Reliance to sign PSCs for two more blocks in Yemen

Vol 10, PW 16 (30 Nov 06) Exploration & Production

Reliance is steadily increasing its upstream presence in Yemen.

PETROWATCH hears the Mukesh Ambani controlled conglomerate is set to sign PSCs for two onshore exploration blocks in the first week of December to add to the non-operating stake it already has in producing Block 9. Reliances new Blocks 34 and 37 measure around 7500-sq km each; are located on the border with Oman; and were two of seven blocks offered in Yemens second licensing round.

Only one other block sits between Reliances blocks and the Oman border, we hear, Reliance has committed two exploration wells on each block during the three-year Phase-I of the work programme, which is followed by a three-year PhaseII work programme. A frequent traveller to Yemen tells us Reliance this month received a formal letter from local authorities in Yemen confirming the awards.

Reliance should have received the draft copy of the PSC this week, we hear. They will be sending a team to Yemen to sign the contract around 1st December.

Local authorities want Reliance to sign the PSCs before 15th December. Initially Reliance wanted 100% and complete control of both blocks but wisely decided to involve its local Yemen partner Hood Oil in the deal.

Hood can take care of all the issues with the Yemen government, we hear. It is a local company and knows the system.

Hood Oil holds 25% in producing Block 9, where Reliance holds 25% and operator Calvalley Petroleum of Canada holds 50%. Equity for the two new blocks is yet to be agreed, we hear.

Reliance will definitely hold a majority stake as operator. In January 2002, Reliance farmed in to Block 9 in Yemen alongside operator Calvalley and Hood Oil.

By early next month (December) operator Calvalley hopes Block 9 can start producing 10,000 b/d. All the wells at Block 9 have the potential to produce more than 10,000 b/d, we hear.

The main constraint is transporting crude, which is done with trucks. Once the consortium lays a pipeline it can increase production.

LNG Summit