February 14, 2012 / 11:09 AM / 8 years ago

UPDATE 2-Strike action stops Yemen oil exports

By Mohammed Ghobari and Nour Merza

SANAA/DUBAI, Feb 14 (Reuters) - Oil production and exports from Yemen’s Masila oilfield, the country’s largest, have stopped after workers from state-owned PetroMasila went on strike over pay last Thursday, oil ministry officials told Reuters on Tuesday.

The strike at the Masila oilfield brings Yemen’s total oil output of around 260,000 barrels a day to a near halt as its other major oil pipeline carrying light, sweet Maarib crude has been shut since November after consecutive blasts.

“There is no export or production in Masila,” a senior oil ministry official said, adding that exports from the Ash Shihr terminal had also stopped.

The bulk of crude exported out of the Ash Shihr terminal on the east of the country is shipped to customers in Asia.

The country’s largest oil refinery in Aden has not been processing crude due to lack of oil flow in the Marib pipeline, forcing the poorest Arab country to rely on imports and donations from its powerful northern neighbour Saudi Arabia.

Impoverished Yemen has been brought to its knees by a year of political upheaval with months of protests against the outgoing President Abdullah Ali Saleh. Violence has escalated in the run-up to the presidential elections set for Monday.

The government has lost control of whole chunks of the country, giving southern separatists, northern Shi’ite rebels and Islamist militants a window to further their goals. =========================================================== Election preparations start in Yemen Key political risks to watch in Yemen Yemen’s energy industry ===========================================================

Although a small oil producer, Yemen’s location on the strategically important Bab al-Mandab strait, through which millions of barrels of oil are shipped between Asia, Europe and the Americas, makes instability there a risk to global trade.

State-owned PetroMasila has taken over operations at Block 14 in the Masila oilfield from Canadian’s Nexen after the government did not renew the company’s licence when it expired in December.

“Workers are demanding better salaries and retirement packages and of course there is no way the local company (PetroMasila) can match what Nexen was providing for its employees,” a Western official based in Yemen said.

There are several international companies such as Calgary-based Calvalley, Norwegian oil firm DNO and France’s Total operating from the Masila field and even though their workers have not gone on strike, their operations are also affected, another oil official said.

“There is some 1 million barrels waiting in the pipeline but it can’t be shipped to the export terminal,” he said.

In a statement, Canadian company Calvalley said work stoppage will hurt production from all crude oil producers in the Hadramout province including Calvalley’s 7,000 barrels of oil per day Block 9 and it will shut operations shortly when crude oil storage tanks are full.

The company also said stoppage at Block 14 is restricting the deliveries of crude oil for export from Block 9.

Calvalley said it was “cautiously optimistic” that the current political environment in Yemen will improve after the Feb. 21 elections.

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