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OMV provides faint light in Yemen gloom

Austria's OMV, the first IOC to return to Yemen since the war started, has resumed limited exports

When the Saudi-led Arab coalition began air strikes on targets in Yemen in March 2015 and fighting on the ground intensified, all international oil companies suspended operations. OMV said it had to shut in all production facilities in early April that year and declare force majeure on all its blocks and open contracts. This was because of "a major deterioration of the security environment" and a sea blockade of ports that "prevented crude export".

Earlier this year, OMV decided to return to the Habban field in Block S4 in Shabwa province. The company said the field hadn't been affected by the war. As a result, "comprehensive technical, commercial and security arrangements" were put in place to test the resumption of production. Oil began to be trucked to the facilities of the nearby Block 4, operated by the Yemen Company for Investment in Oil and Minerals. From there it's pumped via a 204km pipeline to the Bir Ali terminal on the south coast.

"The first crude oil was lifted at the end of July and has been sold on the international market," OMV said. Current output is around 5,000 barrels a day, around one-third of that before the shut-in.

At least one other IOC is looking at the possibility of returning. Australia's Petsec Energy, in its June results announcement, said it was in communication with Yemen's oil ministry to discuss how the company might resume operations in Blocks 7 and S1. Petsec added that for Block 7 it had provided the ministry with "a restart schedule for 2018-19 for the An Nagyaha field that proposes initial production of 5,000 b/d for the first three months", rising to 10,000 b/d within a year.

The Petsec announcement said that Yemen's oil minister, Aws al-Oud, who was appointed in December 2017, "has taken an active role in encouraging the restart of Yemeni oil production". In April the internationally recognised Yemeni government of President Hadi wrote to all operators urging them to resume operations "as soon as they could".

The latest developments don't signal anything like a return to normal for Yemen's energy sector-aside from most oil operations remaining suspended, Total's 6.7m-tonnes-a-year capacity LNG plant is still shut in. But the return of an IOC and the flow of at least some oil offer a glimmer of hope during a particularly dark period in the war.

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