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Petroleum investors could cut their losses in Yemen

Monday, May 22, 2017

Subject

Yemeni oil production.

Significance

The oil and gas sector -- which was in any case in long-term decline, owing to a lack of investment -- suffered serious disruption after civil war broke out in March 2015, with oil, liquefied natural gas (LNG) and refining facilities closed, and ports blockaded to prevent delivery of oil products. The internationally recognised government of President Abd Rabbu Mansour Hadi has renewed efforts to encourage a recovery in oil production since late 2016, but these are hampered by the civil war and lawlessness in remote areas.

Impacts

  • Saudi Arabia and the UAE will be the main sources of oil imports, probably on concessional terms.
  • Hydrocarbon exports will not provide sufficient finance for post-conflict reconstruction.
  • Exports of LNG are unlikely to restart before 2020 at the earliest.
  • A crisis of power provision will expand the market for small solar panels.
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