Deputy Minister of Oil “Partnership agreement in oil production has developed methods that reflect the long-term experiences gained by the oil sector since the beginning of oil exploration in the 1980s.” [Archives:2001/45/Business & Economy]

November 5 2001

Future oil and gas efforts made in the Republic should be directed towards the sedimentary basins. The discovery of oil and gas in commercial quantities and encouraging results from geo-physical and geological surveys suggest that Yemen still has great potential and augurs well for future oil and gas discoveries in other parts of the sedimentary basins.
In July 1984, after many years of disappointing results, the first commercial oil discovery was finally made in Yemen by Hunt Oil Company in the Marib – Al-Jawf Basin. In 1987, another oil discovery was also made in the Ayad – Masilah Basin – Hadramout by Canadian Nexen Company (Canada) and other international companies.
All these discoveries put Yemen on the world oil & gas map. Since this discovery, Yemen has become one of the most active regions for hydrocarbon exploration in the Arabian Peninsula, a result of promising hydrocarbon potential in this country which forced exploration teams to rethink their ideas about the region’s petroleum geology. It has raised the question: Are there other oil-rich fields still to be discovered in Yemen? Mr. Hassan Al-Zaidi of Yemen Times met the Deputy Minister of Oil, Abdulmalik Mohammed Alama, and filed the following interview.

Q: What are the facilities granted by the Ministry of Oil and Minerals in the field of oil and gas exploration?
A: First, I would like to thank Yemen Times staff for their remarkable interest in displaying the activities and the achievements of the productive and economical sectors in our country due to its great importance. This will of course show our natural potentials and capabilities objectively and accurately to the Arab and foreign investors and encourage them to invest their capitals in the available projects present in different economic sectors, especially in the field of gas and oil exploration. First, I would like to highlight the facilities provided currently by the Minister to Arab and foreign investors interested in oil and gas exploration. Furthermore, I would like to point out that the partnership agreement in oil production has developed efficient methods which reflect the long-term experiences gained by the oil sector since the beginning of oil exploration in the 1980s. As for the facilities provided by the Ministry of Oil and Minerals for the Arab and foreign investors in the field of oil and gas exploration, the oil sector remarkably improved as a result of the successful nature of activities performed by the operating companies in the authorized sectors of oil exploration or production. I would like to mention here the competitive incentives provided to oil exploration companies interested in this field:
* Royalty does not exceed 10 percent and it might slightly increase during specific periods in the nearest future .
* Production share has increased to the benefit of investors in line with production and potential reserves.
* Oil cost percentage has increased and, therefore, it is refunded in accordance with size of the project.
* Operating expenses can be wholly reimbursed, that is 100 percent.
* Interested oil companies in the field of oil investment may get various exemptions in different aspects and activities.
This kind of agreement is inapplicable in our country but is applicable in most of other oil producing countries. All these facilities are existing and have so far been applied as stipulated in the partnership agreements. I would like to stress out here that the grants in oil investment were offered more particularly in the field of oil and gas exploration. Oil exploration incentives are not restricted to exploration only but there are also additional facilities granted to the operating companies during the developing phase of to-be operated oil fields. Moreover, the political leadership headed by the President of the Republic of Yemen will give his full support and encouragement to the interested oil companies in the field of oil exploration, whether Arab or foreign companies.

Q: How do you assess Arab and foreign investment in Yemen particularly in the field of oil, mining, and gas industry?
A: We can say that the future of the Arab and foreign investment in the field of oil, gas, and mining exploration as well as the mineral resources in Yemen are promising. On this basis, we will rely on the following premises and conclusions:
– The success of our country’s foreign policy with friendly and sisterly countries has led to the enhancement and strengthening of relations among countries.
– Stability and safety throughout the country, particularly in the remote places, and the political leadership’s permanent support chaired by the President of the Republic not only for the Arab and foreign investment but also in all issues in the economic sectors.
– The sedimentary basins located in our territorial waters in both the Red Sea and the Arabian Sea are promising.
– Coping with the world changes in all economic aspects in a drive to attract Arab and foreign interests as a way of flowing investment in the oil and gas sectors.
– The continuous development of oil and mineral map surveys has become one of the most important activities in the Republic of Yemen.
All these factors have led to positive and substantial results represented by the increase in the agreements and memoranda of understanding signed between oil companies and the Ministry of Oil and Mineral to explore oil and gas in the country. These companies have various investments and gained a lot of experience throughout the world, especially the American and Russian companies. In addition, the Ministry is still receiving offers from oil companies interested in oil exploration.

Q: Any last comment?
A: Using Yemen Times’ channel, I call upon the oil entrepreneurs and investors to inject their capitals in an environment of healthy and fair competition where profit can be made, that is oil and gas explorations, by making use of the available facilities. I also call upon businessmen of the neighboring countries to invest in the field of mineral resources found in Yemen.