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The first shipment of crude oil from Yemen frees up enough storage so that oil production in the east of the country can resume, reports said Friday.
International Oil Daily, a service from Energy Intelligence, reports sources have confirmed that Swiss trader Glencore has pulled about 1 million barrels from Yemen, the first time since the latest bout of civil war erupted last year. The loading frees up storage capacity enough so that oil production in eastern Yemen can resume and sources said another shipment from the Ash Shihr export terminal is scheduled for next week.
“The terminal is working now and all secure,” the source was quoted as saying.
Austrian energy company OMV, a player in Yemeni energy, said early this year a production rebound was possible should the national security situation clear.
Norwegian energy company DNO stopped work in Yemen last year because of the tense security situation in the country. Prior to the announcement, the company said it was producing around 1,950 barrels of oil per day from two reserve interests in the country.
Apart from production, Yemeni conflict had posed risk to international oil shipments because of security risks at the country’s port terminals. The Bab el-Mandab shipping channel creates unique risks. Threats to the waterway, through which more than 3 million barrels of oil passes per day, means shippers would have to go around the southern tip of Africa.
Fragile peace talks between warring factions began last week in Kuwait under the supervision of the United Nations. Yemen, however, has been mired in some form of civil conflict since at least the Arab Spring uprisings that began in 2010.
The report from International Oil Daily said the return of Yemeni oil to the market “looks unwelcome” as the situation globally already favors the supply side.
“It is unclear whether its crude will be sold on the international market, refined for domestic consumption with some products such as jet fuel going overseas, or a mixture of both,” the report added.