DUBAI | Wed Aug 3, 2011
Aug 3 (Reuters) - Canadian oil company Nexen Inc is still in talks with the Yemeni government over the possible renewal of operating licences in the small oil producing country, a company spokesman said.
Under existing agreements with the Yemeni government, Nexen has the right produce oil from the Masila project until December 2011. It is negotiating a five-year extension because it still sees significant value in the mature field.
"Discussions with the government continue at this time," the spokesman told Reuters in an emailed response to questions about the company's licence renewal.
Nexen produces some 70,000 barrels per day (bpd) of oil from its two blocks in Yemen -- Masila (Block 14) and East Al Hajr (Block 51) -- and exports almost all of it from Ash Shahir terminal on the southern coast of the country, mainly to Asia.
Nexen's Yemen operations have been largely unaffected by the violence that has erupted across the poorest Arab country in months of protests demanding an end to the 33-year rule of President Ali Abdullah Saleh.
Production of Yemen's high-quality, light Maarib crude -- which is mainly used to meet domestic fuel demand -- stopped for more than three months after an attack on its feed pipeline.
The pipeline was repaired and crude flow restarted in mid-July. The first shipment of Maarib crude to the Ras Isa export terminal arrived last week, shipping sources said.
A domestic fuel crisis has exacerbated Yemen's political crisis, sparking petrol station shootouts and squeezing shaky public finances by forcing it to nearly double fuel imports.
"In terms of fuel supplies, I can't say there is a shortage right now," one shipping source said, adding that the fourth shipment of Saudi-donated crude from kingdom's Yanbu port is expected to arrive this week.
"There's also a lot of gasoline, diesel imports coming in," the source said. "But the problems in distribution continue; fights in queues, violence. It is still chaos."
The army has launched an offensive against militants they suspect of ties to al Qaeda and who have seized several areas in Abyan in recent months -- including the provincial capital Zinjibar, which lies east of Bab el Mandab, a strategic shipping lane where some 3 million barrels of oil pass daily.