Bloomberg News

Yemen Oil Output at Half Potential Capacity, Minister Says

February 24, 2012

(Updates with minister’s comments from second paragraph; pipeline sabotage in 10th.)

Feb. 23 (Bloomberg) -- Yemen, the Arab world’s poorest country, is producing crude at about half of its 250,000 barrel- a-day capacity and depends on fuel donated by neighboring states to meet local needs, Oil Minister Hisham Sharaf said.

Crude pumped in the western Marib region remains cut off from refineries and markets because of sabotage attacks on the country’s main pipeline, Sharaf said in an interview in the capital Sana’a. With the network halted for almost 12 months, Yemen’s refineries are working at only about 60 percent of their abilities, the U.S.-educated minister said yesterday.

“About half of our income is lost because Marib stopped,” Sharaf said. “The number one issue for the ministry is safety, stability and security. If the government reaches safety and security, we can go beyond 250,000 barrels a day” in oil production.

Yemen, bordering Saudi Arabia and Oman at the southern tip of the Arabian Peninsula, is seeking to recover from violent protests that led to the exit of former President Ali Abdullah Saleh. Saleh’s removal paved the way for presidential elections on Feb. 21. As part of a regionally brokered accord that ended Saleh’s control, the vice president for the past 18 years, Abdurabu Mansur Hadi, ran in the poll uncontested.

U.S. Education

Under a new president, its first in 33 years, Yemen should be able to reach a level of stability, making it attractive for companies to explore the country’s energy and mineral wealth, said Sharaf, who took over the ministry in December as part of a new government formed to end 10 months of unrest. Born in 1956, he was formerly minister of industry and trade. He holds a bachelor of science degree in civil engineering from the University of Pennsylvania and a master’s degree in administration from Catholic University of America in Washington, D.C.

Yemen ranks ninth in the Middle East for output of both oil and natural gas, according to data from BP Plc. It produced 264,000 barrels a day of crude in 2010, the data showed. The country experienced a fuel shortage after anti-government members of the Al Shabwan tribe blew up part of the 420- kilometer (260-mile) pipeline from Marib to the Red Sea port of Ras Eisa in March.

Yemen needs $600 million a month in oil products for local use, Sharaf said. Saudi Arabia provided fuel in January and February, and the minister said he expects support from Kuwait and the United Arab Emirates. Kuwait and the U.A.E. together may cover Yemeni domestic needs through June, he said.

Masila Oil Field

Oil production is about 120,000 barrels a day nationwide, Sharaf said, with export-grade crude coming from the Masila field. A strike by workers at Petromasila, the state-run operator of Masila, ended earlier this month. Total SA is among companies producing at the field.

Attackers targeted the Marib pipeline for reasons both personal -- anger over the loss of a job, for example -- and political, he said. “Now it’s like a fashion,” he said, adding that he expects the link to resume operation this year or in 2013.

“We were waiting for after elections to tackle the issue,” Sharaf said. “We will call these guys and we will see what is the problem. Those who have real claims, legitimate claims, we can solve these problems as long as they’re real.”

Production of liquefied natural gas “is going very well,” and Yemen is diverting some LNG cargoes from the U.S. and shipping them instead to China, Japan, Thailand and India.

Asian Prices

“We’re getting better prices” from Asia, where demand in higher, Sharaf said, without giving details. “We are doing well, and we are increasing that amount of gas going to better markets.”

Yemen has discovered oil, gas and gold, Sharaf said, declining to provide further details. The country may offer additional exploration rights for oil and gas resources in the next five years, he said.

“Yemen needs 10 years of peace and stability to allow us to work and get our wealth of gas, oil and minerals. If the whole world helps Yemen to establish peace, security and stability at this critical time, this country can get a lot of oil and gas.”

--With assistance from Ayesha Daya and Anthony DiPaola in Dubai and Mohammed Hatem in Sana’a. Editors: Bruce Stanley, Randall Hackley

To contact the reporter on this story: Donna Abu-Nasr in Sana’a at

To contact the editor responsible for this story: Andrew J. Barden at

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