Falling oil production in Yemen

Oil production is falling in Yemen where oil accounts for 70% of the government’s earnings.

Yemen EITI (Extractive Industries Transparency Initiative) 2009 Report shows that the future hold hope in gas finds.

Yemen published its second, third and fourth EITI reports last month revealing that the government’s revenue from oil and gas had fallen by over half from 2008 to US $3.6 billion in 2009, but recovered to US $5 billion in 2010. This fall is partly due to a steady decline in production from 160 million barrels in 2002 to less than 100 million barrels in 2010.

Commercial exploitation of gas increased significantly with production from the Liquefied Natural Gas (LNG) plant that opened operation in 2010. This provided government revenue from gas sector for the first time of US $112 million.

The report notes that over 95% of revenues from oil and gas are in physical rather than monetary form. This is because of their production sharing agreements, where the companies pay the government with barrels of oil and cubic feet of gas. These raw materials are then either used in the local refineries or exported.

On launching the report, the Minister of Oil and Minerals, Ahmed Abdullah Daris, said that the report provided an opportunity for “the oversight bodies and civil society organisations to use these figures and data to enhance transparency and accountability in the management of [Yemen’s] resources for positive national development”.

Challenges in Yemen

Between early 2011 and late 2012, Yemen fell into major conflict that led to the suspension of the YEITI process and a delay in the publication of further EITI reports.

The reports now published have provided insight into the challenges of operating in Yemen.

According to BP the average Brent crude oil prices in 2009 was US $62. In that same year the Government of Yemen received $36 a barrel for its oil compared to over $53 in Norway (see www.eiti.org/blog/what-eiti-reports-do-and-don-t-tell-us-about-oil-deals).

The report covering data from 2011 is expected by the end of this year.

To learn more about the EITI in Yemen, visit Yemen's country page>
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