New measures for . . .Restructuring Yemen’s oil & minerals sector [Archives:2004/788/Business & Economy]

November 8 2004

The Higher Council for Economic and Oil Affairs and Investments has recommended that the Yemeni State Establishment for Oil and Gas would represent the government for its share in the group of oil agreements that the Ministry of Oil has signed with a number of oil companies.
The Council had taken that recommendation after its approval of submitting the concluded agreements with oil companies in sectors 69, 71, 72 and 73 situated in the governorates of Shabwa and Hadramout.
The council proposed management of the government share with the contracting parties after amending all previous agreements according to which it had authorized the Yemeni branch company, which is under establishment, to participate in oil production on condition it shall issue all resolutions and necessary legal amendments.
The Higher council for Economic and Investment Affairs approved the nomination of a highly qualified international advisor for the oil ministry to help it in all aspects and measures pertaining to signing oil agreements with regards to economic, financial and consultative sides.
The council, by choosing an advisor to the oil ministry, intended to avoid problems resulting from oil agreements and commitments with highest degrees of transparency and clarity as well as the public interest of the state and investors rights.
The council has also affirmed the importance of the ministry seeking help from a world investment company for the restructuring of the sector of oil and minerals. It has also entrusted the ministry for the re-analysis and evaluation of oil agreements through drawing up complete vision on the mechanism that should be followed in this area.
The council has also proposed the restructure of the State Establishment for Oil Investments for the purpose of activating its designed role in the oil sector and serving the Yemeni economy. These measures come following proposals presented by the International Monetary Fund to the Yemeni government concerning Yemeni oil production.
The proposals included the importance of studying alternatives to be depended on for development of the national income along with indicators assuring that oil future in the country is possibly heading for dwindling and retreat.
Nevertheless, Yemen, which produces around 450 bpd of crude oil, intends to go ahead in the process of oil discoveries of new wells and fields, especially that there are geological surveys indicating that the country possesses big opportunities for new oil discoveries.
Yemen depends on oil and gas revenues in supporting its general budget by a proportion exceeding 85% for improving its exports of non-oil commodities and goods and the improvement of its external balance of trade.