Khuyut
The internationally recognized government continues to bypass constitutional and legal legislation by violating, tampering with, and managing sovereign economic sectors in a random and irresponsible way, with a succession of scandals involving suspicious deals, as is currently happening in the oil sector, and concluding illegal deals with foreign companies to market the oil and sell it at a low prices.
The internationally recognized government accuses the Houthis of targeting oil export facilities and ports in Hadramaut and Shabwa governorates in October 2022, which led to the cessation of oil exports and the government's loss of more than one billion dollars.
The failure to extend the truce in October 2022 prompted the Houthis to inform the investment companies in the oil and gas sector that they must stop once and for all what they called the looting of Yemen's sovereign wealth and hold them fully responsible in the event of non-compliance. They followed this up by targeting oil export ports in Shabwa and Hadramaut (southern Yemen) with drones.
Since then, Yemen has been going through difficult and critical times, with the aggravation of the humanitarian crisis reaching its peak, the collapse of the national economy, and the expansion of division, in conjunction with the incursion of tampering and the dubious deals around which the corruption suspicions are raised in both Aden and Sana'a. With the government of Maeen Abdul Malik in Aden leading the scene with resounding deals that sparked wide controversy, from the investment deal that violated the telecommunications sector to the conclusion of deals that affect the proven reserves of oil in the fields of Hadramaut and Shabwa—according to information supported by documents exclusively revealed and published by "Khuyut", in addition to selling and marketing it in agreement with an Emirati company, in a way that seemed shocking to Yemenis, whose country is going through difficult and critical circumstances.
“The government, represented by the Ministry of Oil, decided to grant these contracts to an Emirati company called “Malaih Company for Investments and Project Development," which is the same company that was granted by the Cabinet of the Aden government a license to establish an oil derivatives refinery, storage tanks, and a free industrial zone in the Al-Dhabba area in Hadhramaut governorate (southeast of Yemen).”
In an update of what is currently taking place in the corridors of the internationally recognized government, official sources told "Khuyut" that the government, represented by the Ministry of Oil, after sitting with several companies in Cairo and Canada, decided to grant these contracts to one of the Emirati companies, called “Malaih Company for Investments and Project Development." It is the same company that was granted a license by the Cabinet of Aden government to establish a refinery for oil derivatives, storage tanks, and a free industrial zone in the Al-Dhabba area in Hadhramaut governorate (southeast of Yemen) by Cabinet Resolution No. 6 of 2023, dated March 26, 2023.
Actually, according to the company's official website (http://www.malaih.ae/), which was verified by "Khuyut", it is a company that has nothing to do with the oil industry but is a contracting company for the construction of residential buildings only.
According to data published by members of the House of Representatives, it turned out that another company called EMO, based in the United Arab Emirates, is the buyer of quantities of up to 18 million barrels in several batches, for an amount exceeding one billion US dollars.
The internationally recognized government justifies the sale as the best way to obtain sums of money through cooperation with such companies that will provide liquidity for the maintenance and operation budgets and then carry out maintenance work and drilling wells that were supposed to be carried out by national companies, if there was financial management and a government that cares about the country's sovereign and national wealth.
Another justification is that the company will help the government by providing some of the petroleum derivatives that it buys for the purchased power plants in Aden to generate electricity, amounting to more than 3 million dollars per day as fuel value for these stations. This was the focus of the conflict between Ahmed Al-Aisi, Deputy Director of the Office of the President of the Republic, and Prime Minister Maeen Abdulmalik, which spread and appeared on the surface in the exchange of accusations of corruption, bribes, and the award of contracts by direct order, and which appeared to the public in a miserable manner.
Circumventing the State's Legislative Bodies
Data and documents obtained by "Khuyut" reveal the existence of serious violations in the sale of crude oil to a Gulf entity (an Emirati company) without following the customary procedures for marketing crude oil, in violation—as considered by specialists, economists, and legal experts—of the Yemeni legislation and laws in force that regulated the methods and standards of dealing with the oil sectors and the various sovereign sectors, to the extent that the matter reached the point of selling oil while it is still underground, in large quantities equivalent to the production of more than a year.
In November 2022, the oil expert and investigative researcher Dr. Abdulghani Gaghman published what he called the upcoming plan to sell 500 million barrels of the remaining oil reserves (the Remaining Proved Reserve) in the fields of Hadhramaut, Marib, and Shabwa (worth up to 35 billion dollars). This is done through contracting with subcontracting companies to produce the proven reserves that are 100% owned by Yemen.
This is done through the signing of service agreements by the parent companies (PetroMasila, Safer, and Ycom) with subcontracting companies. These agreements do not require approval from any higher governmental or legislative body, in a trick to circumvent the state’s legislative bodies, as this would exempt them from obtaining the approval of the House of Representatives or even the government officially, and these companies are content to sign with the parent company only (PetroMasila or Safer).
This plan, as Gaghman confirms to "Khuyut", came as a result of weak financial management and the fact that these companies deposit all the amounts from the value of the sold oil to the Saudi National Bank to pay the obligations of the legitimate government and the salaries of the House of Representatives, the Shura Council, and the diplomatic sector abroad without allocating special budgets for the development and maintenance of the oil fields.
“Proven reserves are those that have a high degree of certainty (usually not less than 90% confidence), which can be extracted under existing economic and political conditions with the help of available technology, are considered guaranteed, and are counted as capital for the companies operating the fields.”
Likewise, these development budgets, which represent 15–25% of the general budget, are an essential necessity in ensuring the continuation of oil production from the oil fields, as their wells require maintenance and drilling of new reservoirs and maintenance of completion and production equipment on a regular basis, in addition to drilling new development wells to ensure the production of oil reserves in the underground.
In January 2023, the Minister of Oil in the internationally recognized government, Saeed Al-Shammasi, stated in a report published in the Oil and Minerals Magazine (Issue 48) that the Ministry is implementing serious steps to sell oil reserves through contracting with foreign companies with subcontracted service contracts instead of participation contracts.
The minister emphasized at the time that the ministry started these steps in Hadramaut governorate and that negotiations are underway with many companies operating in Egypt and other international companies to work in the blocks whose production has decreased, in Al-Masila and block (4) in the Ayadh region of Shabwa, which is operated by the Yemeni company for oil investments.
The oil reserve in Yemen is estimated at about 11,950 billion barrels, of which 4,788 billion barrels of oil can be extracted by the primary and existing methods. The number of fields in the concession areas operating in Yemen reaches about 105, of which 13 are under exploration work and about 12 are productive, while 81 of them are open sectors for exploration and drilling, most of which are in Yemeni waters. The number of companies working in the field of exploration in Yemen is about nine, while there are nine production companies operating in the producing governorates.
Presidential Leadership Council and the Billion Dollar Deal
Members of parliament and government officials express their shock and surprise at the process of selling oil fields and reserves, especially with regard to this deal, its value, amounts, and the party to whom the deal was awarded, and therefore the distribution of shares.
Member of parliament, Ali Ashal, described what is happening as a resounding scandal and overt corruption, pointing out that the government is wasting "half a billion dollars" and approving the sale of 18 million barrels of crude oil to an Emirati company, worth less than 30%–35% of its global price, under the pretext that the company will protect it.
He added that this deal revealed what was hidden in the story of the attack on the export port and that now the play (its protector is its thief) has begun, asking, “How will the EMO company, which is a commercial company, protect the oil exports? Does it know who targeted the port so that it can reach an understanding with it not to target its shipments?" Will the entity to which the company belongs, which is a party to the coalition, provide protection? Is the company the owner of the oil refinery project that will be established in Hadhramaut? and that the company will not export oil but will refine it only!
He continued, "Anyway, the deal is catastrophic and unprecedented for the country's oil to be sold at the lowest prices as a 'thief's sale. The government is rushing to finalize it despite knowing of the arrangements for a permanent truce that could allow the resumption of oil exports." Additionally, Ashal said that the Presidential Leadership Council is concerned with stopping this corruption unless it is a key party in it.
Economic researcher Rashid Al-Haddad explains to "Khuyut" that for this reason, the government of Aden refuses to neutralize the oil sector and the understanding on managing and dealing with it, pointing out that chaos, randomness, and tampering are sweeping the economic, revenue, and oil sectors due to the lack of a state in those areas.
According to a letter submitted by Prime Minister Maeen Abdulmalik to the Chairman of the Leadership Council, the Ministry of Oil has conducted many negotiations with security and oil companies in order to export oil, in light of the Houthis' continued targeting of the export ports and oil tankers in Yemeni ports, but all of which refrained for security reasons.
According to the document, published by the member of parliament Ali Ashal on his page on the X website, the government reached the best offers with the UAE-based company EMO (16/7/2023), to sell a quantity of 3.5 million barrels of oil, located and available in the tanks of the ports of Al-Dhabba and Al-Nashima, at a discount of 35% from the price of Brent, and the amount of 14.5 million barrels of future production at a discount of 30%, by a direct order and in violation of the government tenders, auctions, and warehouses Law. This confirms the loss of a large percentage of resources that were due to the state.
Government sources indicated that the agreement with the UAE company (EMO) included the company's purchase of 14.5 million barrels of oil from production fields at a discount of 30% of the traded price of Brent, with promises from this company to provide the government with quantities of fuel to generate electricity at the prevailing price, with a value that may reach one billion US dollars.
Gaghman emphasized that the members of parliament reviewed the minutes and recommendations of the Supreme Committee for Crude Oil Marketing, which raised some inquiries and assurances about the UAE's protection and coordination of the sale of oil reserves and oil located in the tanks of the oil ports in Al-Nashima and Al-Dhabba, in cooperation with one of its companies, called EMO.
Further, he continued by saying: We, in turn, searched for a company with this name and found that it is a company that has a website, https://emoinvestment.com/
However, there is no evidence that it has implemented projects in any country, as it was recently established in 2019. Therefore, How is it possible to communicate and agree with a company that does not have any technical experience or financial capacity? in addition to the fact that there was no point in selling, even if it was a well-known company in the oil field.
Violations of Laws and Regulations
The government suffers from a scarcity of revenues resulting from the lack of oil production, as production decreased by an average of 80% compared to what it was at the beginning of the 2000s. Currently, exports have halted since October 2022, after the ports of Al-Nashima in Shabwa and Al-Dhabbah in Hadhramaut were attacked by the Sana’a government forces (Houthis), due to the disagreement over the deposit of oil revenues, the payment of salaries, and economic aspects that are still under discussion and negotiation between Saudi Arabia and the Houthis since the April 2022 truce until today.
“Regarding the sale of oil reserves, the merits of this deal are currently being discussed at the level of members of the Yemeni Parliament, whose value will reach more than one billion dollars if approved.”
Yemen's oil wealth has been suffering from tampering, neglect, and disregard since the oil companies left Yemen due to force majeure in December 2014. During successive periods, the government sold several oil sectors in the period (2019–2023), some of which were supported by the House of Representatives and some of which were objected to, in an indication that there is no strategic plan for the development and management of the oil sector but rather only selling and searching for a buyer who pays more, regardless of the country’s wealth and its optimal exploitation.
The revenues from oil and gas production and export are the most important sovereign resource for Yemen, but they also represent the most important hotbeds of conflict and fighting between the parties to the war in the country. While it is necessary to harmonize the truce scenarios during the coming period with the adoption of criteria for sharing the revenues of oil and gas resources between the Yemeni government and the Houthis on the one hand and between the oil- and gas-producing governorates and the two governments on the other hand.
Besides, the oil and gas revenues in Yemen have decreased significantly compared to the production level in 2014, which reached about 167 thousand barrels per day of oil. However, government estimates indicate that the average oil production reached only 50 to 60 thousand barrels per day during the period between 2020 and 2022, while gas exports have been halted since 2015 until now, amid widespread criticism of the internationally recognized government for not taking the initiative to correct contracts with investment companies and re-export from the LNG project.
Serious Violations
According to the specialist in commercial law, Fouad Al-Samawi, in his interview with “Khuyut”, what is happening represents serious violations in accordance with the applicable Yemeni laws, which set the methods and standards for dealing with government procurement and projects and link them to the Supreme Committee for Tenders and Auctions and the government committees concerned with oil marketing. However, according to Al-Samawi, such deals, as the sale of oil and, before it, the license to invest in the telecommunications sector, which are sovereign sectors, are concluded in secret and are not subject to the procedures followed in the Yemeni laws in force in an open and transparent manner. Knowing that the most important body responsible for deciding on the work and projects of tenders, auctions, and procurement—the Supreme Committee for Tenders—is still suspended until now by the internationally recognized government in Aden.
According to the World Bank, the oil sector faced a significant contraction during 2023 due to the blockade imposed by the Houthis on oil exports, which led to a reduction in the average daily production of oil from 61,600 barrels in 2021 to 51,400 barrels in 2022.
Who will Stop Tampering With the Country's Wealth?
The House of Representatives is still trying to avoid the disasters caused by the Yemeni government, the latest of which was the loud battle between the Prime Minister and Parliament over passing the deal to sell the government telecommunications portal “Aden Net” to the Emirati NX company, which the Parliament argues its illegality, through its reports, the most recent of which was the report of the Parliamentary Fact-Finding Committee dated August 24, 2023, in which it recommended that the government should cancel all procedures regarding the contract between the Ministry of Communications and the Emirati NX company and to consider what has been done non-binding on the state in all legal, financial, and administrative aspects. However, Maeen Abdulmalik still insists on passing this deal, disregarding the recommendations of the House of Representatives.
In the same regard, in relation to the sale of oil reserves, the merits of this deal are currently being discussed at the level of members of the Yemeni Parliament, whose value will reach more than one billion dollars if approved. Official sources in the House of Representatives (whose names we reserve to mention) indicated that a deal was signed by the Minister of Oil in August 2023 to sell an initial quantity of 14.5 million barrels to the same investor to whom the refinery project in Hadhramaut was recently approved, (the Emirati Malaih Company, or EMO company). There were also reports that an amount equivalent to the value of three million barrels of crude oil was deposited in the accounts of the Central Bank of Dubai Islamic Bank on October 21.
These procedures were not carried out according to the customary standards in the marketing of crude oil, and did not take place through the principles of tenders and auctions followed in the resolution to form the Crude Oil Marketing Committee,
The government source also believes that, for the first time in the history of marketing and selling crude oil, the crude oil that has not yet been produced is being sold while it is still in the underground for a period that may exceed five years. According to the source, the buyer will supply quantities of diesel and gasoline from abroad instead of paying the Central Bank. This monetary and accounting cycle will take place outside the official frameworks, which is considered great financial and administrative corruption and an indicator of the extent of government corruption that has reached the point of plundering and selling the country’s natural and extractive resources.
On the other hand, the Deputy Speaker of the Parliamentary House of Representatives, Mohsen Ali Ba Surra, in an official memorandum, called on the head of the internationally recognized government to provide clarifications about what was stated in the attached memorandum and about the rationale for approving the sale of crude oil that is still underground, in an unprecedented manner in the history of countries.
Conclusion
It is worth noting that a number of members of the House of Representatives hold the Presidential Leadership Council fully responsible and ask it to stop this corruption, unless it will be a party to it, as they said.
Here, the oil expert and investigative researcher Abdulghani Gaghman concludes that what is currently happening is the sale of oil that is available in the tanks and the sale of future production oil (18 million barrels) as quickly as possible for a value of one billion dollars, in addition to the sale of oil reserves in the underground (500 million barrels) due to the inability and failure of the government, the Ministry of Oil, PetroMasila, and Safer, worth $35 billion.
All of these practices constitute a waste of Yemen’s wealth through suspicious deals managed in dark rooms without reference to any governmental, legal, or legislative references, and they are simply corruption deals worth billions.
Former and current officials are not satisfied with what they have done, but they continue to destroy and waste Yemen's oil and gas wealth; neither are they the ones who built a strong national economy, nor are they the ones who have achieved any actual human development; and they have not worked to build or support any other economic sector. Therefore, despite the fact that the country is in a state of chaos and a major economic collapse, some officials are still plundering from the sick body, in light of the deficit and disagreement in the Presidential Leadership Council and the failure and loss of resourcefulness of the dispersed House of Representatives.
Appendix
Project: Purchase of 14 million barrels of crude oil
Location: Hadramaut and Shabwa
Project: Construction, transformation, operation and acquisition of crude oil refinery and extraction of oil derivatives
Location: Al-Dhabbah area in Hadramout governorate
The agreement was concluded with the Emirati company by the Minister of Oil affiliated with the Southern Transitional Council, Saeed Al-Shammasi, months after he was appointed to his position during the cabinet change in July 2022, following the formation of the Leadership Council.
The refinery will operate with a total daily capacity of (25,000) barrels in the first phase, in addition to sufficient storage tanks and an industrial area to connect ships to a marine SPM line for associated production and service activities, as well as a free industrial zone in the same project area.
Project: Construction and operation of a domestic gas production unit in Block (10)
Location: Al-Masila Basin, Hadramaut governorate
The project was signed in Abu Dhabi, in the presence of the governor of Hadhramaut, Mabkhout bin Madhi, by the Minister of Legal Affairs Ahmed Arman, on February 22, 2022, as part of three strategic projects in the field of oil, electricity, and gas, signed by the Minister of Electricity and Energy, Manea bin Yameen, and the Minister of Oil, Saeed Al-Shammasi; all of which are implemented by "specialized companies in the UAE," according to the official Saba news agency.
Further, government sources revealed that the Minister of Electricity granted the same company (Pasco Energy) a contract to supply petroleum derivatives to the power plants in Aden at a price higher than the market price, which cost the state treasury an amount of 150 million dollars during the year 2022, which went as profits in favor of the Emirati company. This was confirmed by the report of the parliamentary fact-finding committee.
