Yemen unrest halts oil production

Yemen has stopped producing oil because of internal strife, a government official said today, plunging a nation that is already the Arab world’s poorest into further economic decline.

Yemen was producing about 290,000 barrels of oil a day, a small amount in global terms, but income from the sales has provided funds for about three-quarters of the budget of President Ali Abdullah Saleh’s government.

Opponents of the regime, including powerful tribes, appear to be using the oil weapon to press their demand for Saleh’s resignation. Security officials have said the tribes have at times blocked fuel tankers from moving through their territory. There have also been attacks on power lines.

The senior oil official said instability, labour strikes and pipeline attacks have stopped oil production.

Most of Yemen’s oil fields lie in the Shabwa, Marib and Hadramawt provinces, the focus of increased security concerns as Muslim militants allied to al-Qaida are said to have moved in after government forces and police left because of the internal strife.

In the most dramatic incident, a pipeline in the Marib province was attacked in March, leading the state-run oil firm Safer to shut down production of nearly 50,000 barrels of crude oil a day. Officials blamed anti-Saleh tribes for the attack.

On Sunday, caretaker oil minister Amir al-Aidarous said tribes in Marib were preventing the government from repairing a pipeline that carries around 100,000 barrels per day.

There were also reports that local tribesmen skirmished with security forces protecting oil fields. A security official said it is becoming more difficult to protect oil tankers through tribal territories.

Mr al-Aidarous warned that some companies are beginning to pull out of the country and that the situation in the country has become “more catastrophic” than expected because of the disruption in the oil sector.

Oil revenues make up at least three-quarters of the government budget, reflecting the lack of foreign investment and the generally downtrodden economy, significant factors in the anti-government unrest.

Several foreign companies have announced cutbacks or halts in production.

Nexen Energy, based in Calgary, Canada, temporarily halted its production of about 74,000 barrels a day because of a labour strike. Nexen spokesman Pierre Alvarez said the shutdown would affect 38,000 barrels a day of his company’s production.

Paris-based Total’s production in Yemen “has been affected”, by the unrest and strikes, Total spokeswoman Phenelope Semavoine said, without giving details. Total was producing oil and natural gas and holds exploration rights in Yemen.