Sat Nov 19, 2011 9:51pm GMT
SANAA Nov 19 (Reuters) – A top Yemen state body set up an oil company on Saturday to take over the Arab country’s key Masila oilfield, Yemeni official media said, replacing Nexen at the field that produced more than a 10th of the Canadian firm’s global output.
Nexen’s efforts to renew its licence for the field, which produces around 35,000 barrels per day, have been hindered by political turmoil and the Yemeni government’s urgent need for cash.
“The Supreme Economic Council approved the establishment of Masila Company for Petroleum Exploration and Production (PetroMasila) … which will replace Nexen in block 14 in Masila, Hadramout province,” Yemen’s state news agency Saba reported.
The Yemeni cabinet is to discuss and finalise the decision, under which PetroMasila is to have “all the rights and privileges of the former operator Nexen”, the agency added.
The loss did not appear to have been unexpected for Nexen, after months of street protests demanding an end to the 33-year rule of President Ali Abdullah Saleh.
“While we continued our (contract) extension efforts, macro political events in the country have made it difficult to make visible progress,” Nexen said in its third-quarter results report posted on its website on Oct. 27.
“At the same time as we continue our discussions, we are preparing for an orderly exit from the country if our renewal discussions are unsuccessful. We remain focused on secure and reliable operations,” it added.
There was no immediate comment from Nexen on Saturday.
Industry sources have suggested that some officials believed the deal with Nexen brought in less revenue than the project should generate for the state.
Nexen has produced oil from its two blocks in Yemen — Masila (Block 14) and East Al Hajr (Block 51) — and exported almost all of it from a terminal on the southern coast of the Arabian Peninsula country, mainly to Asia.
Block 14 had the small oil producer’s biggest proven oil reserves at the end of 2010, according to data from Yemen’s Petroleum Exploration and Production Authority.