Chairman of the Petroleum Exploration and Production Authority:19 International Companies Compete to Operate 6 Oil Blocks [Archives:2004/725/Reportage]

April 1 2004
Engineer Nabil Saleh Al-Gawsi, the Chairman of PEPA
Engineer Nabil Saleh Al-Gawsi, the Chairman of PEPA
The petroleum sector and the current explorations in Yemen are in a boom. Work in this aspect has been ongoing through the implementation of a well-researched and transparent plan. Petroleum explorations in several blocks have started unveiling their richness in many areas of Yemen and other fields are going through further extensive technical inspections.
Amid all of this, the Ministry of Oil and Minerals represented by the Petroleum Exploration and Production Authority (PEPA) is implementing an ambitious program with a number of oil exploration and production companies. After the tremendous success that followed the government's campaigning worldwide, tens of foreign and Arab companies are currently competing to win bids to invest in the blocks still open for international tender offers.
This is a battle for development and construction led by President Ali Abdullah Saleh and carried out by the Yemeni government in total dedication and loyalty so as the oil and mineral sector would always lead the way in comprehensive economic development that Yemen has committed itself to achieve. This is done with the understanding that oil will still maintain its position as the main source of income for the country and the hope that drives overall development in Yemen.
In this interview, Engineer Nabil Saleh Al-Gawsi, the Chairman of PEPA points out the successes achieved in the Masila and Shabwa oil basins and the positive results so far unveiled concerning exploration works in various oil blocks. Engineer Al-Gawsi details the conditions of the blocks that have been re-divided in areas of blocks S1 and 51.
He presents the stages of the first and largest international tender of its kind in exploring oil and gas in Yemen and talks about the companies that have presented their bids and were qualified leading to the announcement of the final result.
Mr. Al-Gawsi mentions the stages of international campaigning for some oil blocks on the Internet in cooperation with the Schlumberger International Network. He specifies the future vision of the Ministry of Oil and Minerals and that of PEPA concerning the blocks of the southern and mid areas of the Empty Quarter.
Most importantly, Al-Gawsi focuses on numbers and statistics to emphasize the interview's credibility.
He also stresses on the fact that under the leadership of Minister of Oil and Minerals Dr. Rasheed S. Ba Rabaa, the valuable and important oil sector in Yemen is indeed in safe and loyal hands.

Q: We start this interview with explorations. What is the latest news about oil explorations in the Masila, Shabwa basin?
A: Allow me to fist start with the 2003 commercial oil explorations in Damis Block (S1) of Vintage Petroleum Yemen and Sharq Al-Hajar block (51) of Canadian Nexen Petroleum Limited.
In this respect I would like to inform you that the accumulation of scientific data gathered and its analysis have indeed participated greatly in bringing new visions that proved to be successful in the latest exploration activities, which have consequently resulted in greater interest by international oil companies in investing in Yemen.
The discovery of oil in commercial quantities -announced in 17 December 2003 – in block 51 operated by Canadian Nexen Petroleum Limited is a good example. It is worthwhile mentioning that constructive work in Central Processing Facilities (CPF) including the 22-km long pipeline to connect with Al-Maseela, Al-Shihr main pipeline is currently ongoing. The official inauguration of production in this area will take place in 2005 with an initial production of 20 to 25 thousand barrels per day (bpd) capacity. We are currently however assessing the petroleum production capabilities of Basheer Al-Khair fields.
As for the oil discovered in S1 block operated by Vintage Petroleum Yemen, commercially announced on 14 October 2003, work is ongoing to construct its CPF that will have a capacity of 10,000 bpd. Furthermore, the 28-km pipeline of 8 inch diameter and a maximum capacity of 80,000 pbd will be connected to Jannah Hunt Oil Company's block (5) pipeline in preparation for production. On the other hand, recently, a certain quantity of oil produced in block (S1) was transported to Jannah block (5), signaling the expected production of the block by the first quarter of 2005 with a capacity of 25,000 bpd.
As for oil explorations under inspection for block (9) operated by Calvalley Petroleum Incorporation and block (S2) operated by Preussag Energy GMBH, I would like to note that block (9) of Calvalley is undergoing explorations in three stages. Work started with inspecting the first well (Ruwaidhat 1) and the initial results were 614 bpd. Work will continue this year by inspecting wells that were drilled in 2003. An assessment program will also be implemented in the form of drilling new wells to identify the extensions of the layers with oil and gas in preparation to announce the commercial discovery of oil in this block, and God willing, we expect this to happen this year.
As for block (S2), I am glad to say that the German Company Preussag Energy GMBH was able to discover a well (Nilm 1) in this block and initial tests have shown a successful production of 450 bpd. This is beside the oil well (Kharwa 1) discovered before with a production capacity of 500 bpd. The assessment and development work plan will also be studied for this block by the German company in preparation to announce the commercial discovery of oil in this block in this year.

New discoveries

Q: Are there any new oil discoveries?
A: There are initial discoveries of oil in block (49) east of Shabwa operated by MOL Yemen Oil and Gas Company along with block (43) south Hawareem operated by DNO, ASA Yemen.
Furthermore, information obtained by analysis of well recordings have unveiled layers of oil in:
1) A well south of Behark in block (49):
Test procedures for the well have already started and unveiled the existence of oil in three secondary layers (Basement rocks, Kuhlan, Shaqra, Lam, Al-Sabaateyn). Later the production capacity of these layers will be identified after the completion of the testing operation and assessments currently taking place at the well.
2) Positive results for Al-Nabraga well at (43) block in Al-Masila:
The results of drilling at Al-Nabraga well at (43) block in Al-Masila revealed significant oil indicators and well recordings have confirmed the existence of a 13-meter thick section of the Qishn layer saturated with oil. This is apart from a section in the Al-Harshiyat layer. In fact last Friday morning, the Al-Nabraga well was examined and results revealed that the oil production rate 2,670 bpd.

Q: What about promising oil blocks?
A: There are promising blocks that indicate the existence of oil in them including blocks 15, 47, 48 as that has been unveiled through exploration drillings at those blocks. Meanwhile, component maps are currently being assessed and new areas are being specified in a more specific manner to locate potential oil fields for exploration in these areas to begin after carrying out more assessments.
As for the blocks that have been re-divided in blocks (S1) and (51), which were announced commercially, the Ministry of Oil and Minister represented by PEPA has re-divided those areas to six new blocks as follows:
– 3 blocks were divided in block 51, and those are 71, 72, 73.
– 2 blocks were divided in block (S1) and those are 70 and 69,
– A block was formed from block (48).

A modern campaigning plan

Q: You have launched an international bid tender for exploration of gas and oil in Yemen, what are the specifications and objectives of this initiative?
A: Upon instructions by the Minister of Oil and Minerals Dr. Rasheed S. Ba Rabaa, the ministry represented by PEPA started a modern international campaigning plan to market for the blocks that have been re-divided in blocks (51) and (S1). These blocks, namely 69, 70, 71, 72, 73, and 74, have been announced in local, regional and specialized international newspapers and have received the greatest of interest by several international oil companies. We have done this to attract international investment in oil blocks in the country and open a new window to petroleum investments for the most prestigious oil companies in the world, which if selected could have their investments in Yemen.
This plan has specified the means to provide bids along with the major conditions for tender offers. Those offers were provided during 14 January – 15 March 2004 after which the qualified companies – financially, and technically- were allowed to participate in the tender. This also comes as an implementation of orders from President Ali Abdullah Saleh, who has always given great attention to the oil production sector and its overall development in Yemen.
The tender has gone through several stages as follows:
1- Comittee has been formed by the Minister of Oil and Minerals to be under his direct supervision.
2- The announcement to open the way for bids was published in major Yemeni newspapers and magazines (Yemen Times, Yemen Observer, 26 September, and Oil and Minerals Magazine) and international newspapers (London-based Al-Hayat, UAE's Al-Ittihad, Upstream, MEES). The announcement was to allow companies to offer their bids to invest in the six new blocks (69, 70, 71, 72, 73, and 74).
3- The announcement was also published on the Internet.
The announcement mentioned the following conditions to accept bids by oil companies willing to operate the mentioned six blocks:
1- The company's profile
2- The company's technical and financial report for the last two years.
3- The company's latest audit report
4- 15 March 2004 was specified as the final deadline to receive bids by the oil companies.

An operation room was prepared to work around the clock (24 hours) to receive the bids of the applying companies and answer any of their inquires. A special data room was also prepared and was equipped with the most highly developed and modern equipment. The period from 27 March to 28 April 2004 was specified to study and inspect the provided bids and identify the ones that qualified.

Twenty eight international companies from 15 countries applied for the tender, but not all of them were allowed in the tender.

5- Letters were sent to companies that did not fulfill the requirements and were requested to complete their files by the deadline specified, 15 March 2004.
6- After the completion of all required data and statistics of the applying companies, evaluation of the companies was made using the most modern statistical procedures and taking into account the international standards applied in the field of oil industries.
Upon the completion of the evaluation of applying companies, 19 oil companies from 12 different countries qualified for the tender. Nine companies were rejected from the tender for either:
– not fulfilling the conditions mentioned in the original announcement; or
– not meeting satisfactory financial or technical requirements necessary to apply

Following the first phase that ended on 26 March 2004, the second phase is scheduled to take place from 27 March to 28 April 2004.
After the approval of the Minister of Oil and Minerals of the results of the first phase, letters were sent to qualified companies to view the data collected by the data room during the period 27 March-28 April 2004.
The third phase will take place during 2 May – 23 May 2004. The day 2 May 2004 has been specified as the date when the Minister of Oil and Mineral Dr. Rasheed S. Ba Rabaa will head a meeting in which he would give a lecture to the qualified competing companies and their representatives in one of the hotels of Sanaa and provide them with forms on the special financial and technical commitments to be filled in by the companies.
The final day to receive final bids by the qualified companies will be 23 May 2004. All bids will be submitted in the form of envelopes sealed with red wax. All bids will be analyzed with scrutiny and studies by the negotiating team and will then be raised to the Minister.

Final results

Q: When will the final results of the tender be announced?
A: 20 June 2004 was specified as the day when the final results will be unveiled by the Minister himself. This whole operation is indeed a first of its kind by the Ministry of Oil and Minerals, which represents the degree of transparency for the International Bid Tender. Due to this step, the Ministry represented by PEPA received several requests to negotiate investment opportunities to explore oil from international and Gulf companies that wanted to operate blocks that are not yet declared. For example, some have applied to operate blocks 6, 7, 3, and 17. Twenty nine companies have applied for the exclusive rights to explore oil and gas in the six announced blocks, and this is a mere example of the transparency and accuracy of the steps taken by PEPA to this extent. This has also been possible due to the many oil discoveries in blocks 51 and S1 and initial oil discoveries I blocks S2, 49, 43, and 9 which have been unleashed in 2003 and 2004. Such positive outcome resulted from the joint efforts of PEPA and oil companies currently operating in Yemen amid direct supervision and follow-up by Minister of Oil and Minerals Dr. Rasheed S. Ba Rabaa. This was also possible through direct campaigning on the Internet.

Q: What are your activities to promote blocks 16, 19, 28, and 55?
A: Apart from what the ministry and PEPA are doing in promotion, PEPA in cooperation with Schlumberger International are campaigning for the open blocks in land and water 16, 19, 28, and 55 on the Internet through a website of PEPA on Launching a website for PEPA on the network itself has many advantages including:
1- Opening a petroleum window to Yemen
2- Receiving the largest volume of information related to the oil industry in the international market quickly, smoothly, and efficiently.
3- Ideal promotion through a common database supported by advertising and modern and developed scientific approaches.
4- Bringing more oil companies (investors) and visitors to the database to know more about oil industries in Yemen and fields of investment and open blocks.
5- Ease of promoting and conveying available information

A Strategic Project

Q: What is the future vision of the Ministry and PEPA concerning the Empty Quarter and middle region?
A: The Ministry and PEPA will continue a similar approach in future plans, especially after the success of the first phase in promoting open blocks. The second phase will be the promotion for the Empty Quarter and Middle region.
There is already a comprehensive strategic project prepared by the exploration department of PEPA based on instructions from the Minister of Oil and Minerals. The project was prepared based on a scientific explorative vision that was well-researched based on specialized and available information.
God willing, we will cover this program in the second half of 2004 after completing our current program at the end of the first half of this year.
The Ministry, represented by PEPA adopts ambitious plans through which we hope we would achieve all our programs and future plans especially after the great success achieved by PEPA in the last few years in the field of explorations and attraction of several international oil companies through its events and promotion activities.

Copyright note:
– Interview done by Abdulqawi
Al-Odeini, 26 September Newspaper