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Wednesday, December 16, 2009     INTELLIGENCE BRIEFING

Out of gas: Yemen crude oil output plummets

WASHINGTON — Yemen, beset by a struggling economy and fighting in both its North and South, was expected to run out of crude oil in another decade, a report said.   

The Carnegie Endowment for International Peace said Yemen was rapidly losing its crude oil reserves.

In a report, Carnegie said Yemeni oil exports, a key source of foreign currency, declined from 450,000 barrels per day in 2003 to 280,000 in early 2009, Middle East Newsline reported.

"Barring any major new discoveries, energy experts generously estimate that Yemen's oil exports will cease in 10 years," the report, titled "Yemen: Avoiding a Downward Spiral," said.

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The report, authored by Christopher Boucek, warned that Yemen's limited capacity was exacerbating the crude oil decline. Yemen's government has also failed to draft a long-term strategic plan for the energy sector.

"There are currently three separate agreements: one for oil, one for gas, and another for a combination of both," the report said.

"As a result, there is no incentive for oil companies to develop resources not covered under a production sharing agreement. Any gas found during oil exploration, for example, is not developed because it was not what the operating company was licensed to extract."

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