US embassy cable - 05SANAA3256

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 003256 
 
SIPDIS 
 
E.O. 12958: DECL: 11/15/2015 
TAGS: PGOV, PREL, ECON, EINV, EPET, YM, ENERGY, ECON/COM 
SUBJECT: ROYG CLOSES DOWN HUNT OFFICES, AMERICANS TO LEAVE 
YEMEN 
 
REF: SANAA 3185 
 
Classified By: Ambassador Thomas C. Krajeski for reasons 1.4 (b) and (d 
). 
 
1. (C) Summery:  Early in the morning on November 15, 
representatives of the Ministry of Oil took over the Sanaa 
offices of Hunt Oil accompanied with security forces.  Hunt 
responded by relocating employees from its Block 18 facility 
in Mareb to Sanaa, and is in the process of removing most of 
its staff from Yemen altogether.  Officially, the ROYG 
approved their departure, but the Ministry of Oil and the 
passport office erected bureaucratic roadblocks while ROYG 
lawyers attempted to persuade employees to accept contracts 
with the government-controlled Safer company.  The Safer 
takeover is a complete reversal of statements made by 
President Saleh to Ray Hunt in Washington, in which he 
assured the Hunt CEO that the company would be allowed to 
extend its contract.  End Summery. 
 
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Hunt Removed from Offices 
------------------------- 
 
2. (C) Shortly after midnight on November 15, representatives 
of the Ministry of Oil arrived at Hunt Oil's main Sanaa 
office, accompanied by security personnel, and took control 
of the Hadda facility.  November 15 marked the termination of 
Hunt's 20-production sharing agreement (PSA) with the ROYG 
for Block 18.  Hunt employees were told to leave the 
facility, after which company vehicles were confiscated and 
phone lines disconnected.  In response to these events, Hunt 
executives in the United States decided to withdraw nearly 
all company employees from Yemen.  The official Yemeni press 
reported that the handover process "went quite smoothly 
without any problems," and dismissed the possibility of legal 
action by Yemen Hunt. 
 
----------------------------------- 
Americans Prepare to Leave Yemen... 
----------------------------------- 
 
3. (C) Employees were told that they must obtain exit visas 
from the ROYG passport office in order to leave the country 
and the Ministry of Foreign Affairs assured Ambassador that 
such permission would be granted for anyone who wanted to 
leave.  Conoffs are working with Hunt officials and the ROYG 
passport office to issue exit visas to 19 Americans.  As of 
November 16, three Americans had received approval to leave 
the country, while the other 16 are expected to be granted 
permission at the airport.  The ROYG has made the departure 
of one American contingent on the release of his computer 
password to the Safer company.  Eight of the Americans are 
field workers from Block 18 in Mareb, two are spouses, and 
the remainder are Hunt management representatives from the 
Sanaa office.  There were a total of approximately 60 
expatriate Hunt employees who chose to leave Block 18 on 
November 15.  Yemeni employees, as well as an unspecified 
number of expatriates, decided to remain in Mareb working for 
the Safer company.  As far as the Embassy can determine, the 
Americans faced no direct security threats at any point 
during their departure and all Americans who wished to leave 
the Mareb facility have done so.  They are currently staying 
at a safe, major international hotel in Sanaa with the 
intention of departing Yemen on November 17.  A small number 
of Hunt executives with residence visas will remain in Yemen 
for a longer period. 
 
----------------------- 
...ROYG Has Other Ideas 
----------------------- 
 
4. (C) On November 15, Hunt employees attended a late 
afternoon meeting with company executives, Deputy Minister of 
Oil Abdulmalak Alama, and representatives of Clyde and Co., 
the ROYG's legal counsel.  Clyde lawyers attempted to sign 
new contracts to retain the 60 Hunt field employees with the 
Safer Oil and Gas Company.  The lead lawyer made several 
comments that the Safer employment contracts would match 
previous Hunt contracts "provision for provision."  He 
stressed that Safer wants as many of the Hunt employees to 
stay with Safer as possible.  Bill Lewis, Hunt's lead 
negotiator, said employees wishing to stay on with Safer 
would face "no prejudice" should they later want to return to 
Hunt.  Safer's lawyers said they would be available all night 
to discuss contract options.  After the meeting, all 
Americans told Conoff that they want to leave Yemen as soon 
as possible. 
---------------------- 
Empty Promises to Hunt 
---------------------- 
 
5. (C) The takeover of Hunt's office came as a surprise, as 
the ROYG and Hunt appeared to have reached a compromise 
during President Saleh's recent visit to Washington.  On 
November 10, Saleh met with Ray Hunt, CEO of Hunt Oil, and 
offered his assurances that the ROYG would honor its 
contractual obligations to Hunt Oil.  Hunt proposed amending 
the PSA to include Safer as a partner.  In earlier 
statements, the ROYG announced that Safer would begin 
operating Block 18 once Hunt's existing PSA expired on 
November 15. (Reftel)  In the Hunt proposal, formal title 
would likely go to Safer, but Yemen Hunt would maintain 
responsibilities for day-to-day operations in Block 18 for 
the next five years, at which time Safer would become the 
sole operator.  On November 14, representatives of Safer 
visited employees at Block 18 and assured them that nothing 
would change with the termination of Hunt's PSA. 
 
6. (C) Comment:  President Saleh returned to Yemen from 
France on November 16 and it remains unclear what action, if 
any, he will take.  Safer's takeover of Hunt facilities 
contradicts Saleh's officials statements in Washington, and 
there is no indication as to who made the decision or whether 
they had Saleh's blessing.  At the same time, recent events 
demonstrate the thin line between the ROYG and Safer.  The 
Minister of Oil is acting CEO, his deputy serves as General 
Manager, and ROYG lawyers are acting on the company's behalf. 
 It is therefore unlikely that the takeover occurred without 
high-level support.  Nevertheless, the ROYG's strategy in 
taking over Block 18 appears chaotic, as are its attempts to 
retain Hunt employees.  Events remain fluid and more changes 
are likely in the days to come.  End Comment. 
Krajeski