Oil Search decides on complete exit from Yemen

Sydney and Port Moresby-based Oil Search Ltd. has decided on a complete exit from its acreage in Yemen.

The company has sold its 34% interest in the onshore Block 7 Al Barqa permit, which lies in the Shabwa basin about 340 km east of the capital Sana’a, to fellow joint venture partner Petsec Energy Ltd.

The terms of the purchase were not disclosed, but Petsec joined the permit group last year by purchasing 21.25% from AWE and 8.5% from Mitsui for a total of about $1.5 million (Aus.).

The purchase of Oil Search’s interest means Petsec now has a 63.75% interest in Block 7 and the company will take over as operator.

The block contains the Al Meashar oil discovery made in 2010, however the political unrest in Yemen prompted Oil Search to declare a force majeure in 2011 and no work on the find, or any other exploration, has been done since.

The discovery is in a proven basement play fairway about 14 km east of OMV’s Habban oil field. A test of comingled basement and overlying Jurassic reservoirs at Al Meashar flowed at a peak rate of 950 b/d plus associated gas in 2010.

Al Meashar-2 was drilled shortly afterward, but was never tested due to the deteriorating political unrest in the country.

Despite the obvious and potentially long-running problems in Yemen, Petsec Chairman Terry Fern is up-beat about the purchase, saying it is a milestone in the company’s attempts to build a Middle East-North Africa portfolio. He said the enlarged interest in Block 7 provides meaningful exposure to high value oil assets with a highly prospective oil region.

Former Oil Search exploration manager in Yemen, Maki Petkovski, has been appointed by Petsec to run its Middle East operations.

The other remaining shareholders in Block 7 are Kufpec with 21.25% and State-owned Yemen Oil & Gas Co with 15%.

For Oil Search the move completes its withdrawal from Yemen, a country it first entered in 2000 by taking an 80% interest in a block in the Gulf of Aden as a way of diversifying from its main focus in Papua New Guinea.

Oil Search went on to take up acreage in Egypt, Tunisia, and Iraq (Kurdistan). It still retains its interest in Tunisia and Iraq, including a promising discovery in the Taza prospect in Kurdistan, but it has left Egypt.

The Yemen exit follows the announcement from Total SA a few days ago that it had shut down its LNG plant and evacuated its expatriate staff from the country.