Yemeni reform process take steps forward and back

Published March 6th, 2001 - 02:00 GMT

Personal weaponry remains a popular accessory in Yemen, where men frequently walk about with curved Jambya daggers strung to their waists and rifles slung over their shoulders.  

 

These and fierce political rivalries created a lethal mix in the weeks leading up to and the days’ following February’s municipal election. Some 20 Yemenis were killed during the election campaign, and another 20 died violently during the polling itself. In the days that followed more people lost their lives. 

 

But, despite the bloodletting, there was a genuinely festive atmosphere in the country, which had not seen a democratic municipal election in the 11 years since the north and south were reunited under one flag.  

 

In an effort to decentralize the manner in which Yemen is governed at the local level, 10,000 candidates competed for approximately 7,000 council slots.  

 

And, when the votes were counted, it was reported that President Ali Abdullah Saleh's General People's Congress party had secured 61 percent of the seats, beating out the Islamic opposition party, Al-Islah. In certain areas, ballot confusion was blamed for voting delays. A date for new elections in those areas will be announced. 

 

A more controversial issue that was also decided on the polling day was a proposal to amend the nation's constitution to extend the terms of the president and members of the national parliament.  

 

The Supreme Elections Committee said the referendum was passed by 73 percent of the voting population. What this effectively does is guarantee that Saleh, who first rose to power as president of North Yemen in 1978, will remain in office until the year 2013.  

 

Human rights groups have attacked these constitutional changes, charging that they are merely means to consolidate the ruling party’s hold on power. 

 

The Yemeni authorities had intended the election to demonstrate to the outside world—and particularly to foreign investors—that the country was ready to enact the political and economic reforms necessary to put it firmly on the world’s business map. 

 

Yemen remains one of the Arab world’s poorest countries, with an average annual per capita income of $280. But its case for international recognition is not necessarily hopeless.  

 

Successful monetary policies, carried out under the supervision of the IMF and World Bank, have increased its central bank’s foreign reserves to $4 billion, sufficient to cover 12 months of imports.  

 

In addition, inflation has been curtailed to around 4 percent in 2000—from a high of 70 percent in 1995—while rising oil prices have also enabled Yemen to repay some of its domestic and foreign debt.  

 

Yemen has also benefited from significant debt relief. Earlier this year, Japan extended Yemen reprieve amounting to $3.04 million, while Saudi Arabia agreed to reschedule $249 million in Yemeni debt, reducing its obligations by approximately 75 percent and extending repayment to 40 years.  

 

The two neighbors also signed a deal in which Saudi Arabia would extend $300 million in fresh loans to Yemen to finance a number of road and electricity projects. 

 

But most of Yemen’s economic hopes are vested in its oil sector, which only recently received a major boost when a decades’ long border dispute with Saudi Arabia was resoled, opening up potentially lucrative areas of the country for exploration and exploitation.  

 

Now, having signed prospecting agreements with several foreign oil companies, Yemen aims to double its production total to 1 million barrels per day over the coming five years. 

 

Yemen has 63 oil fields, all of which are onshore. It is, however, seeking to augment it oil sector through offshore searches, and as early as September 1999 the government signed a memorandum of understanding with Australia's Oil Search Ltd. and the UAE's Mohammed al-Otaibi Group to explore Block 15, off the Yemeni coast. 

 

The country’s recoverable reserves—estimated to equal 5.7 billion barrels—are concentrated in several producing blocks: Marib-Jawf Block 18 (490 million barrels) in the north, East Shabwa Block 10A (180 million barrels) and Masila Block 14 (more than 500 million barrels) in the south, and the Jannah Block 5 (345 million barrels) and Iyad Block 4 (135 million barrels) in central Yemen. 

 

The Masila block is currently the country's most productive oil field, with an output of about 210,000 barrels per day, followed by Marib-Jawf at 160,000 barrels per day.  

 

Foreign involvement in Yemen’s oil sector is picking up, but for the most part involvement is limited to the minor leaguers, as the country’s still precarious political, economic and security situation continues to keep most the major away. 

 

CanOxy signed a production-sharing contract with the government of Yemen to conduct oil exploration in Block 44 in the Hadramaut province in central Yemen.  

 

Block 44 is located just north of Occidental's interests in the 900-million barrel Masila prospect on Block 14 and the East Shabwa operation on Block 10 where combined gross production currently exceeds 250,000 barrels per day.  

 

In September 2000 by the Norwegian Oil Company (DNO) began test production commenced in the in the Tasour field in Block 32.  

 

The Tasour field is comprised of three wells with an overall production capacity of 9,500 to 10,000 barrels per day. The field was officially opened for exploitation in December 1999. DNO has also started test drilling at Block 14, located 2-3 km from Tasour  

 

Another company that is active in Block 32 is TransGlobe Energy Corp. Its Tasour #1 well is producing clean oil, at approximately 4,000 barrels per day.  

 

This rate will be increased as its Tasour #3 and #4 wells are brought into production, raise production rate to 10,000 barrels per day. 

 

October 1999, Algeria's Sonatrach signed an agreement with Italy's ENI on sharing exploration and production in southern Yemen.  

 

In December 1999, ENI, which has been operating in Yemen since 1995, signed a PSA with Yemen's oil ministry on Block 2 al-Maber, located onshore in the Shabwah basin.  

 

Yemen has 16.9 trillion cubic feet worth of natural gas reserves, making the country a potential producer and exporter of LNG.  

 

The bulk of Yemen's gas reserves are concentrated in the Marib-Jawf fields, operated by the Yemen Exploration and Production Company (YEPC). A possible market for this product is India. 

 

On paper, therefore, Yemen’s economic prospects appear reasonable indeed. But much depends upon how the country is viewed in the boardrooms of companies in the developed world.  

 

There, the deciding factor is likely to be Yemen’s long-term economic and political stability, and in that respect the jury is still out.  

 

As a result of recent economic reforms, Yemen’s macroeconomic situation has improved, but its high population growth rate of 5.8 percent per annum has prevented these fiscal improvements from filtering down to the individual level. This makes political reform all the more crucial.  

 

But, whether the ordinary Yemeni citizen considers the recent municipal elections and constitutional referendum as having improved their situation, still remains to be seen. –(Albawaba-MEBG) 

© 2001 Mena Report (www.menareport.com)


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