Parliament: Government should not renew agreement with YHOC [Archives:2005/830/Local News]

April 4 2005

Yasser Mohammed Al-Mayyasi
The Parliament confirmed in its last Wednesday session that it rejects any renewal, expansion or amendment of the original agreement signed between the government and Yemen Hunt Oil Company (YHOC) with respect to bloc 18 in al-Jawf.

Validity of the agreement is due to end on Nov.15 this year and the government is recommended to look for possible alternatives based on transparent competition to achieve better revenues and develop the economy of the country.The report of the Development and Oil Committee at the Parliament urged a discussion of the contract theMinistry of Oil and Minerals is intending to renew with YHOC for the next five years.

On the other hand, the parliament report concerned with bloc18 in al-Jawf included a number of violations by the government against this bloc, which started producing in 1981 under the first agreement due to end next November.

The report explored that renewing the contract for five more years was not legally justified and is expected to negatively affect the general treasure of the State.

The report confirmed that the State will recieve, during the next five years approximately $2.6 billion. That is $3.87 million less than the revenue expected to be during a similar period.

The general treasure of the State meanwhile will obtain additional $898,849,000 to its oil-related revenues in case the government singed a contract with any company other than YHOC to operate this bloc.

It is worth mentioning that riot against the agreement was caused by the governments intention to expand and amend its original agreement with YHOC.

The opposition members at the Parliament accused the government of being unable to bring alternatives to YHOC and that the Ministry of Oil and Minerals does not have a strategic vision to manage the oil wealth.This becomes evident in it being unable to look for feasible economic alternatives to profit from the oil wealth.The parliament report is expected to incite riot in the coming days particularly after the sudden step taken by the government to withdraw the agreement project by virtue of the renewal with the YHOC issued by the Parliament in response to the letter of Prime Minister.

The Parliament added the government does not have any transparent justifications for withdrawing from the project.

Those who oppose the agreements renewal fear the government will expand the agreement term in an illegal way.