Oil & Gas in Yemen: Expert Opinion [Archives:1998/41/Business & Economy]

October 12 1998

Professor Thomas Stauffer taught Middle East economics, Geo-politics and LNG economics at Harvard University. He is presently an international consultant with wide-ranging experience, especially in the Middle East.
Professor Stauffer participated in the First Oil and Gas Conference of Yemen organized by the Ministry of Oil and Mineral Resources during September 28-30, 1998.
Dr. Salah Haddash, Yemen Times Managing Editor, talked to him on the occasion.
Q: What is the purpose of your visit to Yemen?
A: The purpose is to give presentations at the Oil & Gas Conference. Honestly speaking, as important as that was, I wanted to come back to Yemen and update my information on recent developments. I also have a few friends with whom I wanted to touch base.
Q: What was your presentation about?
A: I made two presentations. The first was about the relationship between oil and gas prices and what that implies for marketing gas. The second was more specific as it dealt with the problems of developing LNG (liquefied natural gas) projects and the way to export natural gas. It is a particularly difficult kind of project and today it is even more difficult, notwithstanding, of course, the availability of the proposal of the consortium to build the project.
Q: Have you had a chance to look at the energy policies of Yemen?
A: Well, I do not want to comment the official policies of the government of Yemen. What is clear, however, is that the terms of interaction with oil companies require continuous adjustment to reflect changing opportunities and challenges.
In terms of use of oil proceeds, the oil revenue that comes to Yemen is really small in relation to the population. So the effect is not the same as it is in countries like Qatar or the United Arab Emirates. Oil money can be used productively but it has to be done carefully.
Q: Do you foresee oil and gas can play a role in developing this country?
A: Of course. Revenue from oil and gas can be used to finance infrastructure, say. If the government has more money from oil and gas, it can build more and better schools, roads, hospitals, and and install better communication systems, etc. In most of the oil countries, that is done.
There is also the employment benefits as well as a lot of positive externalities.
Q: Do you think that it is an advantage to Yemen to be a member of the international petroleum club?
A: I would think, politically, there will be a great advantage for Yemen to be seen to be cooperating widely. I think that the net advantage symbolically could be large.
If more oil exporting countries cooperate, then all are better off because the price could go up more quickly. So there is actually an economic advantage to producing less oil to get a higher price.
In the end, however, it is up to the Yemenis to decide on that matter.
Q: How far has Yemen’s LNG project come?
A: There is evidently the consortium of companies charged with the project. Without appearing as a pessimist, let me just say that there is a long way to go before you can tap the resource.
Q: How do you assess the oil conference?
A: It is too early to say. The conference is a first step in a process. Now, the various parties have to pursue the opportunities they see in the country.
I believe something will come out of it, but can’t say how much!