US embassy cable - 03SANAA2204

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 002204 
 
SIPDIS 
 
E.O. 12958: DECL: 09/03/2013 
TAGS: EPET, PTER, EINV, PREL, ECON, YM, ECON/COM, ENERGY 
SUBJECT: CANADIAN NEXEN IN THE HADRAMAUT: THE TERMINAL AND 
CPF 
 
Classified By: Charge Alan Misenheimer for reasons 1.5(b,d). 
 
1. (c) Begin summary:  During an August 7-11 visit to the 
governorate of Hadramaut, Embassy officials toured oil 
company Canadian Nexen's Central Pumping Facility (CPF) and 
Export Terminal.  Nexen said it has good relations with its 
neighbors and there have been no threats to the pipeline, but 
noted that both facilities are focused on the safety and 
security of operations and personnel.  Since the October 2002 
attack on the French tanker "Limburg" and the 2003 Riyadh 
bombings, Nexen has increased its security posture by 
purchasing new vessels for maritime patrols, fencing in its 
airstrips, and installing additional barriers.  End summary. 
 
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CPF:  Security and Coordination 
------------------------------- 
 
2. (c) Embassy officials met with Central Pumping Facility 
(CPF) Production Manager Ralph Johnson, Environmental Health 
and Safety Director Alan Philips, and Administrative Manager 
Mohammed Bin Naibhan.  The CPF is a self-sufficient compound 
with generators, a sewage treatment plant, an airfield, and a 
helicopter pad.  The CPF is protected by both military and 
contract guards, and the 120 kilometer pipeline to the 
Terminal has six isolation points -- 4 controlled by the CPF 
and 2 by the Terminal -- that can be monitored by both. 
 
3. (c) CPF personnel security includes monthly updates of 
employee lists and a database of electronic copies of 
employees' passports, which are shared with U.S. Embassy 
Sana'a.  Nexen officials said that all personnel are now 
flown to/from Sanaa and between the CPF and the Terminal at 
greater altitudes to decrease any land-based threat. 
 
4. (c) According to Johnson, oil companies Total, DNO, and 
Dove have tied their lines into the CPF, which is expected to 
produce between $275-300 million in revenue over the next 2 
years.  Nexen, "as the largest and most established company 
in the region, has also assumed a mentoring role" for their 
overall operations, including security.  There is "constant 
radio communication" between the four and each has 
participated in UNDP-sponsored security meetings in Sana,a. 
In early August, Nexen also held a workshop with local Yemeni 
officials to discuss contingency plans and clarify 
appropriate points of contact. 
 
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Terminal:  Maritime and Compound Security 
----------------------------------------- 
 
5. (c) At the Terminal, Embassy officials were escorted by 
Terminal Manager Nigel Precious and Crude Oil Exports 
Superintendent Barry Herbert.  Completely self-sufficient, 
the Terminal operates 24 hours a day, 7 days a week to 
prepare and batch oil from the CPF to meet quality and 
quantity standards for export.  Two expansion groups are 
currently onsite:  one studying the feasibility of adding a 
second SBM (Single Buoy Mooring); the other conducting 
maintenance on storage tanks.  Nexen is also providing ROYG 
guidance and coastal surveys for a proposed ROYG refinery a 
few miles east of the Terminal.  (Comment:  If the project 
goes forward, the ROYG will likely use Nexen,s SBM for 
export.  End comment.) 
 
6. (c) According to Precious, Chevron, Texaco and other 
routine consumers share information and observations on Nexen 
and ROYG's security posture, "which have a direct impact on 
the entire industry."  In response to the 2003 bombings in 
Riyadh, Nexen increased the Terminal's physical security by 
installing additional barriers and fencing in the airfield. 
Nexen officials said the ROYG military presence around the 
facility has also  improved.  Forsight and "luck" saved Nexen 
considerable financial loss when the Limburg was attacked in 
October 2002 on its way to pick-up over one million barrels 
of oil.  Nexen had just completed a 1 million barrel storage 
tank and was able to hold the excess until alternative 
transportation was found. 
 
7. (c) As part of ongoing efforts to strengthen maritime 
security, Nexen also recently purchased four Delta 10m ribs 
with twin 315-horse power engines.  These vessels are more 
sophisticated than those Nexen,s maritime security force (9 
ROYG officers) had been using, and, while Delta trainers 
accompanied the boats upon delivery, the ROYG-contracted 
Pakistani trainers who took over upon their departure were "a 
disaster."  Nexen has now entered a month-to-month training 
contract with the British-based Hart Group. 
 
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Community Relations 
------------------- 
 
8. (c) Both the Terminal and CPF have extensive community 
relations programs.  In 1998 Nexen made a strategic decision 
to provide support to the local population via the local 
government.  The local councils submit proposals directly to 
Nexen, and the company decides which to fund.  Nexen,s 
medical clinics also offer free health care and medicine to 
the local population and the military, including medevacs. 
CPF offiials estimate that 2,000 people a month pass through 
the clinic -- of whom 1,200 are local villagers. 
 
9. (c) A planned bypass in Wadi Arab to take the pipeline out 
of the way of mudslides may impact community relations.  The 
villages along this portion of the pipeline help Nexen dig 
out when floods bury the line, and moving the line will mean 
a local loss of revenue.  Nexen has maintained open lines of 
communication with the villagers throughout the deliberation 
phase to prepare them for change. 
 
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Nexen Operations At A Glance 
----------------------------- 
 
10. (c) CPF Location:  Masila, 2 hours southeast of Seiyun; 
 
Employees:  2000 , 270 expats including 9 Americans; 
 
Pumpng Capacity:  1700 million barrels since first oil in 
1993; 
--  280,000 barrels of oil per day; 
--  7,500 barrels of diesel per day. 
 
11. (c) Terminal Location:  As-Shahir, 2 hours east of Riyan 
International Airport, 2.5 hours east of Mukalla 
 
Employees:  100-120 people onsite; 
 
Storage Capacity:  3 - 3.5 million barrel storage capacity, 
including a 1 million barrel storage tank; 
 
Export Capacity:  7 billion barrels since 1993; 
--  Single 36" export line; 
--  8.5 - 9 million barrels of oil per month; 
--  8 - 9 ships per month including small lifts (500,000 
barrels) and large lifts (1.9 million barrels); 
--  60,000 barrels per hour loading rate. 
 
MISENHEIMER