Yemen Observer: http://www.yobserver.com
Posted in:
Reports
Written By: Observer Staff
Article Date: Apr 22, 2008 - 1:47:16 AM
Khalid M. Bahah
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The Ceremony for the Production Sharing Agreements involving the winning companies took place at midday, 13th April 2008. Mr. Khalid M. Bahah, the Minister of Oil and Minerals, chaired the signature process with representatives from the five successful companies attending. The successful companies were the following:
1. Blocks 29 and 57 in Al-Jawf Governorate and block 28 in Shabwa Governerate signed by:
a. GSPC
b. Al-Koor Petro Limited
c. Western Drilling Contractors Private Limited
d. General Corporation for Oil and Gas
2. Blocks 83 and 83 were signed by:
a. Medco Yemen Amad Limited
b. Kuwait Energy Company
c. Indian Oil Corporation
d. Oil India Limited
e. General Corporation for Oil and Gas
3. Block 29 in Mahra Governerate was signed by:
a. OMV
b. Pakistan Petroleum Limited
c. General Corporation for Oil and Gas
4. Block 84 was signed by the following:
a. DNO
b. Ansan (WIFKS)
c. TG Holdings
d. General Corporation for Oil and Gas The signature for the eighth block
awarded to Burren Energy has been delayed because the company has been acquired by ENI. It was the climax of what has been a busy time for those working on the bidding process – both for the companies and the Ministry staff. Bidding has extremely active – with some 30 companies bidding for 8 blocks on offer. Mr. Bahah, Minister of Oil and Minerals, operated a series of “regulations” to select the companies during the bidding.
“The fact that we didn’t even call them conditions [was a way] to pre-qualify the kind of companies that bid for the tender.” The aim was to encourage only the most suitable companies: “pre-qualifications… ensure that we pick the right companies to be operating the blocks.” This was a new step for the minister since such regulations are not usually employed.
“We used to accept investors but with these tenders we tried to differentiate between the investors and operators… to ensure that the person, company or body [operating] the blocks are right to do so in a safe manner, with a strong financial backing, and the correct technical knowledge.” Nor did the bidding draw merely the established crowd. Many bidders were new to the Middle East. The Minister was surprised by the aggression of the Asian companies. “We used to brand the Chinese ‘tigers’ but now it is the Indian ‘tigers’… they are showing the others that they cannot go about winning tenders in a traditional manner.”
GSPC, an Indian company, took home the tender for three of the eight blocks, although it will be working in partnership with Al-Koor Petro Limited to run its exploration and drilling operations. The ratification of the agreements was the single hang-up that emerged from the conference. This potentially lengthy process involves parliament and the president approving the tenders before exploration can commence.
To counter this potential issue, the minister has promised an “aggressive approach” to the ratification. He promised that “it will not be like times before… we have received a commitment from a higher level to [approve this] within the next three months. If they keep to schedule it will be very easy for parliament – as we have 8 blocks with the same conditions. If they ratify one they will ratify all.”
The various winning companies were similarly keen to ensure a swift ratification. Colin Kramer, the General Manager of DNO, “hoped ratification would happen sooner rather later because we are ready to start work immediately.” A spokesman from OMV expressed a similar optimism. Realistically, the companies can expect to be exploring within 3-6 months. There is no doubt that the conference is endemic of the ministry’s hard work to optimise Yemen’s most abundant economic asset, and one that constitutes some 65% of their GDP: oil. Dr. Ahmed Ali Abdul-Elah, Chairmen of PEPA for Exploration Affairs, was extremely positive about the conference.
His deputy, Mr. Nassr Ali Al-Humaidi, explained that Yemen has not even reached capacity for oil exploration and production. “At the moment only 26 exploration blocks are being used, last month we had approval for four more exploration blocks, and we have at least 2 more in parliament. By the end of this year we will have 40 blocks available.” Mr. Mohammad A. Al Howqal, Vice President of Kuwait Energy Southern Arabia, was similarly optimistic about the future for the oil and gas sector in Yemen.
“We are very familiar with Yemen and think that there is a lot of potential… as an emerging country. I really invite countries to come and invest here. The terms are very good – much better than other places – and we feel there is a long future in Yemen. Anyone who comes at this time will really benefit.” There are some 20 companies working in Yemen. The oil and gas sector is not just about foreign companies – it is also about employing Yemenis, stimulating the economy from the bottom up as well as the top down.
The “Yemenization” of the oil industry has been a central policy for the government. With the president’s announcement last year that companies must employ 90% Yemenis, the Ministry of Oil and Minerals has been working hard to help many foreign companies achieve this. Many are currently at the 80-85% mark.
“We will no doubt achieve [90%] with further work” commented Mr. Al-Humaidi. But the process is not just about reducing unemployment in Yemen. Employing Yemenis is a mutually beneficial exercise since they are “cheaper than foreign labour, they have the precise skills for the jobs and an in-depth knowledge of the country” said Mr. Al-Humaidi. A further conference is soon to be taking place to celebrate the bidding for offshore tenders, which is currently underway.
