Wednesday, 11 May 2011

Yemen on verge of economic disaster: Minister

Source: Yemen’s official news agency (Saba) , 12/05/2011

SANA’A-Oil and Minerals Minister Amir al-Aydarous has said that Yemen was on the verge of an economic catastrophe due to ongoing political unrest and frequent bomb attacks against oil pipelines.

"Acts of sabotage against the pipeline in Wadi Ubaida in Marib have hampered the flow of oil since mid-March and undermined the trust of investors in the country," Aydarous was quoted as saying.

"Several oil companies have quit the country and the refineries in the southwestern governorate of Aden came to a standstill a week ago," he told the Yemeni parliament, which called an urgent meeting with the cabinet to discuss the energy crisis.

Aydarous also said that the political crisis had led to the departure of foreign oil workers while sabotage of a main oil export pipeline in Marib had contributed to the energy shortages, which have led to power cuts.

Deteriorating security conditions as a result of months of protests had impacted negatively on the distribution of products and made it difficult to repair the damaged pipeline.

"The sabotage and destruction by outlaws of oil and gas pipelines as well as power lines" had also exacerbated these shortages, Aydarous said.

"If the problem persists, the government will be unable to meet the minimum needs of the citizens. The situation will pose a catastrophe beyond imagination," Aydarous said.

The parliament decided to call a meeting with cabinet to discuss the energy crisis and the shortages of gas, diesel and gasoline as well as the persistent power cuts.

Industry sources say oil production in Yemen has been halved in recent weeks as producers have pulled out staff and curbed output after an export pipeline explosion, which also shut the country's sole refinery in Aden.

Minister of Trade and Industry, Hisham Sharaf, estimated the economic cost to the economy of the protests, which began in late January, at US$5 billion, or about 17% of 2009 GDP.

Yemen's oil production, which has been in decline in the last decade, averaged just under 300,000 b/d last year, with roughly half being exported.

Yemen is a modest producer and exporter of oil, relying on hydrocarbons for 70% of its budget revenues.

The bombed pipeline carries crude oil from Marib to the Red Sea and has been the target of repeated attacks in recent months.

The reduced flow of Marib crude led the Yemen General Corporation for Oil and Gas to exclude Marib Light crude from its July tender. Output of the other main Yemeni crude grade, Masila, has not been affected by the pipeline bombing.

Most of Marib Light crude goes to the 130,000 b/d Aden refinery, which is a regular buyer of the grade in the monthly tenders, taking roughly 2-2.5 million barrels/month.

The Aden refinery last week issued a tender for 35,000 mt of gasoline for June delivery.

On Saturday, a Chinese tanker discharged 30,000 mt of gasoline sourced from India at the port of Aden.

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