Yemen was a colonial protectorate of the British Empire between 1839 and 1967. Once the Empire left, the country essentially broke up into two; the Saudi-backed Yemen Arab Republic aka “North Yemen” (located along the Red Sea coast down to the Bab al-Mandab Strait) and the USSR-backed People’s Democratic Republic of Yemen aka “South Yemen”. South Yemen was the only openly communist nation in the region at the time. The two sides had a brief conflict in October 1972 but settled it quickly with the Cairo Agreement, in where they set out to unify the country. Fighting broke out again in Feb-March 1979 after South Yemen assisted rebels in North Yemen to rise against the Saudi-backed government.
On December 21st 1984, the New York Times published a story about Yemen’s first oil discovery, which was going to help get the country out of poverty, end its short-lived conflicts and eventually unite the two as one. This was at a time when the average annual income was less than $500 per capita. The country also had less than 10 million inhabitants, which is just a one-third of what it is today.
This chart shows the rising population of Yemen.
Consuming only 20Kbpd back then and aiming for 100-200Kbpd in production looked very promising for foreign investors in keeping Yemen a net exporter. Yemen’s geographic advantage is that two of its export terminals (Bir Ali and Ash Shihr) face the Indian Ocean (Gulf of Aden) while the Ras Isa export terminal (via FPSO SAFER) faces the southern end of the Red Sea. Indian Ocean terminals were best because during the 1980’s tanker wars, the tensions between Gulf nations were in a state of outright conflict as Iraq and Iran fought it out on both land and sea.
After oil production shot up from just 10-20Kbpd in the mid-1980’s to nearly 200kbpd in the late 1980’s, North Yemen & South Yemen unified in 1990 thanks to a common goal of prosperity thanks to oil. Though they mostly unified for the sake of foreign investors and international oil companies such as Exxon, both parts were controlled by their own leaders. It also led to in-fighting after Saudi had expelled 700,000 Yemenis (causing a massive influx of people the government wasn’t able to house) from the kingdom after Yemen took sides against the Coalition during Gulf War I. Oil production nonethless doubled to over 430Kbpd by the turn of the millennium.
Afterwhich, it began its rapid decline as tensions and divisions in this tribal nation mounted. Not only that, but religious extremism in the form of AQAP (Al-Qaeda in the Arabian Peninsula) occupied a growing portion of the country even though they had to relocate a few times in attempts to establish their own emirates (princedoms), particularly by the oilfields in the east and ports in the south. UAE forces managed to expel them in 2016 as Saudi led its coalition in a bid to fight off the Shia Muslim group in the former North Yemen called Ansar Allah, (meaning “Supporters of God”), though better known for their tribal name: Houthis. That means that oil production tumbled as a result of AQAP occupying the oil production in the east and then by the Houthis in the west.
Lately however, we see that oil exports are finally back on the rise this year 2019, and it’s coming entirely from the east via Shabwa and the Masila oil basins. Between January 1st, 2019 and September 22nd, oil exports have averaged to 52Kbpd, which 38.47Kbpd (74%) of it heading to China, and the rest divided by India, Singapore and Italy. This might place 2019’s oil production to well north of 85Kbpd. The exports are very infrequent, (only 11 vessels so far this year), but the shipments are quite large, involving mostly VLCC-sized supertankers taking oil to deepwater ports such as Rizhao, Paradip and Singapore.
