On 29 July Austria’s OMV became the first IOC to export Yemeni crude since 2015 when the Ambelos oil tanker disembarked from the Bir Ali terminal, a tiny offshore single point mooring station (SPM) located 30km west of the Yemen LNG facility at Balhaf (see map). The Ambelos is currently in the Indian Ocean sailing toward East Asia—the primary market for Yemeni crude.

OMV, the only foreign firm currently operating in Yemen, confirmed to MEES in April that it had restarted test production at the Shawba basin's Habban field on its S2 Block (OMV 44%op, Sinopec 37.5%, Yemen state firms YOGC 12.5% and YRL 6%) and planned to ramp up output to 10,000-12,000 b/d in the coming weeks (MEES, 20 April). But CEO Rainer Seele was more measured in June, telling MEES it was “too early to know if production can be stable … the challenge is our wellheads and the reliability of the infrastructure” (MEES, 22 June).

OMV confirmed output at 5,000 b/d during its first half earnings call on 2 August. The firm “assumes” output will hold steady at this level for the remainder of 2018 “if nothing is changing materially in Yemen.” The field produced 14,500 b/d prior to the 2015 halt in production. The crude is currently being trucked to nearby Yicom-operated Block 4 where it is fed into the recently-rehabilitated 207km pipeline that runs to Bir Ali on the Gulf of Aden. There are five storage tanks at Bir Ali, each with 126,000-barrel capacity, but satellite footage suggests only one storage tank is in working condition. This implies at current output levels that one 126,000-barrel shipment could be made every 25 days.

OMV initially planned to ship its crude from Bir Ali down the coast to the 150,000 b/d Aden refinery but subsequently opted to sell it on the open market. It is unclear why. If more IOCs follow OMV’s lead, the existing Bir Ali infrastructure would quickly prove unable to handle the volumes. For large scale exports to restart would require access to the 110,000 b/d Marib-Ras Issa pipeline was crucial to Yemeni oil exports pre-war and the Ras Issa terminal boasts 3mn barrels of crude storage, but Houthis remain in control of these territories and the infrastructure has likely suffered immense damage from three years of conflict. Block S2 output had been exported via Ras Issa before force majeure was declared in 2015 (MEES, 6 April).

The only other Yemeni crude exports come from Blocks 10 and 14 in the east of the country (MEES, 15 September 2017). State firm PetroMasila operates the blocks, using some of the crude for local power generation and sending the rest via a 138km pipeline to Ash Shihr where it is exported to Asia. Exports in 2017 averaged 44,000 b/d (up from 13,000 b/d in 2016 when exports restarted) with 73% heading to China. So far in 2018, Yemen has exported at least three cargoes of around 1mn barrels – one to India, one to Thailand, and at least one to China – China ceased publishing detailed crude import stats in April but the country has likely received Masila crude since.

It is difficult to say whether or not OMV’s successful restart marks the beginning of IOCs flocking back to Yemen. French major Total, which leads the 6.7mn t/y capacity Yemen LNG project with a 39.62% stake, confirmed on its Q2 earnings call last week that the plant remains “cocooned at the moment” and that the firm is “not expecting [production] starting again soon.” Natural gas is clearly a riskier restart, and other foreign firms including Austrian-listed Petsec (100% stakeholder at Block S1) appear keen to restart production, having submitted a formal application “required to access government facilities” to the Saudi-backed Yemeni government in July.

Maps included Yemen Key Oil Basins & Infrastructure

Yemen Key Oil Basins & Infrastructure