Hunt exercises pressure to, Violate parliament resolution [Archives:2005/846/Business & Economy]

May 30 2005

Mahyoub Al-Kamaly
Parliamentary sources have deemed the pressures the American oil company Hunt practices on the Yemeni government for continuation in operating the oil sector No. 18 in the governorates of Mareb and al-Jawf does not depend on any papers possessed by the company for violation of a decision taken by the parliament on non-renewal of the contract with Hunt that would expire by the end of November.

In a meeting held between the Yemeni prime minister Abdulqader Bajammal and president of Hunt company, the government confirmed that it had no other choice but to seek the help of another operator to manage the sector following the decision of the parliament. Nevertheless, the prime minister said that the Hunt Company would be given priority in case it desired to continue is work according to new agreements for operation.

The parliamentary sources commented on that by emphasizing that the government commitment to parliament decision was stemming from an economic stand at the backdrop of the parliament resolution that had been taken according to legal procedures no bearing any political dimension.

Media sources had earlier mentioned that the company would demand compensation amounting to $7 billion but parliamentary sources ruled that out because the company does not possess any legal excuses for suing. Prime Minister Bajammal and the regional director of TOTAL Company had agreed on seeking help of an independent consultant to present a neutral report to assist the Yemeni government to operate the liquefied gas project. That project has been delayed for a long time because of the crisis of Southeast Asia and some companies dillydallying in its implementation in addition to non-availability of external markets for exportation. Yemen attaches great expectations to the liquefied gas project whose cost amounts to $5.2 billion, as Yemen is considered among the poorest countries in the world with regard to possessing alternatives to oil reserves that might deplete by the year 2012. President Ali Abdullah Saleh has warned that petroleum reserves would exhaust by that date and that the government had to search for alternatives.

Yemen seeks to export its natural gas resources that are estimated at about 2.10 trillion cubic feet and they are situated in the region of Mareb to the east of Sana'a along with oil reserves. However, the total reserves of natural gas in Yemen seem to be very small in comparison with Qatar's reserves of gas, which are estimated at 900 trillion cubic feet. Yemen plans the projects, costing $5.2 billion, which is the most important in the history of the country since 1997. The project was, nevertheless, postponed due to the great world drop because of the Asian economic crisis and thereafter (1997-1998) but the latest rise in demand has encouraged the Yemen Gas Company of which shares the TOTAL Company owns 43%, to begin the project after finding possible buyers. Yemen has lately signed three contracts for exporting natural gas, ranging between 6 and 7 million tons of natural gas per year, to the United States and South Korea over 20 years starting from 2009. The contract stipulates that the Korean Firm for gas should begin buying from December 2008 of an amount estimated at least 3.1 tons a year and over 20 years, to be increased by one million tons later. The American market would take the remainder amount of production per year beginning from May 2009, via the French TOTAL Company and a Belgian company. The project includes the construction of 320km- long pipeline to transport liquefied gas to liquefaction factories in Aden at a rate of 5.3 million tons per year, in addition to building a gas exportation terminal. However, Mr. Mustafa al-Ruwais, representative of the World Bank in Yemen said the liquefied gas would be an alternative to petroleum. Director-general of the Yemen Natural gas company, who was working for the French Company TOTAL says despite that the project would not solve the Yemen problems; it would give it a push for 20 years ahead. If the project is not implemented in the few coming years there would be no revenues, and absence of revenues, along with population increase, constitutes a source of anxiety for the west. The population of Yemen is over 20 million and it is not an OPEC member. Its daily production of petroleum amounts to 380 thousand barrels per day, according to what was mentioned by the Yemeni deputy prime minister, Ahmed Mohammed Soufan.Yemen exports more than half of its modest production of petroleum and this represents more than 90% of the country's exports and more than 70% of the budget revenues. There are no accurate estimates on Yemeni petroleum reserves but international organisations estimate that they would finish after 20 years. The deputy prime minister, minister of planning added that Yemen was facing dangers of water resources depletion during the similar period, and that the gas project may help in fighting terror in the country, as the American International Herald Tribune says, as it is known that the individual share of the annual revenues of he country is 510 dollars and illiteracy among women is over 70%. The minister added that the president's call for looking for alternatives to petroleum was springing from the rapid growth of population that is expected to double in the coming twenty years. A western diplomat says they are trying to help Yemen to get rid of terror and pointed out that the international community was generous with this poor country.

Director-General of Yemen Gas Company said security was among the hindrances of the gas project that is situated nearby Mukalla where a terrorist attack had taken place against the French oil tanker Limburg and resulted in the death of one person. He added that they were building an underground pipeline and would take all security precautions in cooperation with the Yemeni authorities. He says the local tribes could benefit from the project and would take part in the security measures. Experts demand from Yemen to implement reforms it is in dire need for besides the gas project, especially the abolition of the government's subsidiary to petroleum products that cost the government $800 million and amounts to fifth of the government spending.