Yemen plans to boost oil output by up to 10 percent to more than 300,000 barrels per day (bpd) this year and is in talks with firms including China's Sinopec to upgrade its Aden refinery, the country's oil minister said. The poorest Arab country depends on oil income for three quarters of public revenue and more than 90 percent of export earnings. It is battling declining output from mature fields.
"We have a plan for 2010 to increase production for maybe 5-10 percent, to be over 300,000 bpd," Amir al-Aidarous told Reuters in an interview. Output from a relatively unexplored oil structure the country started exploiting about five years ago would provide the increase, he said. The small producer currently pumps between 285,000 bpd and 295,000 bpd after having produced around 287,000 bpd last year, he added. Yemen has boosted security at oil and gas installations to guard against militant attacks after the government stepped up operations against al Qaeda.
The remoteness of energy installations in impoverished parts of the country complicated security, he said. Foreign oil company operations had not been affected by instability and violence in the country, he said. The country's output is largely dependent on the private foreign firms. Yemen was confident that more oil would be found in parts of the country as yet little explored, the oil minister said.
YEMEN LNG Yemen would export 6.7 million liquified natural gas this year from the Yemen LNG project he said. The exports would go to South Korea, Europe, Mexico and the United States, he added. The $4.5 billion Yemen LNG project led by France's Total started production in October and is the country's largest industrial project. Yemen LNG had already exported eight or nine cargoes from the first production facility, known as a train, he said.
The second train was still under construction and would start in about three months, he added. 5Income from the gas exports were seen as an important stream of revenue as the country struggles to turn around falling crude revenues. Yemen had potential to increase gas output, Aidarous said. "Our exploration shows there is a good quantity of gas, maybe more than oil," Aidarous said.
REFINERY Yemen was also in talks with China's Sinopec and several other firms from Japan, India, South Korea and Turkey to upgrade the capacity of its Aden refinery to between 150,000 bpd and 500,000 bpd. The refinery at Yemen's biggest port has currently a capacity of 70,000 bpd-80,000 bpd, he added. That was well below the nameplate capacity of around 140,000 bpd.
"We want to open the Aden refinery for a strategic partner," adding that maybe two partners would be brought on board. The size of the upgrade would depend on the strategy decided on by engineering and construction firm Foster Wheeler, which is advising Yemen on the upgrade.
The refinery could process heavy oil, he said. That would involve the construction of units to handle complex refining operations. Heavy oil is harder and more expensive to convert into transport fuels. Costs would be a minimum of $2 billion but depended on the design, he said. "We are close to negotiating with investors to have it for heavy oil.
We have a plan for heavy oil," the minister said. "If you design for heavy oil you need to spend more, if you have light oil you spend less but then have less benefits." If Yemen decided on a larger refinery, it could process heavy oil from other Middle East producers, he said.