How to manage our oil resources? [Archives:2008/1182/Opinion]

August 18 2008

Saif Mohsen Al-Sharif
For tens of years, oil has played a primary role in the world economy, most notably in oil-exporting states. The lion's share was demonstrated by many Middle East states, which have more than half of the global reserves of oil and gas.

Despite Yemen's late entry into the club of oil-producing states, but with modest quantities of crude, oil turns to constitute the backbone for the country's national economy. However, excessive dependence of state's general revenues on the oil sector reflects how important this sector is since it greatly contributes to developing the Yemeni economy.

As all know that at lest 70 percent of state's general revenues come from oil, oil also accounts for 90 percent of Yemen's export. There is also excessive dependence on oil to provide fuel derivatives for local consumption.

As such a vital product has a crucial significance in driving forward wheels of national economic development amid absence of an economic alternative in the near future, and due to the great challenge represented by the continued decrease of oil quantities in Yemen's mature blocks, the government continues encouraging oil companies to explore in further areas.

Yemen faced threats that its mature blocks were about to deplete, particularly as the bell of risk started to ring in the official agencies, as well as among all those observers who care a lot about the future of Yemen's national economy.

The competent authorities in the government are recommended to expend serous efforts in studying and setting up a comprehensive strategic plan for the oil operations in Yemen and this should include exploration, production and development in a way ensuring maximal economic returns for the country throughout a long time period.

A strong sense of responsibility needed:

At this point and based on a strong sense of responsibility that must be shouldered by each one, who is jealous of the future of Yemen's economy, as well as through my modest experience in the oil sector, I suggest to the kind readership some basic themes due to function as the foundation for a strategic vision that may contribute to building an integrated strategic plan for oil operations in our country.

I also hope that all those concerned and the competent authorities in the government should pay close attention to the situation of such a vital sector in Yemen.

The kind readership also needs to know some of data about the situation of oil in our country, plus some facts accompanying these data. As is widely known, petroleum exploration operations in Yemen first began in the early 1960s. The first exploratory well was drilled in the Salif area in 1961 but of no avail. This was followed by a non-commercial oil exploration in the 15th Marine Block in Hadhramout governorate in 1982.

Successive petroleum exploration operations followed in various southern and eastern parts of Yemen until Yemen's crude production reached 435 thousand bpd in 1991.

It is worth mentioning that productive oil blocks numbered up to 12 while exploration operations were still taking place in other 31 blocks. Up to 49 marine and land blocks are open for petroleum-related investment.

Of the basic themes that are key to the development of oil exploration and production operations is the establishment of national companies and recruitment of local staff to be in charge of such operations. Another theme is reflected in the way the government encourages investment opportunities of oil explorations in open blocks.