YEMEN - Block Offerings.

Despite declining output in mature fields, Yemen's goal is to raise oil output to 500,000 b/d early in the next decade. Oil exploration has accelerated since 1997, after a downturn following Yemen's civil war in 1994 (see background in Vol. 62). Many blocks for exploration have been awarded in three

Oil Minister Khaled Baha' on March 6 said San'a' may offer new oil and gas E&P blocks in a fifth bidding round for IOCs by the last quarter of 2008. The announcement may be made during the third international oil and gas conference to be held in Yemen before end-September. Baha', then in Tokyo promoting investments in Yemen, where so far no Japanese firms had participated in its E&P. But Baha' said Japan Petroleum Exploration Co. (Japex) had applied for the fourth bidding round for 11 offshore oil and gas blocks.

The winning bids are to be announced in July. San'a' has accepted 25 of 30 bids from IOCs which it received. PSAs awarded in the fourth round may also be signed during the conference. Yemeni officials say San'a' may offer incentives for IOCs to invest in gas E&P under the revised PSAs. Baha' said: "There will be a very promising future for the gas business in Yemen for exploration, production and investments". In a road-show in Dubai on Oct. 31, 2007, to promote the 11 offshore blocks, Baha' said total of 42 IOCs including Shell, BP, StatoilHydro and Occidental Petroleum (Oxy) participated. He said: "We assume seismics will...start by the end of next year" (2008). He said the fifth round was to cover mostly onshore blocks.

Reliance E&P of India, part of the giant private refiner Reliance Industries Ltd (RIL), on Nov. 20, 2007, signed a PSA for Blocks 34 & 37 in Jeza Basin of the east. It was to do seismic survey and drill exploratory wells based on comprehensive geological and geophysical studies. In both blocks Hood Energy partners RIL with 30% participating interest.

RIL has been in Yemen since 2001 when it got Block 9, where major petroleum reserves has been found and one of the finds is producing. In Block 9 exploration continues with a number of identified prospects. RIL and Hood Energy hold 25% each in this and Calvalley Petroleum of Canada with 50% are the partners in this JV.

RIL is also planning to invest in an oil refining venture in Yemen (see down24YemenEnrBaseRef-Jun9-08).

Two South Korean consortia led by Korea National Oil Corp (KNOC) on May 30 signed final PSAs to explore and develop two oil blocks. A consortium of KNOC, Samchully Co., Daesung Industrial Co. and GS Holdings Corp got Block 39, said to have 500m barrels of oil in place. The other group, of KNOC, Hyundai Heavy Industries Co. and Hanwha Corp got Block 4, estimated have 250m barrels in place. The consortium has 95% in Block 39, with the remaining 5% owned by Yemen Oil & Gas. South Korean firm own 50% in Block 4, with Yemen Co. for Investment In Oil & Minerals (Yicom) having 50%.

Epsilon Energy on May 17, 2008, began drilling on al-Waya-2 well on Block 41 where the firm has a 57.14% paying interest and a 50% undivided interest. Al-Waya-2 was a step-out to the al-Waya-1 discovery well, which produced 454 b/d from the Naifa formation on long-term test. Three known oil zones - the Naifa, Madbi and the Fractured Basement - will be targeted. In addition to the al-Waya-2, three additional well locations on Block 41 have been selected, Duda #1 which is down-throne from al-Waya-2, West Mahrawa-2, which is an up-dip to Mahrawa-1 and Mukalla-1 which is on trend with al-Waya. Epsilon was negotiating to secure an additional drilling rig to drill these wells.