A blast in March on Yemen’s major oil pipeline, suspected to have been launched by tribesmen, has stopped the flow of light Marib crude, forcing its 130,000 barrels-per-day Aden refinery to shut and triggering a nation-wide fuel shortage.
“By importing crude oil, we would keep the Aden refinery going,” a senior official said.
“The economics of it makes sense. It’s being discussed within the government,” he said.
The Yemeni government was in talks with Saudi Aramco to import around two million barrels of crude, Gulf-based traders said, adding the deal was not finalized.
“The only choice for Yemen is to buy crude because at this point Saudi is not ready to export products because they need products themselves,” another trader said.
Saudi Arabia has been a regular importer of gasoline to meet its buoyant demand but it has increased its purchases since late April, when a maintenance shutdown in its PetroRabigh refinery has reduced supplies.
Yemen produced a total of around 260,000 barrels per day of crude oil in 2010.
Around 110,000 barrels of that is light crude, which is in short supply globally after the loss of Libyan output in February.
The output of light crude from the Ras Isa terminal was still shut, shipping sources said.
In a bid to overcome the fuel shortage, Yemen has had to increase its imports of oil products.
It imported 15,000 tons of diesel from Saudi Arabia last week, followed by a further seven cargoes of diesel and gasoline from unspecified suppliers, shipping sources said.
“They’ve been receiving supplies of gasoline, diesel into Hudaida and Aden. At least seven vessels have come to Hudaida since the middle of last week,” the source said.
The cargo sizes were around 15,000 to 20,000 tons as the coastal terminal of Hudaida handles smaller tankers.
Yemen normally imports around 30,000 tons of oil products per month, but Aden refinery opened a spot tender last week to buy 105,000 tons of jet fuel, gasoline and gas oil.
Two traders said the tender was not awarded as traders were reluctant to supply due to Yemen’s credit issues.
“I heard there are at least 4-5 ships offshore, which can’t discharge because of credit problems,” one Gulf based gasoline trader said.
The credit problems are unlikely to go away, another Gulf-based trader said, with nearly half of impoverished Yemen’s oil output remaining shut and depriving it of vital oil incomes.
Austria’s OMV is among companies which stopped producing out of Yemen following the pipeline blast.
The company was exporting its light crude out of Ras Isa.
Separately, Canadian oil producer Nexen halted its oil output in Yemen on Sunday night due to a labor disruption.
