Army Retakes Public Offices in Yemen Capital

Sana'a, June 2, 2011-The Yemeni army has retaken public offices from the tribal fighters loyal to Sadeq Al-Ahmer, the sheikh of Hashid, and fierce confrontations are continuing between both sides in Al-Hasaba district and nearby areas in the capital Sana'a.
On Thursday, an official at the Interior Ministry said," we retook public offices in Al-Hasaba district including the Ministries of Trade and Industry and Local Administration, the permanent committee of the ruling party and others".
" I am in my office inside the Interior Ministry and battles are taking place right now," the official said, as eyewitnesses added that the army was shelling many areas in the area.
There are also hundreds of Al-Ahmer trying to enter the capital to support their elder, but the forces are preventing them.
Russia on Thursday called for an immediate ceasefire and urged its citizens to leave Yemen due to the grave developments in several cities.
On Wednesday, the U.S. Secretary of State, Hillary Clinton, urged Saleh to leave and respect the choice of the Yemeni people as she said that Saleh's stay will lead to true conflict.
In Taiz, fierce clashes started earlier today when the forces closed all entrances of the city and dispersed a massive demonstration.
Source: Yemen Post

Al-Qaida seizes another large city in southeast Yemen

SANAA, June 1 (Xinhua) -- Al-Qaida's regional branch in Yemen took control over another large city in Yemen's southeastern province of Shabwa on Wednesday, a week after they controlled the southern Abyan province, local officials and residents said.

"Following fierce battles with government forces, fighters of al-Qaida in the Arabian Peninsula (AQAP) managed to seize the whole city of Azzan in the southeast province of Shabwa on Wednesday, announcing that the city of Azzan joins in their Islamic emirate," one local official told Xinhua.

Some tribal leaders and residents confirmed the news in phone conversations with Xinhua.

The tribal leaders said the AQAP militants were enjoying high- level activities nowadays because of the weak presence of security forces, which were pulled out to major cities to curb the four- month-long anti-government protests as well as to secure the government and foreign interests from sporadic riot acts.

Shabwa, some 458 km southeast to the capital Sanaa, is believed to be a stronghold of hundreds of al-Qaida militants, including the wanted U.S.-born Yemeni cleric Anwar al-Awlaki.

In the escalating unrest in Abyan, the gunmen of AQAP also took over Wadhiee district on Wednesday, which is the ancestral homeland of Vice President Abdu Rabu Mansour Hadi, another local official and residents said.

The AQAP declared Saturday to seize Zinjibar, the provincial capital city of Abyan which is located about 480 km south of Sanaa, as the capital of their newly-established Taliban-style Islamic emirate.

Meanwhile, a provincial government official in Shabwa told Xinhua that the governor of Shabwa held a meeting with tribal chieftains and dignitaries on Wednesday, during which they signed an agreement for forming armed popular committees to defend and protect the government facilities and residential neighborhoods.

Exclusive: Arcadia may have rigged Yemen exports: cable

By Brian Grow and Joshua Schneyer

ATLANTA/NEW YORK | Wed Jun 1, 2011

ATLANTA/NEW YORK (Reuters) - Oil trading firm Arcadia Petroleum, sued by regulators last week for allegedly manipulating U.S. oil prices, used hardball tactics in Yemen to buy the country's oil exports at below market prices, until authorities revamped their sales process to break the trading house's "long-standing monopoly", according to a confidential State Department cable.

The September 2009 cable says that an internal government shift in control over the country's valuable oil exports, meant to open up oil bidding to more international buyers, threatened Arcadia's sway over Yemen's exports.

It also put at risk an alliance between Arcadia and its "local agent" in Yemen, tribal leader Hamid al-Ahmar, the cable says. Arcadia, in an interview, denied the allegations in the cable, saying it did not employ al-Ahmar as an agent, although it did work with some of his companies in the oil trading business. The company said it always paid official market prices for Yemen's export oil.

NEW OIL BOSSES

In a bid to increase transparency, the government of Yemen in March 2009 yanked control of oil export pricing away from officials in the country's Ministry of Oil, and handed it to an oil council controlled by the son of President Ali Abdullah Saleh, including officials from several government departments.

The shift was meant to end Arcadia's buying of a large portion of Yemen's government-priced export crude at "below-market value", according to the cable, which was obtained by Wikileaks.

Oil traders in Asia who have also been involved in Yemen exports confirmed to Reuters the change in policy. Before the change, many potential buyers would not bid for Yemeni crude because they saw the market as stacked in favor or Arcadia, even though it had a nominally competitive bidding process, the traders said.

"Arcadia almost always won oil export tenders because Arcadia had an "agent" in Yemen. Other international companies such as BP and Chevron were reluctant to participate in the bidding," said an Asian crude oil trader with a major buyer.

The 2009 pricing shift was "a crackdown on corruption and some (government) officials who were in charge of oil export tenders were fired," the trader added.

Stephen Gibbons, CEO of Arcadia's Singapore office, said that al-Ahmar was not the company's agent in Yemen. "He is not our agent and wasn't actually earning anything from us. He has companies in Yemen which we have worked with," Gibbons said.

Cited in the cable, al-Ahmar bragged to an economic official from the U.S. Embassy that he earned $50,000 per month from Arcadia, but the amount was "an infinitesimally marginal part of my income." Global oil trading firms often hire a local agent to secure access to domestic supplies, or improve the odds of winning tenders.

Many of the firms staff small, local offices in countries where they do business, and rely on local agents for access to senior officials and decision-makers. A strong relationship with officials can be an important factor in getting access to coveted supplies.

OTHER SCARE TACTICS?

But the State Department cable, citing a highly-ranked government official, says al-Ahmar and Arcadia took this further and "scared away potentially more competitive bidders by threatening to kidnap their representatives."

On Wednesday, Reuters contacted the official cited in the cable, who repeated the allegation that Arcadia made kidnapping threats in Yemen. Neither the official nor the cable provided specific details of the alleged threats.

Reuters agreed not to name the official at the request of the State Department. "This kidnapping stuff is ludicrous. I completely refute that. It is the kind of thing that could come from competitors, or from the enemies of al-Ahmar," Arcadia's Gibbons said. "This is Yemeni politics. Remember that al-Ahmar is a bitter enemy of (President) Saleh."

The government is currently locked in a near civil war with rebels aligned with al-Ahmar, though at the time he was described in the cable as a powerful leader of the Hashid tribe and a businessman.

The State Department cable was signed by former Ambassador Stephen Seche and sent to six U.S. embassies, the Departments of Treasury and Commerce, and officials at the Joint Chiefs of Staff.

Since the cable was sent in 2009, Arcadia, which is controlled by Norway's billionaire shipping magnate John Fredriksen, has played a diminishing role as a buyer of Yemen's oil exports. The cable says the revised bidding process attracted several other foreign bidders, including China's Unipec, Swiss-based Trafigura and British oil giant BP (BP.N).

COMPETITIVE THREAT

The increased competition challenged "the crude oil sale monopoly long held by London-based Arcadia Petroleum Limited and (Hamid al-Ahmar)," according to the cable. It was made available to Reuters by a third party.

The State Department declined to comment. The cable says that the prices Arcadia received were influenced by al-Ahmar's powerful connections as the company's agent. Arcadia denied that.

"We have had no advantage on prices. There is an open and clear bidding process. Official selling prices have applied to us and everyone else who lifts crude from Yemen," said Gibbons.

Located on the southern tip of the Arabian Peninsula, Yemen is a relatively small oil producer and exporter relative to its neighbors in the Middle Eastern Gulf. But oil sales are the lifeline of the economy, making up 75 percent of government financing and more than 90 percent of export earnings, according to the Department of Energy.

MONOPOLY PLAY

Al-Ahmar and Arcadia allegedly did not stand idly by. In July 2009, "Arcadia sought to wipe out its competition by buying Yemeni oil at an artificially high price designed to temporarily scare away competitors," the cable said.

Arcadia allegedly bid $1.02 per barrel above the world-market price for Brent crude, when it had previously bid 2 to 3 cents below world prices, according to the cable.

The trade generated an extra $3.4 million profit for the Yemeni government that month. The London-based company was pushed into the spotlight earlier last week when the U.S. Commodity Futures Trading Commission sued it, along with two other firms owned by Fredriksen and two oil traders, in federal court in Manhattan, for allegedly manipulating the U.S. oil market in 2008.

Arcadia is among the world's largest private oil trading firms and typically markets around 800,000 barrels per day of crude and oil products worldwide. Its Yemen crude "book" has been among the company's most prominent trading positions, along with Nigeria, where Arcadia has long-term contracts.

Arcadia has continued to bid for and buy Yemen crude from the government since the change in policy in early 2009, most recently buying 3 million barrels last month.

However, Yemen has awarded most of its recent monthly export tenders to oil refiner Unipec, a unit of China's state-run oil giant Sinopec.

Obama, upping pressure on Yemen, sends aide to region

June 02, 2011

Reuters

WASHINGTON: President Barack Obama has dispatched a top aide to Saudi Arabia and the United Arab Emirates to discuss the deteriorating situation in Yemen, the White House said on Wednesday.

“We strongly condemn the recent clashes in Sanaa and the deplorable use of violence by the government against peaceful demonstrators in Taiz,” the White House said, announcing the visit of Obama’s top counter-terrorism adviser John Brennan.

US relations with Saudi Arabia have been strained by unrest sweeping the Arab world, which saw Washington ditch long-standing allies, including Egypt’s autocratic ruler Hosni Mubarak, in order to side with pro-democracy demonstrators.

In Yemen, both are pushing for a transfer of power amid escalating violence that could spread instability in a region strategically vital for global oil supplies.

Yemeni government troops gunned down protesters in the southern town of Taiz during violence this week in which at least 19 people died, while world powers continued to press President Ali Abdullah Saleh to end his three-decade rule.

“These tragic events underscore the need for President Saleh to sign the GCC-brokered transition proposal and to begin the transfer of power immediately,” the White House said.

The Gulf Cooperation Council has so far failed to broker Saleh’s departure but the White House urged it keep trying.

“That is the best way to avoid further bloodshed and for the Yemeni people to realize their aspirations for peace, reform and prosperity,” the White House said in a statement.

Brennan began his trip in Sudan, where violence between North Sudan and the south has flared over the contested oil-rich Abyei border region, ahead of the south’s planned succession from the north in July.

He met Sudanese officials in Khartoum on Wednesday to stress Obama’s “deep concern” about the situation in Abyei, which was seized by northern forces on May 21, and also to discuss a review of Sudan’s inclusion in the State Department list of state sponsors of terrorism and cooperation against al Qaeda.

Tens of thousands have fled the fighting around Abyei, which has sparked international fear that the two sides could return to full-scale civil war.

Assistant Secretary of State Johnnie Carson, the administration’s top diplomat for Africa, said Brennan would be conveying a warning that Khartoum’s behavior in Abyei may complicate the situation.

“They have to meet the legislative requirements for being taken off” of the list, Carson told reporters at a news briefing. “But there is no doubt that the events of the last several weeks do undermine people’s confidence in the commitment to follow through on the roadmap that was laid out some months ago.”