Yemen turns to solar in adversity
As its oil sector remains effectively paralysed by conflict, Yemenis are exploiting renewables out of necessity
Yemen has become the tragic poster child of proxy conflict in the Middle East as its civil war rumbles into a sixth year. With the conflict having brought about one of the world’s most desperate humanitarian crises, and considering that it has sizeable proven hydrocarbon reserves, Yemen is not somewhere you would expect to find a significant shift towards renewable energy. But with just 40pc pre-war electricity connectivity, and oil and gas production decimated in the fighting, Yemenis have had little choice but to turn to solar PV.
The conflict saw oil production drop from around 150,000bl/d in 2014 to 42,000bl/d in 2015 and to just 18-20,000bl/d 12 months later, according to Yemeni data. Flows were largely restricted to the Marib-Jawf concession and fields operated by state-owned PetroMasila.
2,500pc – Estimated growth in solar in Yemen
Output has since rebounded to c.60,000bl/d following the return of IOC activity. Austria’s OMV and Calvalley Petroleum of Canada resumed operations in 2018 and 2019 respectively, with the former bringing 2,000bl/d back onstream in Q2 2018. This rose to 5,000bl/d in 2019 and 4,000bl/d during the first half of 2020, according to the company’s Q2 data supplement. But an industry source in Yemen tells Petroleum Economist the company’s production had been running at more like c.15,000bl/d.
Despite the revival, such numbers are modest by Middle Eastern standards and—while the conflict precipitated a marked drop in output—a downward production trend had been evident for some time. The country’s oil production peaked in 2002 at 460,000bl/d, and attacks on facilities disrupted operations before the war—with output halving in less than a decade.
Rewards for the brave
The country does still have potential as a hydrocarbon producer. According to consultancy Wood Mackenzie, Yemen’s total initial reserves amounted to 4.8bn bl oe, with around 1.4bn bl oe remaining, although more than 70pc of this is thought to be gas.
That prospectively remains attractive to those willing to brave the security concerns. Australia-listed Petsec Energy, for example, sold its US operations in June to focus on monetising its Yemeni assets (block S-1 and block 7).
It plans to engage with “potential joint venture partners” for block S-1, which includes the An Nagyah oilfield. In its Q2 update, the company noted recent improvements in the “security position” and spoke of the “significant oil potential” identified by seismic surveys at its Al Barqa (block 7) concession.
The internationally recognised government in Aden also has high hopes for the future potential of the underexplored onshore Rub’ Al Khali, and offshore Aden-Abyan, Mukalla-Sayhut and Tihamah basins. But this is dependent on improved interest from IOCs.
Their retreat from the Yemeni upstream is clearly shown by the failure of the government’s latest licensing rounds to award blocks and a halt in exploration activities. No wells have been completed since 2014, according to Wood Mackenzie.
Pivot to solar
The drop in domestic hydrocarbon availability has had one surprisingly positive result—a notable shift towards solar PV that has the potential to generate the reliable connectivity that the country has previously sorely missed.
“The shift towards renewable energy in Yemen since the beginning of the conflict in 2015 has been remarkable,” says Alia Eshaq, managing partner at MEA-focused consultancy Mashora Group.
The war turned already dire electricity coverage into an even more severe shortage. “The main source of power was gas from [the] Marib [field]. After 2015, major governorates with millions of inhabitants, including the capital, were completely cut off from the grid,” says Eshaq.
“It only takes a walk around the streets of Sanaa to realise that almost every household has installed solar panels” Eshaq, Matsora Group
“Residents therefore naturally shifted towards solar energy,” she continues. While it is difficult to obtain accurate data on the ground given the situation, “estimates have suggested that the growth in the use of solar energy is around 2,500pc”. “It only takes a walk around the streets of Sanaa to realise that almost every household has installed solar panels,” Eshaq notes.
The country also has significant potential for wind and geothermal energy, and building these out could provide decentralised generation, numerous job opportunities and stimulus for economic development. But Eshaq warns that any shift could be reversed if and when oil and gas production resumes post-conflict.
It “becomes a question of policy and what the government of Yemen will choose to prioritise”. “What the war period demonstrated is that renewable energy is an option and habits have changed. But it will require wise policies to build positively on this change of habits,” she says.