Yemen


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Yemen's economy is highly dependent on petroleum. In 2010, oil and gas made up 63 percent of government revenues. However, oil production has declined steadily; in 2011 Yemen produced 228,000 barrels a day, a 24 percent drop from 2010. Seeking to diversify the economy, the government has worked to attract foreign investment in the natural gas sector. Yemen began exporting liquefied natural gas in 2009, partially offsetting the decline in oil revenues.


Yemen's Performance on the Resource Governance Index

Yemen received a "weak" score of 43, ranking 37th out of 58 countries. A relatively high Institutional & Legal Setting score contrasted with "failing" performance on the Enabling Environment component.

Rank
(out of 58)
Score
(out of 100)
37 Composite Score 43
34 Institutional & Legal Setting 57
Freedom of information law 0
Comprehensive sector legislation 67
EITI participation 100
Independent licensing process 100
Environmental and social impact assessments required 50
Clarity in revenue collection 100
Comprehensive public sector balance 100
SOC financial reports required 0
Fund rules defined in law N/A
Subnational transfer rules defined in law 0
31 Reporting Practices 46
Licensing process 83
Contracts 0
Environmental and social impact assessments 17
Exploration data 33
Production volumes 83
Production value 67
Primary sources of revenue 50
Secondary sources of revenue 25
Subsidies 100
Operating company names 100
Comprehensive SOC reports 83
SOC production data 24
SOC revenue data 21
SOC quasi fiscal activities 100
SOC board of directors 0
Fund rules N/A
Comprehensive fund reports N/A
Subnational transfer rules 0
Comprehensive subnational transfer reports 33
Subnational reporting of transfers 0
32 Safeguards & Quality Controls 52
Checks on licensing process 78
Checks on budgetary process 33
Quality of government reports 57
Government disclosure of conflicts of interest 100
Quality of SOC reports 50
SOC reports audited 67
SOC use of international accounting standards 100
SOC disclosure of conflicts of interest 0
Quality of fund reports N/A
Fund reports audited N/A
Government follows fund rules N/A
Checks on fund spending N/A
Fund disclosure of conflicts of interest N/A
Quality of subnational transfer reports 33
Government follows subnational transfer rules 0
47 Enabling Environment 16
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 11
Open Budget (IBP Index) 26
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 13
Government effectiveness (WGI) 14
Rule of law (WGI) 14
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 34th/58, Score: 57/100) learn more

Yemen's "partial" score of 57 reflects clear systems for collecting payments from petroleum companies but an incomplete legal framework.

The Oil and Minerals Ministry regulates the sector, while the Petroleum Exploration and Production Authority grants rights and licenses. Licensing follows open and competitive bidding rounds, and companies ultimately sign production sharing contracts. All revenues from extractive companies are collected by the Finance Ministry and placed in the treasury.

Laws relating to the petroleum industry are publicly available, but include only general principles; implementation regulations, fiscal terms, and methods of assessing revenue are not defined. Environmental impact assessments are required but not published. The legislature passed a freedom of information law in 2012 but Yemen was suspended from the Extractive Industries Transparency Initiative in February 2013.

Reporting Practices (Rank: 31st/58, Score: 46/100) learn more

Yemen received a "weak" score of 46, the product of a lack of contract transparency and incomplete government reporting.

Licensing criteria are provided before bidding begins, and the Oil and Minerals Ministry publishes information about winning bids on its website. However, contract terms and other important license information are not disclosed.

The Finance Ministry publishes petroleum prices, the value of resource exports, costs of social investments, government share in production sharing contracts, special taxes, and bonuses. The Oil and Minerals Ministry regularly discloses similar information. The Petroleum Exploration and Production Authority publishes data on reserves, production by block, and the names of companies operating in the country, but not petroleum revenues. The central bank publishes production volumes, prices, oil and gas export values, the cost of subsidies, production stream values, and government share in production sharing contracts. The Parliamentary Committee for Development, Oil and Natural Resources publishes reports containing similar information, along with estimates of investment in exploration, block-by-block production data and costs, royalties, special taxes, and bonuses.

Safeguards & Quality Controls (Rank: 32nd/58, Score: 52/100) learn more

With relatively effective government monitoring but insufficient audit capabilities, Yemen received a "partial" score of 52.

Without legally-mandated fiscal terms, licensing officials have discretion when negotiating with petroleum companies. The legislature has significant oversight responsibilities; a parliamentary committee must approve petroleum contracts and may amend or terminate agreements. Final licensing decisions may be appealed through an arbitration process.

The Finance Ministry and the state auditor must review petroleum revenues, but often lack the capacity to do so effectively. Audit reports are to be presented to lawmakers and the president, but it is unclear whether this happens in practice. The reports are not publicly available.

Enabling Environment (Rank: 47th/58, Score: 16/100) learn more

Yemen performed poorly on global rankings of corruption control and democratic accountability, resulting in a "failing" score of 16.


State-Owned Companies (Rank: 25th/45, Score: 45/100) learn more

The Yemen Oil and Gas Company and its six affiliates are entirely state-owned. The company enters into joint ventures with foreign companies and provides subsidized fuel to the domestic market. Its only published report is from 2008 and contains information on reserves, production volumes, prices, the value of resource exports, the names of companies operating in Yemen, production data by block, subsidies, government share in production sharing contracts, and royalties; it does not provide financial balances. State-owned companies must be audited, but it is unclear whether these audits meet international standards.

Subnational Transfers (Rank: 29th/30, Score: 11/100) learn more

The central government transfers a portion of petroleum receipts to local authorities, but only after merging resource revenues with other fiscal income. Very little information is available on these payments, which do not appear to be linked to regional petroleum production.

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