Forced suspension of production companies.. Will Houthi win the oil battle?
English - Monday 07 November 2022 الساعة 05:57 pm
Mocha, NewsYemen, a special report:
The Houthi militia - the Iranian arm in Yemen - has returned the conflict ball to the Yemeni government's court after eight years of war, after the infrastructure, economic public facilities and oil ports became within the range of Iranian-made drones, which heralds difficult days for the country.
In early November, Calvalli Petroleum Cyprus Ltd. stopped oil production in an important sector it manages in the Hadhramaut Governorate (southeast of the country), under pressure from the repercussions of the attack launched by the Houthi militia on the Dabba port and its continued threat to the oil companies operating in the country.
The company said in a memorandum addressed to the contractors, and sent copies of it to the competent authorities, the governor of Hadhramaut, the deputy governor, the director of the Seiyun Oil Company, that it had suspended the operation in the ninth sector in the Al-Khashaa area, because of force majeure, according to what was stated in the “Reference to the Production Sharing Agreement – Article 22.”
It added that "due to the current very difficult situation, Calvali found herself forced to stop oil production as a result of the current political situation and the lack of oil storage capacity, which forced her to stop continuing oil production."
And "Calvali" is a Canadian company, which began working in Field 9 in Al-Khasha'a in the Hadhramaut Valley in 2005 AD, and stopped its operations after the turmoil caused by the Houthi takeover of state institutions by force of arms, but it returned to work in 2019, after understandings with the government.
Calvalli was not the only company that completely stopped its oil production activity, following the Houthi attack on the Al-Daba oil port, as Petromasila, which operates oil sectors in Shabwa Governorate, announced the suspension of the production process for the same reasons.
On October 21, the Houthi militia claimed the attack by drones on the Dabba oil port in Hadhramaut Governorate to prevent what they described as "crude oil looting." The incident drew international and Arab condemnation over the past few days.
The attack on the Dabba port was not the first of its kind, as the Houthis targeted the ships "Hana" and "Al-Taj Bat Blue Water" docked at the Radhum port in Shabwa governorate (southeast of the country) on October 18 and 19, 2022, without losses, according to a statement by the Yemeni government.
The attack resulted in a complete halt to exports, which annually give the country about one and a half billion dollars, according to experts. It is the pillar of the rickety economy in Yemen, which has been at war since the Houthi militia - the Iranian arm in Yemen - took control of the country eight years ago.
Economists and bankers expect that there will be costly consequences for stopping the production and export of oil from the Yemeni government areas, as the already collapsed Yemeni riyal will collapse more with the vibration of the artery available to feed the local market with hard currency, and the financing of accounts for opening documentary credits to import food commodities, due to the reluctance of oils companies for work, production and export.
The Houthi escalation threatens to set back the Yemeni government's plans to increase oil production in order to improve its financial performance and pay the bill of salaries and services, as pumping oil from the Masila fields to the port of Dabba is still suspended today.
According to previous data, Yemeni crude oil exports recorded a remarkable increase in 2021, the first of its kind in years, and amounted to 1.418 billion dollars, compared to 710.5 million dollars in 2020.
The recent attacks appeared as a pressure card to support the Houthi position in the negotiations to resume the collapsed truce and to obtain new concessions from the Yemeni government and the Saudi-led coalition, and also to strengthen Iran's position in the nuclear agreement negotiations.
The Houthis require paying the salaries of employees in their areas of control, including fighters in the group's ranks, and sharing oil and gas revenues with the Yemeni government, in order to stop attacks on ports and ships carrying Yemeni crude oil.
The Houthi militia is taking advantage of the international and regional need to prevent any threat to oil facilities, in light of the energy crisis that the world is witnessing, to impose more impossible conditions on the Yemeni government, which are concessions that are difficult to make with the absence of a clear path for negotiations.
Observers say that the Houthis find that it is possible to comply with the conditions they set and respond to them, and therefore they continue to wave force, rejection and threat to achieve this, especially as they know that the major actors in the Yemeni file are trying to pressure to maintain the state of stability.
The recent Houthi escalation towards oil export ports, as well as the companies operating the production fields, bore clear indications that they had opened a new front focusing on money and economic activities, with the aim of pushing the Yemeni government into bankruptcy and economic collapse, as a prelude to resuming military attacks to complete control over the liberated governorates, especially the oil-rich Marib.
Despite recent fears that the attacks would fuel new levels of conflict in Yemen, with the extension of the UN truce faltering on October 2, despite international and UN efforts to extend it, the Yemeni government did not seem to have the capabilities to respond to the Houthis or to maneuver.
The decision to renew the war also seemed to depend on the extent of the Houthi militia’s threat to the coalition countries, and this event helped the Houthis demonstrate their ability to threaten and control by targeting areas far from their control, and contributed to clarifying the fragility of the parties that make up the current government.
This is reinforced by the fact that despite the Yemeni government's decision to classify the Houthis as a terrorist organization, in response to their ending of calm by attacking the oil ports in Shabwa and Hadramawt, the reality on the ground has not changed, as the requirements of the collapsed truce - on the part of the government - are still in force. Meanwhile, the Houthi militia did not stop its threats, as it continued to fly its drones over the oil and gas ports in the Hadramawt and Shabwa governorates, amid information that export operations had stopped.
