The Cabinet approved Tuesday a draft decision to establish the Masila Company for Petroleum Exploration and Production (PetroMasila) at block 14 in Masila area, Hadramout province.
In its weekly meeting chaired by Premier Ali Mujawar, the cabinet assigned Oil and Minerals Minister to issue all the executive decisions to execute the draft decision presented by the Supreme Economic Council and the issuance of the company's statute, financial and accounting systems in coordination with Finance and Legal Affairs Ministers.
Under the decision, PetroMasila company is a subsidiary of the National Petroleum Company (under formation) and runs and operates the block 14 according to the global petroleum industry standards after taking over the Masila oilfield replacing the Canadian Nexen company, whose production sharing contract expires on December 17th, 2011.
The state-run company acquires all the rights and privileges enjoyed by the former operator Nexen as well as all duties and obligations according to the valid contracts at the delivery field date of the oilfield.
It also stipulates that the PetroMasila company, as received the block, to conduct further exploration and development operations by itself or via contracting with local and foreign specialists.
The Supreme Economic Council discussed a report of the Oil and Minerals Ministry on the future of the block 14 in Masila area and the available alternatives to run and operate the block.
Moreover, the council discussed a report on the local market and electricity sector's needs of oil derivatives. It affirmed the importance of providing all needed derivatives to meet the requirements and enhanced the necessary measures to crack down the black market that impacts the stability of local market.
The revenue of the oilfield entire production will transfer to the government, in addition to the block's assets and property which would by considered - after assessment - as a capital of the company.
The cabinet formed a committee to coordinate the procedures for taking over and operating the block 14 and to identify the following tasks and procedures.
On the other hand, the cabinet confirmed the Supreme Economic Council's decision on providing all oil derivatives to meet the local market and electricity sector's needs and enhancing the necessary measures to crack down the black market that impacts the stability of local market.
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