peace agreement in the country, noting that the country’s leadership informed them that “in the first phase of peace, the export of crude oil and gas will be allowed in the first week of the agreement, and it will remain a resource for the legitimate government during the phase.”
He added, “We are ready at any moment for the peace process to be launched and to be allowed to export with regard to crude oil, and with regard to gas, we have recently begun a re-maintenance phase and have reached regarding 80 percent of the maintenance of the Balhaf port for exporting gas.”
In response to a question regarding the faltering operation of the Balhaf Gas Port over the past years, the Minister confirmed that “the port is ready for operation and we have restored maintenance. The port is close to the sea and has been exposed to many erosion and rust factors, and the maintenance teams in the project are working continuously and seriously to rehabilitate the facilities well and re-export Gas, military forces are present, but in an area far from the operating area.”
Al-Shammasi pointed out that the Yemeni government does not want to risk “very large facilities and export operations in light of the Houthis’ madness to attack all state facilities and people’s property. This madness makes us wait in the process of exporting crude oil and gas.”
Marib events and the rise in oil prices
In his comment on the recent events that took place in the Marib Oil Governorate following raising the prices of oil derivatives, the Yemeni Minister of Oil said, “There is a tendency among the government to unify the prices of oil derivatives throughout the republic.”
He pointed out that “since 2015, some exceptions were given to Ma’rib as a result of its security situation and the always burning front. I was excluded from the process of raising prices for the quantities produced from the Ma’rib refinery, especially gasoline only. As for diesel and diesel, their prices were liberalized (…) and we began to move the price from 3,500 riyals to 8,000 riyals, and we received rejection as a result of some tribal elements’ lack of understanding and understanding of the financial situation of the government and the country.”
The minister stressed that “any increase will give Ma’rib a larger share and thus increase development resources. However, very great efforts have been made by the government and the Presidential Council, as well as by our brothers in Saudi Arabia, who are always indebted to them in all their positive interventions. They helped us resolve the issue by returning production and moving oil tankers.” Gas and diesel, with prices being liberalized gradually.”
New refineries
Dr. Saeed Al-Shammasi stressed that Yemen welcomes all national and foreign investments in the field of oil, gas and precious metals, noting that the Ministry is working to promote investment opportunities in all regional and international forums.
Al-Shammasi revealed two major projects in the year 2024, for which final agreements will be signed. The first is the establishment of a refinery with an industrial zone in the Al-Dhabah region in Hadramaut, with a production capacity of regarding 25 thousand barrels in its first phase, and the second is the establishment of a domestic gas project in the Masila sector, which will reduce significant burdens from domestic gas production and dependence. On one supplier in Marib.
The minister pointed out that the construction studies for these two projects have been completed by investors from the Yemeni private sector, in partnership with the Emirates.
He added, “We are also now offering to establish a home gas unit in Shabwa, Sector 5, and we welcome companies to invest, and there are studies to establish a refinery in Shabwa, and we are open to all investments (…) The metals exhibition also gave momentum and we received offers for cement factories and copper companies, and we also have Silicon is in very large quantities in Shabwa, the Habban region, and I believe that Yemen is the Yemen of mining more than it is oil.
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