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Extractive Industry, Extractive Resources, General Corruption

Black Money, #Yemen Dirty Deals via @YemenPost

20, November, 2011

Much has been written in Yemen about corruption since it seems that corruption has become the system in vigor in Yemen.

As anti-corruption activists report that violations have risen in Yemen’s oil industry in 2011, resignations by parliamentarians who have joined the anti-government protests are presenting an obstacle to reform. The coalition named The National Coalition against Oil and Gas Suspicious Deals consists of 21 parliamentarian members, businessmen, Oil engineers, lawyers and nine NGOs. They have only just learned that the Oil Ministry was renewing some contracts with foreign Oil Companies outside the parameters of the law and without proper public knowledge. “The problem is corruption…prioritizing self-interest over the public’s interest leads to more issues for the country to suffer from when talking about the oil sector, and this due to inefficiency,” said Mohammed Al-Absi, anti-corruption activist of the NCOGSD.
“Corruption in Oil companies’ deals is mostly reported in terms of production expenses,” reported to Al-Absi. “The national company Safer always gives the cheapest offer based on those terms, yet the government prefers to deal with foreign companies.
“Safer proved that the quality of their work is good and makes cheaper offers. It cost them only US$3 per barrel for production expenses, when Hunt used to do it for US$9,” he explained. “The problem is huge, as these deals last for decades – at least 15 years – so letting these deals happen now while the revolution continues will cost the country a lot later on.”
According to Al-Absi, oil in Yemen and Gulf nations does not require high expenses, as the oil is near the sea surface. “One of the companies takes US$29 for production costs, which is crazy according to the fact that digging for the oil does not cost this much and the government knows it.”

 

Areas marked off for oil extraction are termed ‘blocks’. The recent renewed contract is for Block 18, which is a new Block that can still bring huge benefits to the country if used well. “While the foreign company who renewed the contract for Block 18 carried benefits for Yemen, still, this new block should be bid upon by more companies, thereby providing the best offer and the possibility of more jobs for Yemenis,” said Al-Absi.
But this is only the tip of the iceberg; the Yemeni government has been squandering away the country’s resources for it cares only for its immediate financial reward, not the good of the country or long term planning.

Most famous of all was the deal agreed upon by the government towards the Korean Company, where Yemen sold gas to a rate of $US4, when locally it is bought $US9, equating to Yemen losing millions of dollars of unrealized gains. Officials have argued that Yemen had been forced to adhere to such conditions as the country was suffering from a chronic gas and oil shortages from May to June.
Although this argument fails to really prove a point, it is to this day the only explanation the Oil and Minerals Ministry was willing to give.

According to Al-Bakri, although local oil needs are huge, the country is obliged to export the oil – and also to import it to cover local needs. However, when new oil fields are discovered, the Supreme Oil Committee chooses to export the oil because of the Central Bank’s need of foreign currency.
From his side, Al-Absi claimed that the government has no efficiency when it comes to running the oil business in the country. “The government does not have any restrictions on foreign countries’ work in Yemen. All the oil companies work without restrictions.”

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Exposing the corruption in Yemen

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