Thursday, June 16, 2011

Yemen pipeline down for months after attack

Opposition tribes won't allow repairs without elections

By Dan Healing, Calgary Herald June 16, 2011

It will likely be months before production disrupted by a damaged pipeline in Yemen can resume, says the chief executive of TransGlobe Energy Corp.

The 120,000-barrel-a-day pipeline has been closed since being attacked by militants in the troubled Middle Eastern country in March. TransGlobe had about 2,400 bpd on the line from its working interest in a field operated by partner Occidental Petroleum.

"We've modelled six months shut in for our operations," Ross Clarkson told reporters at the Canadian Association of Petroleum Producers investor symposium in Calgary on Wednesday.

"The government is the one that has to go in and fix it, and the opposition tribes are saying no one is allowed in to fix it until we see a move toward elections."

TransGlobe still produces 500 bpd in eastern Yemen.

On Wednesday, gunmen reportedly seized control of a southern Yemen city after President Ali Abdullah Saleh left the country for medical treatment in Saudi Arabia. He was injured in an earlier attack on his palace.

Presenters at the Calgary conference insisted international business is still being done despite the wellpublicized troubles that have swept many countries in North Africa and the Middle East.

Dave Monachello, president of junior Winstar Resources Ltd., complained that his company's stock has been punished because its main assets are in Tunisia, which has been relatively quiet since February when an interim government took over from ousted president Zine El Abidine Ben Ali. Tunisia borders Libya, where rebels are fighting a bloody war with dictator Moammar Gadhafi.

"Winstar has experienced only minor inconveniences as a result of the people's uprising last December," said Monachello. "Our field operators stayed on the job throughout the conflict and our office staff continued to perform their duties.

"We've sold gas as before and we've been paid as before."

He said the company plans to spend $38 million US in Tunisia this year to nearly double production from about 1,650 barrels of oil equivalent per day to about 3,000 boe/p. And the oil will get near-Brent prices, he said.

Winstar stock closed down four cents at $3.66 Wednesday. It has ranged from $3.06 to $6.79 in the past year.

During a presentation, Albert Gress, vice-president of business development for TransGlobe, emphasized its Egyptian assets and noted it plans to spend $81 million there this year to drill 50 wells.

A pending acquisition is to add 4,000 bpd to Egyptian production.

"We'll be coming out with new guidance. Don't be surprised to see 20,000 barrels (per day) as we exit 2011 -last time I checked the map, that's about 100 per cent over the 2010 average," said Gress.

Without the acquisition, TransGlobe had previously estimated it would grow production from 11,200 in the first quarter to 13,000 to 13,500 bpd by year-end.

Another Egyptian producer, Sea Dragon Energy Inc., is spending $13 million there this year, reported president Tony Anton, as it aims for exit production of 2,000 bpd from its working interest in two oilfields.

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