Saudi Arabia has been eyeing the largely untapped oil reserves in Yemen for decades, now, with the war seemingly winding down, it’s scrambling to secure them at any cost.
MARIB, YEMEN — Saudi Arabia possesses around 18 percent of the world’s petroleum reserves. That fact though has done little to stifle the Kingdom’s apparent appetite for new sources of crude. Now, following over five years of all-out war against its southern neighbor, Saudi Arabia is scrambling to secure rights over Yemen’s potentially bountiful reserves of oil.
Aramco, Saudi Arabia’s state-owned oil company, is seeking decades-long strategic agreements with the internationally recognized government in exile of Abdul Mansour al-Hadi, which is backed by the Saudi-led coalition and the United States, to gain control of Yemen substantial oil and gas reserves, particularly in the oil-rich provinces of al-Jawf, Marib, Shabwa, and Hadramout, according to officials. The move could inflame enough anger among Yemen’s many warring and fractious parties to band together against what is increasingly viewed as an existential threat to Yemen’s sovereignty.
Officials in Yemen’s state-owned oil and gas company, known globally as Safer, as well as members of the transitional Hadi government who spoke on condition of anonymity for fear of reprisal, revealed to MintPress that negotiations are already taking place between Saudi Arabia and its allies with officials in Yemen’s ministry of oil and Safer to reach an agreement that would ostensibly hand control of much of Yemen’s oil and gas reserves to Saudi Arabia for decades to come.
A number of meetings have already taken place between high-ranking Saudi officials, including Saudi ambassador to Yemen Mohammed Al-Jaber and officials from Aramco, and Yemeni leaders, including interim vice president of the transitional government Ali Hussen al-Ahmer, governor of Marib Sheikh Sultan al-Arada and officials from both Safer and Yemen’s Ministry of Oil. Negotiators from French oil company TOTAL reportedly attended some of the meetings held in Marib, al-Mahrah, and the Saudi capital of Riyadh.
According to a source in Yemen’s transitional government, Saudi Arabia is seeking long-term lease agreements over the much of country’s oil reserves, particularly in what some officials have called “the oil triangle,” an area between al-Jawf and Marib provinces. Under the agreement, Saudi Arabia would be allowed to develop Yemen’s oil reserves and retain the profits from the sale of said oil in exchange for an annual remittance that would be paid by Aramco to certain members of the Yemeni government. The agreement stipulates that the payments are only required if the government remains friendly to Saudi Arabia.
Jalal al-Salahi, a Yemeni activist known to have close ties to decision-makers in the transitional government, recently released a video in which he claimed to be in possession of a draft document of an oil agreement between Saudi Arabia and Yemen. In the video, which has already garnered nearly 90,000 views since it was published to YouTube on July 4, Al-Salah said the document shows that the Saudi government is to pay $15 billion to certain Yemeni officials in return for seventy years of oil concessions in al-Jawf. Sources in Yemen’s transitional government refused to deny or confirm the authenticity of the document but told MintPress that some of the claims being made on social media are true without specifying which ones.
According to official sources, under the Saudi deal, payments would go to a fund restricted to what the Kingdom calls “Yemen’s debts and reconstruction.” Saudi Arabia, one of the world’s most repressive monarchies and wealthiest countries, launched a U.S.-backed scorched-earth campaign against its southern neighbor under the auspices of restoring the government of ousted President Hadi to power and is now pushing, along with the UAE, for Yemenis to compensate the Saudi-led coalition for the war it has waged on their country.
Negotiations to wrest long-term de facto control over Yemen ostensibly began in 2019 and have been marked by Saudi pressure and threats according to a source close to the negotiations. In fact, Riyadh has kept high-level officials in the Hadi government, including Hadi himself as well as Yemen’s members of parliament, under house arrest in Saudi Arabia. Yemeni officials that have been allowed to stay in Yemen are confined to coalition-controlled areas and cannot leave the country without permission from Riyadh and Abu Dubai.
The potential Saudi move is not without precedent. Saudi Arabia has been securing its objectives in Yemen by enabling its allies in the Yemeni government to take power in exchange for profitable long-term agreements for years. Yemen’s history is rife with these sorts of long-term agreements, including the Treaty of Taif signed in 1934 between the emerging Saudi state and the Mutawakkilite Kingdom of Yemen, which handed Saudi Arabia control over the former Yemeni provinces of Jizan, Najran, and Asir.
Saudi forces and Yemeni tribal leaders with Saudi nationality, along with allied mercenary forces, have been blocking domestic oil exploration in al-Jawf since the war began and it is an open secret that Riyadh bribed former Yemeni government officials to keep them from drilling and exploration activities in the area. In fact, just last week Saudi armored vehicles crossed the border to bury a well that had been dug for water by Yemen’s 1st Brigade Border Guards, apparently fearing they could be covertly drilling for oil.
Saudi Arabia, supported by the United States, has been preventing Yemen from capitalizing its own oil reserves since the 1970s, particularly in the al-Jawf Province which holds most of the country’s reserves and enjoys a unique status as a neighbor to two oil-rich regions of Saudi Arabia.
Yemen’s stolen oil
It was about 9:20 a.m. at the Block 18 oil field in Marib, Yemen when H.A.Y.K., an oil tanker driver who wished to be identified only by his initials, put his hand in his pocket to make sure that his recently acquired “official permit” to cross the Saudi border was where it was supposed to be. H.A.Y.K. was not alone, eight drivers had gotten into their trucks that morning and started their engines in preparation for the journey. Minutes later, the crude oil-laden convoy lurched ahead and was soon inside Saudi territory accompanied by at least six armored Toyota Land Cruisers from the Coalition-backed Al-Abra Military Brigade and laden with a shipment of crude oil stolen from Block 18.
H.A.Y.K told MintPress that after a treacherous drive through Yemen’s northeast border region, he crossed the Saudi border into the Bishah District in the southwestern Saudi province of Asir where he unloaded his truck. Saudi Arabia and UAE are believed to be transferring stolen oil into the Sharq Eaidh desert located between Shabwa and Marib provinces. It is then pumped through a pipeline owned by an unidentified Austrian company to the UAE-controlled Al-Nashima Port on the Arabian Sea where it is then transferred to small oil vessels.
The theft of crude has become a daily occurrence in Safer’s Blocks 4, 5, and 18, as well as in other oil fields in the province, including the al-Uqlah Block (S2) located in the Marib-Shabwa Basin east of Block 18. Thefts have also become prolific in the Shabwa, Hadremout, and al-Mahrah provinces.
But the presence of crude oil-filled trucks crossing the Saudi border tripled in the second week of March when the Saudi-Russia oil price war was at its peak, according to oil engineers and tanker drivers that spoke to MintPress. This could suggest that Saudi Arabia was likely pumping oil stolen from Yemen into the international market, albeit in small quantities, at a time when losses by oil-producing companies in the U.S. were skyrocketing. Hedging untapped Yemeni oil reserves would give Saudi Arabia an important advantage in negotiations with competing oil-producing countries like Russia and the United States.
According to economists and officials who spoke to MintPress, up to 65 percent of Yemen’s oil produced since 2015, when the war began, has been looted by Saudi Arabia, the United Arab Emirates, and international oil companies and some 18-23 percent of crude production, including that produced by Safer and Petrol Masilah, is being looted by tribal leaders and black market traders allied with the Saudi coalition.
Militant groups and tribal factions allied with Saudi Arabia and the UAE in Marib and other eastern provinces, particularly the El-Eslah Party and the Southern Transitional Council as well as personnel close to Hadi, including his son Jalal, are all involved in the looting of Yemen’s oil and gas and have used heavy equipment belonging to Safer and TOTAL to extract crude oil assisted by engineers from both companies.
MintPress witnessed small bootleg oil refining operations scattered through the Neqm and Shaharh oil fields. Local residents, as well as oil smugglers, told us that similar machinery could be found throughout Marib, Shabaw, and other districts. These operations, according to witnesses, are owned by members of the Hadi government as well as local tribal leaders who are stealing crude from fields and pipelines belonging to Safer. Pipelines are punctured and the crude oil is siphoned off into small and medium trucks and brought to large open storage pits or floor tanks to be refined or sold on the black market.
The financial returns for the plundered oil are not used to invest in Yemen’s infrastructure or bolster the local economy to keep the value of the Yemeni Riyal from tanking. In fact, they rarely even make it into Yemen’s banks, instead going directly into the personal bank accounts of corrupt Saudi-allied officials or to fund infighting between warring militant groups. Money from plundered Yemeni oil is rumored to have made it into the bank accounts of corrupt officials across the Middle East, and as far off as Turkey.
Ansar Allah leader Abdulmalik al-Houthi said in a televised speech that more than 120 million barrels of crude oil have been looted by Saudi Arabia and the United Arab Emirates since 2016, amounting to nearly 80 billion Yemeni Rials worth of lost revenue per month. Ahmed Daris, Ansar Allah’s Sana’a-based Minister of Oil, claimed that Saudi Arabia has looted more than 18 million barrels of oil exports in 2018 alone and that the profits from that oil are now in the Saudi National Bank.
According to an official database maintained by the Hadi government, Yemen used to produce some 300-350 thousand barrels of oil per month before 2010, however, due to Saudi Arabia’s active suppression of Yemeni exploration and development of its oil fields as well as internal conflict, Yemeni crude output has plummeted sharply. The low point was reached at the end of 2015 after oil fields were closed on Saudi orders. At the time, Yemeni production hovered around 35,000 barrels per day. In 2019, the Yemeni government loyal to Saudi Arabia said that it had managed to bump that number up to some 70,000 barrels per day.
Although these figures are likely inaccurate, as many known oil fields were not included in the official lists of the state and international oil bodies such as OPEC, it had long been confirmed that Saudi Arabia has deprived Yemen of revenues from the sale of at least 70,000 barrels a day and at least 126,000,000 barrels over the course of five years of war. That amounts to a total of over six billion dollars based on an average $50 per barrel price of oil. That revenue would have been sufficient to pay the salary of every government employee for at least four years.
The Saudi clock is ticking
Hoping to thwart Saudi ambitions in their oil-rich provinces, some Yemeni tribes have begun an armed uprising against Saudi Arabia and their allies in the province, sparking fear among the Kingdom and its allied militants and triggering a cruel campaign against the families of tribes who have announced their opposition to the Saudi Coalition. Sheikh Mohsen Suba’yan was among the tribal leaders opposed to the Saudi regime. On June 29, he and six of his relatives were killed when their home was surrounded and burned to the ground.
The completion of any long-term contracts with the internationally-recognized Hadi government is very important for Saudi Arabia as Ansar Allah is close to recapturing the Marib Province after gaining control of most of al-Jawf. Just four months ago, Yemeni forces backed by Ansar Allah took control over the rich-oil province of al-Jawf after fierce battles with Saudi forces backed by al-Qaeda and IS militants and supported by American advisers.
Ansar Allah, supported by tribes disenfranchised with de facto Saudi rule, hope to secure the oil for domestic consumption in the country amid an acute fuel crisis that has halted the delivery of much-needed fuel to Yemen.
Feature photo | A Saudi soldier guards a cargo plane at an air base in Marib, Yemen, Feb. 1, 2018. Jon Gambrell | AP
Ahmed AbdulKareem is a Yemeni journalist. He covers the war in Yemen for MintPress News as well as local Yemeni media.