Cnooc Unit Suspends Oil Production in Yemen Citing Security Threat

CALGARY—The Canadian unit of China National Offshore Oil Corp., or Cnooc, said Sunday it has halted oil production in Yemen due to an unspecified “security threat” to its personnel in the Arabian country.

The shutdown affects the Yemeni assets of Cnooc’s Canadian subsidiary Nexen ULC, which operates a crude oil field and processing facility in the country. It comes after the pro-U.S. government of Yemen collapsed in September amid a civil war.

“We’ve determined there is a security threat and undue risk” in Yemen, said a spokesperson for the Calgary-based Cnooc subsidiary.

“The shutdown was progressed in a timely manner, production has ceased and our personnel have safely departed,” she said.

The Yemeni oil ministry wasn't immediately available for comment.

Nexen’s production is centered at the Bashir al Khair-A field on lease Block 51 in Yemen, a little over 62 miles inland from the Gulf of Aden coast. The company began production there in 2004 and has a 87.5% stake in the field, with the remainder owned by the Yemeni government.

Nexen said the move was temporary and that it plans to restart operations once it can be sure that its personnel will be safe.

China’s state-owned Cnooc, which bought Nexen in late 2012, doesn't report production data for Yemen. In 2011, when it was publicly listed, Nexen said it produced between 6,000 to 8,000 barrels of oil a day in Block 51, about half of which were transferred to the Yemeni government in the form of royalties.

Nexen’s 18-year lease to Yemen’s largest oil project, called Masila or Block 14, expired in 2011 and the operation was taken over by Yemen’s government.