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Thu 1 Feb 2007 09:15 PM

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New production starts at Yemen’s Block S2, Al Uqlah

Europe’s OMV is adding to Yemen’s daily oil output and is looking to develop it further

European oil and gas firm, OMV has started oil production at Block S2 (Al Uqlah) in Yemen. Daily production rate of the first well, Kharwah-1, will be approximately 1,000 barrels.

Further development of the field will be carried out in two phases. In the first phase, production is expected to reach 11,000 barrels per day (bpd) by 2008. This will increase to 32,000 bpd during the second phase, which will come online in either 2009 or 2010.

Proven reserves at Block S2 amount to approximately 50 million bpd and the field is said to have a lifetime of at least 20 years. The development area for oil discoveries in Block S2 covers a 1,000 square kilometre area in central Yemen, with investments for the first phase totalling US $85 million.

Current estimates for the development of the entire field, including phases one and two, are US $250-300 million.

Block S2 is situated close to Block 2 (Al Mabar), for which OMV signed a production sharing agreement (PSA). The PSA for Block 2 was ratified by the Parliament of Yemen in May last year and was signed the following month by President Ali Abdulla Saleh.

"Yemen is part of one of OMV's international exploration and production (E&P) core areas," said Gladson Ronad of OMV.

"Yemen's importance in our portfolio is growing especially with Block S2 on stream, and the expected increase in production there. We want to expand our activities in that country. In line with OMV's 2010 growth strategy to increase (E&P) from 320,000 bpd to 500,000 bpd, Yemen of course will contribute to that overall increase."

Furthermore, OMV was awarded a new exploration licence on December 9 last year, which will boost OMV's Yemen portfolio. OMV was awarded Block 29 in the Jeza-Qamar Basin in a joint venture with Pakistan Petroleum. Both partners have a 50% stake in the project. The block is located in the eastern part of Yemen and covers an area of 9,237 square kilometres. Negotiations for the PSA will commence shortly.

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