Oil is Yemen’s most important source of income, but the country is a small producer compared to neighboring states and the war has hit hard on production. Larger oil deposits were found in the 1980s, but the extraction did not start in earnest until after the association of North and South Yemen in 1990. The oil industry is dominated by smaller foreign companies. The most important oil fields are in the eastern parts of former South Yemen.
With limited refinery capacity, Yemen has been forced to export crude oil and buy back fuel. The gasoline has since been sold domestically at sharply subsidized prices, thus costing the state even more money.
COUNTRYAAH: Major exports by Yemen with a full list of the top products exported by the country. Includes trade value in U.S. dollars and the percentage for each product category.
Sabotage against oil pipelines has been occurring from the beginning, often carried out by local clans who wanted to put pressure on the government. This and the risk of kidnappings and assaults and a corrupt judicial system have deterred foreign companies, especially the largest ones, from investing in Yemen.
The problems have increased as the government loses control of the country. The unrest that erupted in 2011 led to a sharp fall in production. In 2012, oil exports stood still for a long time due to attacks on pipelines and oil installations. The escalated war situation from 2015 caused both oil and gas recovery – gas exports began in 2009 – to almost collapse. The energy companies stopped their operations for safety reasons. In 2016, oil production was about one-eighth of what it was in 2014 and gas production had declined even more, according to the international trade organization IEA. In 2018, the recovery resumed on a field in Shabwa southern Yemen, operated by Austrian and Chinese stakeholders. The first cargo went to China.
The refineries have not avoided the war either. In early 2019, a major explosion with subsequent fire damaged the refinery capacity in the city of Aden.
Abbreviationfinder: A popular acronym site in the world covering abbreviation for each country. For example, YE stands for Yemen. Visit itypeusa for more information about Yemen.
Even if the war ends, assets on oil are limited. If no new finds are made, they will only last a few years with full production.
Salt, gypsum and limestone are extracted from the country’s other natural resources. Investments have been made on gold and zinc mines. There are also deposits of silver, lead, nickel, copper and uranium that have not been exploited.
According to World Bank statistics, six out of ten households in Yemen lacked electricity in 2010, although many had their own generators. Electricity was produced in thermal power plants, but less than half of households had access to the national electricity grid, which was also often hit by interruptions. In 2012 and 2013, a series of agreements were concluded with Turkey and China to build coal and gas-powered electric power plants. But the infrastructure has been severely taxed by both war and terrorism, and today’s electricity shortage is a much worse problem than before. The UN and the World Bank are working on a project aimed at equipping primarily hospitals, schools and water utilities with solar energy.
Water scarcity is one of the country’s biggest problems. Yemen has no “real” rivers – the waterways are filled only when it rains. The situation therefore becomes serious as the groundwater level falls, due to increasing outlets and unregulated well drilling. This is both because of the increase in population and because of corrupt authorities not addressing the problem. The great need for irrigation in agriculture, where much of the water goes into producing the narcotic plant qat (see Agriculture and fishing), contributes greatly to the problems. The worst is the situation around the fast-growing capital, where acute water shortages threaten in the not too distant future. This has also led to cholera and other epidemic diseases spreading in areas where it is difficult to obtain clean drinking water, and to a growing number of local conflicts between villages and clans fighting for the right to water resources and irrigation canals in their immediate area.
