The key to analysing EITI Reports is not to get distracted by small discrepancies and details, writes Tawfiq Al-Budiji.
Falling oil revenues in Yemen: how is our government preparing for this?
On October 5th the PWYP affiliated coalition in Yemen, the Transparency Coalition for Extractive Industry, organized with EITI a workshop to analyze the EITI Report 2008-2010. We as civil society need workshops and exercises like this so that we can use the EITI annual reconciliation reports. The Reports are not only for looking at the numbers, the reconciled revenues and any differences, but also to analyze trends, draw out stories and develop key advocacy messages on how to improve the management of the sector so that current and future generations can benefit.
So what does the 2008-2010 EITI report from Yemen tell us? Or rather, what does it not tell us?
The key when analysing EITI Reports is not to get distracted by small discrepancies and detail, but to look at the larger stories the numbers are trying to tell.
A quick look at the crude oil production and value figures in the report show that oil production is falling.
This shows that the oil boom in Yemen is ending. Although the government put up 15 new exploratory oil blocks for auction earlier this year there is, as always, no guarantee that exploratory blocks will automatically yield productive fields.
If the oil boom is indeed ending what plans has our government put in place to diversify our economy beyond oil?
Could other minerals be exploited to replace oil? Unfortunately this report did not include mining revenues. We know that nearly 95% of all mining companies operating in Yemen are exploratory and only a meagre 5% are in production, but as a coalition we still believe that revenues flowing in from this sector should be transparent. That is why we negotiated for mining revenues to be included in the next EITI reconciliation Report, which is due before the end of December.
But let’s go back to the black gold. When looking at whether the crude oil the government receives is exported or goes to refineries for domestic consumption, we get the following picture:
Almost half of the crude oil the government gets is sent to refineries for domestic consumption.
With this in mind, why is it that we face energy shortages? Yemen suffers from severe electricity cuts that can last up to 12 hours a day and only 40% of the population has access to electricity. With figures in the report showing such heavy internal consumption rates, we need to know what is happening to that oil. There is a big question mark drawn around what is happening to these substantial amounts of crude oil.
Despite being asked to do so by the reconciler, companies failed to report production figures for the crude oil, so production figures were based on the government data alone. However, project by project reporting for oil and gas production by companies in the next EITI Report will enable for a more accurate assessment.
With Yemen’s income from crude oil alone averaging around US $5 billion per year (2008 - 2010), we need to know how these revenues from natural resources are being spent by our government. In the next EITI Report the annual government budget will be included, with clear indicators as to how the revenues were distributed. This is a formidable step towards enabling Yemeni citizens to act as a conscientious monitor of how their wealth is being spent. According to UNDP, Yemen ranked 2nd lowest in the Human Development Index for Asia and Oceania (0.458). Revenues for our oil and gas must therefore be used to improve living conditions for all citizens.
It is now up to us to act on this information, to ensure that our oil and gas benefits not only the citizens of this generation, but of the generations to come.