YEPC has produced oil from Block 18 in Yemen for approximately 20 years pursuant to a Production Sharing Agreement (PSA) passed into law in Yemen in 1982. A five-year extension to the original PSA was signed by the Government of Yemen and YEPC on Jan. 4, 2004 and the 5-year term began on Nov. 15, 2005.
Since November 15, 2005, the Government of Yemen has taken numerous actions to prevent YEPC from exercising its duties as operator of Block 18 in breach of the various legally executed and binding agreements signed in 2004. This is without precedent in Yemen. Further, Yemen has attempted to replace YEPC in the Marib Block with a government-owned company, Safer Exploration and Production Operations Company ("SEPOC").
Hunt Oil Company CEO Ray L. Hunt said, "Since the signing of the extension in January 2004, YEPC has spent millions of additional dollars in Yemen at the request of the Government of Yemen. Unfortunately, YEPC is now forced to respond to the Yemen Government's failure to honor the sanctity of our legal contract by filing this arbitration."
Mr. Hunt continued, "In our 70 year history, with operations on every continent except Antarctica, we have never had to file arbitration to defend our rights. We are proud of our history in Yemen, having discovered the country's first oil in 1984 and having employed and trained over 2,000 Yemeni nationals while producing over one billion barrels of oil. We are disappointed that YEPC has been forced to file arbitration, but the Government of Yemen's expropriation of Block 18 leaves us no choice."
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