Yemen to build new oil pipeline and storage tanks

06 January 2019
New export route could help Kuwait Energy resume its operations

State-owned Yemeni Company for Investments in Oil & Minerals (YCIOM) is preparing to lay a new pipeline to transfer oil from its Marib and Shabwa provinces, a move that could help the embattled country boost its exports.

The 82 kilometre-long pipeline will run from Block 5 to a central pumping station at Block 4, both in the centre of the country, Yemen’s Saba news agency reported.

From there, the crude oil will be pumped to the Bir Ali oil terminal on Yemen’s southern Gulf of Aden coast. This could help boost YCIOM’s oil export capacity to as much as 70,000 barrels a day (b/d), the report said.

Block 5, also known as the Jannah Block, is operated by privately owned Kuwait Energy, which holds a 15 per cent interest. Acquired in 2013, the block is located in the Marib sector of the Marib-Jawf-Shabwa Basin.

Kuwait Energy has not been producing oil from the block due to the ongoing conflict in the country. Oil had been pumped westwards by pipeline to the Ras Issa export terminal on the Red Sea, but oil vessels have been unable to enter the port since April 2015, shutting in the field’s 4,500 b/d output.

The Houthis maintain control of the northwestern border region, as well as key oil infrastructure such as the route for the Marib-Ras Isa crude oil export pipeline, and the Red Sea oil terminals at Ras Isa and Hodeidah port.

Crude from the central Marib province, previously Yemen’s most productive acreage, has also been shut-in, despite being hundreds of kilometres east of the fighting, which is focused in the northwest of the country along the border with Saudi Arabia, the Houthi-controlled capital Sanaa and along the Red Sea.

Yemeni President Abdu Rabu Mansour Hadi has repeatedly called for the Oil Ministry to boost oil and gas operations to bolster the government’s revenues.

Unable to export from Ras Issa, Yemen’s operators have been looking for alternative routes for their crude. Oil from Block S-2 in Shabwa, operated by Austria’s OMV, is exported through a 200km pipeline to Bir Ali on the Gulf of Aden coast. Yemen’s total oil production is still about 50,000-60,000 b/d, according to Yemeni sources, around a third of its output before the war. Most of the production comes from blocks in the Shabwa, Marib and Masila provinces.

The most important export terminal is Al-Shihr, where crude is loaded from the Masila basin. This comes mostly from PetroMasila and Safer Oil Company, two state-owned companies.

OMV became the first international oil company to restart crude oil production in Yemen last April, hitting about 17,000 b/d from its Habban field by the end November.

The new route could help Kuwait Energy resume its operations, although it would be several months before the pipeline is operational.

YCIOM is also expanding its strategic storage facility at Bir Ali, also known as Al-Nushaima, by 500,000 barrels to hold a total of 1 million barrels of crude.

Aden-based YCIOM was appointed in the 1990s by the Ministry of Oil & Minerals to supervise exploration and production operations at Block 4 and 5. Since then, the company has worked with international oil companies, and has made a number of discoveries including the Halewah, Dhahab, Al-Nasr, Aser and Jannah fields.

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