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YEMEN: Chaotic Venue Offers Up New Exploration Tenders

Bottom Line: Yemen is offering up new oil exploration licenses citing a great interest by foreign oil companies, but the truth is that this venue presents THE HIGHEST political risk of any venue anywhere in the world. 

Analysis: Bidding ends on 15 May and the licenses up for grabs are in the al-Sabaateen Basin, al-Rub al-Khali Basin and the Aden-Abyan Basin, according to the country’s Oil Ministry. Some of the sectors included have never been explored. There are 15 blocks (10 offshore and 5 onshore) up for auction and 20 April is the deadline for letters of intent. Earlier in April, Yemen accepted bids from nine companies for five exploration blocks.

There is massive political risk to investing in Yemen, not the least of which is the fact that the government hasn’t even come close to solidifying control over its oil resources, which will determine who can buy the most political patronage to form an authoritative leadership. Oil fields and pipelines are the key targets of attacks by various groups vying for power. Most recently, last week seven people were killed in clashes between army deserters and tribesmen in the south. Also last week, two Yemeni government soldiers were killed and two were wounded in a gunfight with tribesmen who had blown up the main Maarib oil pipeline in south Yemen two weeks after it was repaired from a previous attack. This is weekly fare for Yemen, and though the country has huge oil reserves and is strategically positioned…




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