Calvalley Petroleum affected by labour unrest at state-owned Yemeni oil firm

By The Canadian Press | February 14, 2012

CALGARY - Calvalley Petroleum Inc. (TSX:CVI.A) says 1,000 workers of Yemen's state-owned PetroMasila have gone on strike, which will lead to the shutdown of some company operations in the area.

Calgary-based Calvalley said Tuesday that its 7,000 barrel per day Block 9 field will be shut down once storage tanks are full.

Block 9 includes the Hiswah, Ras Nowmah and Al Roidhat fields. The company said Al Roidhat and the Ras Nowmah have been curtailed "due to heightened security risks posed by locals in the area" but production has so far been maintained at the Hiswah field.

The work stoppage is affecting all crude oil producers in the Hadramout province, with some groups organizing blockades on major roads, hampering movement of crude, fuel and supplies.

"The company anticipates production from the Hiswah field will be curtailed within the next few days as a result of both the local blockades and the work stoppage at the export facilities," Calvalley said in a statement.

The company said it continues to work with government officials to help resolve local concerns.

"Management is cautiously optimistic that the current political environment in Yemen will improve after the Feb. 21, 2012 election and that operations will return to normal, however, the timing is uncertain at this point."

Calvalley said it intends to restrict spending on the project until safe operations can be restored.