DUBAI - Insurgents attacks in Yemen could threaten its small but vital energy operations, as well as having potential knock-on effects for the wider oil producing region if insurgents take advantage of the country's instability. Yemen has come under pressure to act against al-Qaeda since attacks on its two main allies, Saudi Arabia and the United States, by militants coming from Yemeni soil. Al-Qaeda in the Arabian Peninsula (AQAP) has strongholds in Yemen's eastern province of Hadramaut and the towns of Marib and Shabwa, where the oil and gas fields of major international companies are located. The biggest potential threat would be if insurgents took advantage of Yemen's instability and porous borders to spread operations to Saudi Arabia and beyond. "AQAP has shown it would certainly attack Saudi Arabia and has threatened attacks on government targets, Western targets and oil supplies as well," Gregory Johnsen, a Yemen scholar at Princeton University, said. "It would be no surprise if it is looking to retaliate for recent (Yemeni) attacks against it and the question is not if it will do so, but rather when, and what its target would be. "Yemen is an oil producing minnow in a region of export giants such as neighbour and top exporter Saudi Arabia, so interruption of its 300,000 barrels per day (bpd) of oil output would have little impact on international energy markets. But Yemen relies on oil revenues for 70-75 per cent of public revenue and more than 90 per cent of export earnings. Any interruption to that income would put pressure on the budget of an already desperately poor country that said it needed billions of dollars of economic aid. New gas export income is seen as a potentially important stream of revenue for a country struggling with falling crude exports. A new $5 billion LNG project, Yemen LNG, in Marib is expected to give Yemen revenues of $30 billion to $50 billion over 20 years from 2008. Production is heavily reliant on private foreign companies, with more than 20 foreign firms operating concessions. French energy giant Total is perhaps the most exposed foreign operator. It has a 39.6 per cent stake in Yemen LNG and US firm Hunt Oil holds a 17.2 per cent. "The situation is getting extremely tight where oil and gas installations are and for companies like Total," said Sara Hassan, security analyst at IHS Global Insight.
