Yemen Crude oil exports, Somali Pirates and Sana'a Summit Links

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Djibouti (HAN) January 6, 2006 -   The Horn and Red Sea continued to grapple with issues of economic development, refugees, diseases, particularly TB, HIV/AIDS, clan conflicts and political turmoil, to count just a few. Although familiar problems persisted on the region, there was also cause for optimism for oil rich explorations and major oil agreements and prospects across the Horn of African States; Somalia, Ethiopia, Sudan, Djibouti and Yemen. Today's Geeska Afrika Online, English edition highlights some of the important developments on the Red Sea Zone and the Horn of African region last year (2005).

The dispute between Russia and Ukraine over natural-gas supplies that has rattled Europe has once again brought to focus the geopolitics that revolves around the control, transportation and consumption of energy, and more specifically, natural gas. The tussle will turn more acute. A global energy crisis is brewing as the economic powerhouses continue to consume more oil than they can possibly produce or import. It is estimated that by 2025, today's global demand for 84 billion barrels of oil per day will have grown to 121 billion to 130 billion.

According to Thomas O'Connor, principal petroleum engineer for the World Bank, who headed a three-year study of the oil prospects in the Gulf of Aden, off Somalia's northern coast, Somalia's oilfields have “high commercial potential, once the Somalis get their act together”, like the Sana'a Somalia presidential deal. Everyone thinking the big question here isn't famine relief but oil -- whether the oil concessions granted under Barre will be transferred if and when peace is restored. It's potentially worth billions of dollars, and believe them, that's what the whole game is starting to look like piracy, famine and clan skirmishes.”

Far beneath the surface of the tragic drama of Somalia, four major U.S. oil companies are quietly sitting on a prospective fortune in exclusive concessions to explore and exploit tens of millions of acres of the Somali countryside. That land, in the opinion of geologists and industry sources, could yield significant amounts of oil and natural gas if the U.S.-led military mission can restore peace to the impoverished East African nation.

According to documents obtained by the Times, nearly two-thirds of Somalia was allocated to the American oil giants Conoco, Amoco, Chevron and Phillips in the final years before Somalia's pro-U.S. President Mohamed Siyad was overthrown and the nation plunged into chaos in January, 1991. Industry sources said the companies holding the rights to the most promising concessions are hoping that the Bush Administration's decision to send U.S. troops to safeguard aid shipments to Somalia will also help protect their multimillion-dollar investments there.

Presenting their results during a three-day conference in London, two of those geologists, an American and an Egyptian, reported that an analysis of nine exploratory wells drilled in Somalia indicated that the region is "situated within the oil window, and thus (is) highly prospective for gas and oil." A report by a third geologist, Z. R. Beydoun, said offshore sites possess "the geological parameters conducive to the generation, expulsion and trapping of significant amounts of oil and gas."

Bush stressed "the growing strategic importance to the West of developing crude oil sources in the region away from the Strait of Hormuz," according to a report later in the authoritative Middle East Economic Survey. Bush's reference was to the geographical choke point that controls access to the Persian Gulf and its vast oil reserves. It came at the end of a 10-day Global tour in which the president drew fire for appearing to stop future higher oil and gasoline prices. Last year, US President George W Bush said his country would encourage China and India to turn into more efficient users of oil. "It's in our economic interest and our national interest to help countries like India and China become more efficient users of oil. That would help take the pressure off global oil supply, take the pressure off prices here at home," he said.

The US government's Energy Information Administration identifies the Bab-Almandab Strait as one of the most strategic "world oil transit chokepoints". How convenient if in the course of cleaning out a nest of tyrant regimes Washington might militarily acquire control of the Horn of African region and the Red Sea zone. Until now the states in the area have supported US attempts to militarize the region to secure Oil supplies through red sea zones from the unknown enemies.

In early October 2002, A French VLCC chartered by Malaysian state oil company Petronas was attacked by terrorist suicide bombers off the coast of Yemen, seriously damaging the ship and killing one crew member. The VLCC, known as the Limburg, had about 400,000 barrels of oil aboard, and was on its way to load additional oil in Yemen when attacked. The attack on the Limburg prompted a warning by the U.S. Navy's Maritime Liaison Office in Bahrain, stating that "Shipmasters should exercise extreme caution when transiting...strategic chokepoints such as Bab el-Mandeb, traditional high-threat areas such as along the Horn of Africa region." Following the attack, al-Qaeda issued a statement which warned that the attack on the Limburg "was not an incidental strike at a passing tanker but...on the international oil-carrying line in the full sense of the word."

The global Natural gas (Yemen and Russia are the world's largest reserves) has emerged as a more environmentally sound, cheaper and more easily available substitute for oil. Compared with oil at more than US$60 a barrel, an energy-equivalent amount of gas costs in the region of only $20. Experts predict that gas, which was once considered a wasteful by-product of oil exploration, will turn into the No 1 fossil fuel. Vying for gas resources are the world's top guzzlers of energy, the United States, Europe, China and India.

The Yemen liquefied natural gas (LNG) initiative, created to develop the region's natural gas resources, is the direct result of the company's foresight in employing the industry's most modern conservation techniques since it began production operations in 1986. In 1997, Hunt signed agreements with the government of Yemen and partner companies that provide for the development of a 6.15-million-ton-per-year LNG export project. The agreement was renewed in 2002. Hunt is an 18 percent shareholder in the Yemen LNG Company Ltd.

With only a few LNG projects in operation in the world today, the involvement of an independent oil company in such a project is exceptional. Plans include development of natural gas reserves in the area, transportation of over 1 billion cubic feet of natural gas per day through a 320-kilometer (199-mile) pipeline to Balhaf on the Gulf of Aden, and construction of two liquefaction trains. Additionally, large storage facilities and a berthing facility for LNG carriers will be constructed at Balhaf.

According to the Yemenis central bank figures, crude oil exports amounted to $2.81 billion in the first 11 months of 2005, up from $2.06 billion in the same period the previous year. The Yemani Crude oil exports fell to 54.91 million barrels in the 11 months to November from 56.29 million barrels a year earlier, a central bank report said. Yemen, an independent oil producer, pumps around 450,000 barrels of crude oil per day. The sky-rocketing crude oil price in 2005 served as a warning that oil and gas are finite resources and will certainly run out some time in the future. Over the past 20 years, the world’s proven oil reserves have increased by 56% to 1187 thousand million barrels, enough to last the world another 40 years at current production or 22 years if growth continues at the same 4.5% rate as 2004 and no more oil is found.

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