Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Yemen's Push Into the Gas Sector Is Being Muffled


Lack of interest and the country's vulnerability to terrorism are among factors hindering potential revenue.

Editor's Note: This article was written by Fawzia Sheikh of, which offers free information and analysis on energy and commodities. The site has sections devoted to fossil fuels, alternative energy, metals, oil prices, and geopolitics.

With Yemen's oil revenues plunging, the government's push into the gas market seemed like an economic saving grace for a state wracked by poverty and terrorism, but analysts warn more thought should be given to carving out the country's post-petroleum era.

The infamous Christmas Day bomber's attempts to blow up a jet approaching Detroit -- which Yemen-based al Qaeda in the Arabian Peninsula claimed responsibility for -- has drawn unwanted attention to the country's vulnerability to terrorist movements.

Dwindling oil and water resources, high poverty and illiteracy, a ballooning population, rebel uprisings, and separatist movements have made Yemen ripe for extremism.

Nestled in the southern tip of the Arabian Peninsula, Yemen is highly reliant on oil money, which accounts for 70% of the budget. But total reserves amount to about 2.8 billion to 3 billion barrels, which "really isn't much to write home about," S. Rob Sobhani, president and founder of Caspian Energy Consulting in Potomac, Maryland, told

In recent months, the government has tried to spark foreign interest: A delegation from Indonesia visited Sanaa, the Yemeni capital, in January to discuss investment in the oil and gas industry as well as the mining sector. And in February, France's Total (TOT) signed a preliminary oil exploration deal for $32 million. The company was already leading a $4.5 billion liquefied natural gas plant that started production in October.

Major gas exports, however, are probably not "in the cards" for the Middle Eastern country, but some reserves may be moved within the region by pipeline to Oman and possibly to Saudi cities like Jeddah, Sobhani said. Yemen is strategically advantageous to all liquid natural gas markets, both in the Asia-Pacific basin and on either side of the Atlantic Ocean, he also wrote in the Christian Science Monitor in February.

Yemen needs "built-in consumers already lined up" to fuel the gas sector but where such interest will come from remains unclear, said Christopher Boucek, an associate in the Middle East program for the Washington-based Carnegie Endowment for International Peace. Boucek cited huge, "unfounded" fears in the United States that Yemeni natural gas tankers entering Boston's port, for example, constituted "some sort of a threat to national security."

Apart from drying-up oil reservoirs, the government is also contending with a legal process -- and "mechanics on the ground" for exploring, producing, and extracting gas -- that are "not very well streamlined," Boucek noted, adding that Sanaa aims to fix these problems in a bid to court more foreign investors.
< Previous
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos