he Republic of Yemen is situated in the southern sector of the Arabian Peninsula. Initial petroleum exploration in the country took place in 1938 when the Iraq Petroleum Company (at that time a British-owned company) conducted geological and geophysical surveys. It was not until the late 1970s when industry began to unlock the oil and gas potential of the country. Agip signed the first PSC in Yemen and this initial work was followed by other agreements with large international operators. In 1984, Hunt Oil signed a PSC in the Marib-Shabwa region in North Yemen and discovered large accumulations of oil. Canadian Occidental (now Nexen) made significant discoveries of oil in the Masila region in 1991.
The country's oil production has decreased over recent years and currently stands at approximately 280,000 bopd, with the majority of production exported to provide the main source of the country's foreign income. In 2009, the Government of Yemen, with French operator Total, commissioned a world-class LNG export project to sell gas to foreign markets. In 2010, a second train came on-stream, providing the country with current production capacity of 6.7 mmtpa. Also in 2010, Yemen entered into an important MOU with Kuwait Energy to study domestic gas utilization in the country.
Oil production in Yemen is dominated by a relatively small number of international oil companies, with production coming from two main sedimentary basins; Marib/ Shabwah and Say'un/Masila. The proven and prospective petroleum resources of Yemen are confined almost exclusively to these onshore rift basins, which developed between the Late Jurassic and Late Cretaceous periods. The primary source rocks for the oil in the rift basins are the organic shales of the Madbi formation, which were deposited during the main phase of Jurassic rifting.
Yemen's Ministry of Oil and Minerals is responsible for managing industry contracts and relations with operators and partners, as well as the Government's share of crude exports. Yemen's total commercial reserves are estimated at 3.05 billion barrels of oil. Yemen also has gas reserves estimated at 16 Tcf (associated and non-associated), the majority of which are dedicated to the Yemen LNG project. Yemen has a relatively mature oil industry with good, but localized infrastructure.
Key Terms of HOA with Kuwait Energy
Seven PSC blocks totalling over 21,000 square kilometres
Blocks have substantial data sets allowing for rapid assessment of unconventional potential
World-class shale source rocks may provide new unconventional play
Conventional reservoirs to be studied for application of certain unconventional technologies to enhance production and reserves
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