Aden port & oil markets, Yemen December 12, 2018 - Iman Hanna
Aden – 30 December 2018: The Huthi war cast a shadow over life in Yemen, and the economic sphere, largely dependent on the port of Aden, has been affected.
The port is one of the most famous landmarks and economic pillars in Yemen. It is the largest natural port in the world. It is surrounded by the Shamsan mountain range and Jabal al-Muzlqam, which is the natural harbor of the port, adding to it a competitive advantage as a wall against seasonal winds and waves so that it works at any time of year without stopping. On the quay, we saw the work being done in full swing, unloading containers from a 200-meter Singaporean vessel, and another German vessel “Elabella”, one of the most active lines before the war, port officials told us.
The port of Aden also follows the ports of Al-Ma'ala and Al-Zait, where the city derives its importance from the port of Aden, which is an important pillar of the Yemeni economy. It is the second largest natural port in the world.
The port of Aden, which dates back to 1999, passed through difficult periods following the Houthi attack in March 2015. However, it is trying to recover. It has started to take its first steps as it has witnessed a lot of progress under difficult and complicated conditions, the workers confirmed during our tour.
The moment we entered the main gates, we were surprised by the big number of cars carrying goods, unloaded from the ships to begin the journey of land transport, dozens of cars and traders and goods on the sidewalks and another on a huge truck waiting to unload its cargo.. An activity that does not make you feel that it is a port still taking its first steps to restore its strength after the events Aden, which affected the global trade movement, nevertheless, it refused to surrender and rose again.
Zahir Al Sayyad, Director of Operations at the port, explained that the port consists of a container berth with a length of 700 m. It accommodates 3 vessels, a storage and unloading station and “Dahroga” berth dedicated to liquid goods, but the container activity represents 70% of the total port activity. The oil port of Aden is also owned by Aden refinery supervised by Aden’s Refinery Authority. There are also 31 storage units working 24 hours. It receives commercial and aid ships coming from various Arab and foreign countries. However, security situation is more stable, which helps that the port regain its activity, even though we passed through very tough circumstances, either during war or after it directly. Nowadays, The Aden port container terminal is being developed and supported by new equipments. The number of vessels and containers is increasing. The port of Aden is fully dependent on the Yemeni market, and most of our imports are foodstuffs.
On the commercial traffic inside the port, Ashraf Kardash, Commercial Director of Aden Port, explained that there are 15 thousand containers in the container port of with the capacity of 20 thousand containers per day. The port contains 31 Block; the freezing container storage unit, with a capacity of 300 freezing containers. He confirmed that the political solution affected work routine in the port. For example, the Aden Container Terminal has a capacity of up to one million containers per year, but currently there is only 40% to 50% of this capacity. Before the war, the port received ships up to 350 meters long It was called the "Mather Ship" that connected the harbor head to Singapore and East Asia. But what we receive now is «Vedders» length of about 200 meters comes from Singapore to Jeddah to Ade. China is our largest supplier, and 65% of our imports from China, it still considered the largest trading partner with us.
He said about the main factors that affect the customers of the station: It is limited to the accumulation of containers for several days in the port because of problems in land transport due to the Houthis’ control on parts of Yemen, and also the demographic distribution has an effect, as a large number of the population of Yemen in the north, and 85% of the trade in the north is controlled by the Houthis, in addition to the high value of the insurance fees. All this created another land competitor such as “Al-Wadeeah” port and shipping port and other ports linking Yemen to Saudi Arabia and also linking Yemen to Oman. Qardash said about the mechanisms used to receive relief shipments: Aden port is the main port for receiving any relief shipments to Yemen. In recent days, a large number of vessels of the World Food Organization have been received. We provide large facilities for unloading and fastening anchoring. We set a special place for Shipments to be unloaded and moved to the customs area quickly and then to the market and the Yemeni citizen.
Mohammed Alawi Amzrabh Chairman of the Ports Authority Egypt Today, “The decision to liberalize the oil derivatives market increases the port's activity
We have developed the container terminal. The port and the Suez Canal are complementary to each other. The stability of the Strait of Bab al-Mandeb and Yemen as a whole is important for Egypt. The situation has improved compared to previous years, however, the port needs huge funding. We expect the number of containers to exceed rates before 2011.”
There were no cases of assault or theft of containers until the war, and we have taken high security measures.
To learn about the challenges facing the port's work after the war, the future of the port and the most important countries that are still using it, and many details related to the port, we met with Mohammed Alawi Amzrabeh, head of Aden Ports Authority.
Tell us about the current situation of Yemen's ports in general?
Yemen has three main ports: Aden, Mukalla and Hodeidah, which are still under the control of Houthis. Mukalla port suffered many problems because of the war. The most important of these is the decline of two thirds of the GDP, according to estimates of the Ministry of Planning. Yemen has become the 10th. country in the world in inflation, the decrease in purchasing power and the high rates of insurance on vessels ranged between 1200 and 1500 dollars for the ship, which represents twice the value imposed by the ports of neighboring countries. So,this reduced the competitive advantages of the port of Aden, because Yemen is classified as a high-risk country, and thus increased the value of insurance.
There are no direct flights from the export ports to the port of Aden, there must be an intermediary port, formerly it was Salalah, Djibouti and Jeddah, and now most of them are in Jeddah. Now 45% of our imports come from Southeast Asia and are unloaded in Dubai or Jeddah which forms a burden over the cost of operating compared to the ports of neighboring countries, which is witnessing huge funding for development, like Egypt when it established the new Suez Canal. This is an important project which generates huge revenues, and provides a competitive advantage on the Canal in general. They signed an agreement with Dubai Ports Authority to establish a logistics industrial zone in Ain Sukhna, Aden port and the Suez Canal which are two complementary to each other. There is also the establishment of Sheikh Khalifa Port in Abu Dhabi which has importance for being electronic, and the port of Dubai, which is the largest industrial port in the region as well as the development of the port of Berbera in Somalia.
What is the importance of Aden port?
Aden is the main and largest port in Yemen, with a capacity of 10 million tons for “Al-Zayt” port and 3 million tons for “Mualla” port .
The ports of Aden, Al-Muala and Al-Zayt witnessed a development in the services provided in 1800, especially, the service of refueling, coal and water for steam vessels. Services offered expanded after the Suez Canal was opened in 1869. Aden port became one of the busiest fueling ports in the year 1950, and a shopping and trade center in the world.
The maritime economy and maritime transport industry is the international trade artery and 80% of the goods are transported by sea because of the low cost. The port of Aden is located in the Gulf of Aden on the southern coast of Yemen, about 95 nautical miles east of Bab al-Mandab, the southern gate of the Red Sea. The international shipping line is only 4 miles far. The port covers an area of 8 nautical miles from east to west and 5 nautical miles from north to south. It consists of 3 sectors, the container terminal, the berths of the port and “Al-Zayt” port. 10% of the maritime transport traffic passes through the territorial waters and Bab al-Mandeb, along with many goods, which are transported and pass in front of the Yemeni coast, especially the port of Aden, and carry more than 60 thousand ships annually of all types of goods passing near the port, the daily number of ships is 57. Aden Port is the nearest port to the international shipping line as it is about 4 miles away.
Would you tell us also about the movement of transportation and trade in Aden port after the war?
The situation varied widely. For example, in 2014, the number of containers reached 650 thousands. In 2015, when the war was running, it reached 178 thousand containers. In 2016, it reached 270 thousands, and it improved in 2017 to reach 330 thousand containers. As for the operating fuel, it costs 40 million Yemeni riyals which is very high price. However, despite the challenges, we are working as much as we can to improve and develop it according to the available resource. Compared to previous years, the situation has improved a lot.
For in the last 9 months of last year (2017), the movement in Mualla port (part of the port of Aden), reached thousand tons - 2 million and 200 thousand metric tons compared to 800 thousand tons in 2016. While the terminal container of Aden port, in the last 9 months of the year 2017, reached 245 thousand, compared with only 200 thousand in 2016.
We have imported the full container handling equipment, “Al-Reish Sticker”, which are the latest at all Yemeni ports. We also imported 12 new locomotives and we are working on the maintenance of the marine locomotives. An agreement was signed for the construction of large bridge cranes. New generators with a capacity of 3 and half megawatts were purchased to boost the power of the port. In the coming period, we expect the number of containers to exceed 320,000 containers. This figure has not been achieved since the years prior to 2011, and we are endeavoring to supply the terminal with container handling equipment to speed up handling and to improve performance.
Are there still obstacles facing the port?
The port faces challenging for sure but we exert a lot of efforts to overcome obstacles. Despite of the near location of the port which is important to the international shipping line, the war has affected stability, leading to higher insurance costs in the port compared to neighboring countries, and the increase in the customs tariff in force. We hope to implement the President’s orders to reduce tariffs. The high freight charges on the vessels traders switch to the ports of neighboring countries. In addition, the importers rent small vessels «Feder» for the transport of goods, which in turn leads to increased cost in transport, because the larger the size of the vessel and the quantity of cargo loaded, the less transportation costs. Before the war, we suffered from the lack of direct flights from the manufacturing facilities to the port of Aden. Besides, the purchasing power of the citizen became less. We also suffer from the system of remittances under an observable banking system, to purchase equipment in the port and spare parts such as locomotives and marine parts. The purchase of parts and equipment has been stopped for years.
The port also needs specialized companies, and requires huge funds to promote it, and the state at present time is not able to do all this because of the conditions of war and instability. As a matter of fact, the war froze a lot of investment and port movement, while investors prefer stable countries, so, they switched to neighboring countries for investment. For, maritime transport requires security and stability, while Yemen is still suffering because of the circumstances of war and terrorist operations.
Our biggest problem now the “Al-Zayt” port which is specialized in Petroleum products as oil and gas production in Yemen has been stopped. Before the war, 12 million tons of petroleum products were traded. The rate is now 2 million tons per year. There are many services that are stopped such as the supply of ships with a rate of 300 ships a year before the war, now completely stopped, as well as the supply of water to the ships, the rates were up to 250 thousand ships a year, which also stopped, because the region is still troubled, and the entry permits for ships needed long procedures and a long time. Anyhow, Coalition Forces Supporting Legitimacy now contributes to overcome this obstacle and to accelerate procedures.
How did the liberalization of the oil derivatives market affect the movement of the port?
The decision of Yemeni President Abderbo Mansour Hadi to liberalize the market for the importation and marketing of oil derivatives has had a positive effect on the port's activity and facilitated the passage of these derivatives, which form more than 60% of the size of imports in Aden port.
This decision along with the suspension of customs duties charges also greatly helps to strengthen the business environment, and we wish the private sector to take its responsibility towards this stimulating and encouraging decision for further supply.
Tell us about the size of containers related to relief received by the port?
Most of the relief to Yemen is received through our country as we have recently received 40 rice containers from the Chinese government. The World Food Program (WFP) ships bring aids for the operation of grain mills which are handled by the shipping agent who is responsible for those trucks.
Were the containers subjected to special robberies or thefts during the war of Aden?
There were no cases of aggression or theft of containers even during the war, and high security measures and strict security have been taken, and popular resistance supported us in this regard, although in the year 2015 the management of the port was between the legitimate government and the coup forces.
Were the ports affected by the Arab spring revolutions since 2011 and what followed?
Certainly the entire Arab region was affected, including the movement of the port. In 2011, several provinces in Yemen witnessed chaos, Abyan fell into the hands of al-Qaeda, and the capital of Aden witnessed great chaos as well. The number of containers dropped down to 80 thousand containers and from 2012 to 2014, the number of containers did not exceed 290 thousand container per year, but before 2011 things were stable from 2007 to 2010 and the average number of containers was 500 to 550 thousand.
Are there new ports to be established in Yemen within the coming period?
There is “Broome” Port in Hadramout which is supported by Saudi Arabia with a loan of about $ 100 million, and it is under construction, it is essential because the current port “Mukalla” is small while Hadramout is a large governorate.
What is the relationship between the port of Aden and the Suez Canal?
The port of Aden and the Suez Canal are complementary to each other, and they are the north and the south gates on the Red Sea. Stability of Bab al-Mandab Strait and Yemen as a whole is important for the Suez Canal and vice versa. The trade size between Asia and Europe is 700 billion passing through the international shipping line from Bab El Mandab. The port of Aden is the closest to the international shipping line.
Gas stations are empty. Citizens are screaming because of a shortage of gas cylinders. The gasoline crisis stifles Yemenis and freeze transportation.
On the tour in the streets of various provinces in Yemen, we noticed that the petrol stations became deserted places, inhabited by insects and crows, with old equipment and counters rusted and chairs broken.
We approached one of them, one of the citizens told us: since the beginning of the war of the Houthis, there have been nothing called "petrol"; that is the name Yemenis call for “gasoline”. The citizen continues: People search for days and may not find any depending on their luck. Traders of black market sell it on roads or in isolated areas with prices that could reach 6000 to 8000 riyals for 20 liters. We went to those places until we saw is the selling and buying, we searched a lot with a friend who needs to "fill" his car, and he is afraid because if he does not find a petrol station, he will have to take a break from work.
Alaa Mohammed assured us that this is the case of all people since three years. He explained that every family is reducing its movements in order to save oil because even the black market merchants do not stay in specific places. They are accidentally found in different places.
Finally, after hours of searching, we found someone putting a number of gasoline jacks in the trunk of his car and the place is crowded, we could hardly reach him and we found him taking the jerk and fill every car with a hose as required. The roads are almost empty of cars, transportation are few, and the streets are quiet but it is a quietness under which a burning crisis is hidden.
Amr Rabie tells us that the strainers in Aden, Mukalla and Shabwa have been closed since the war and the crisis is growing and traders are monopolizing oil. After the war of the Houthis, a Yemeni company took the process of marketing gasoline imported by the government through traders and the oil company entered into competition with traders, and there has been a price conflict; the price of the gasoline subsidized by the government is 3700 riyals, while its normal price is 6500 riyals. Currently, the oil company started a strike in front of the refinery because it has been turned into gasoline tanks for traders who sell it to citizens at double prices. In areas that are not liberated yet , it reaches 8000 riyals. Gasoline subsidized by the government to a big extent, and it is subsidizing as much as it can but it cannot covered the market.
The tariffs for transportation have increased significantly," says Ahmad al-Faqih of Aden. "For example, the tariff has reached 250 riyals, so we may stay in the house for days because we cannot pay for transportation, we also know people who are stuck in areas of conflict with the Houthis. Until now, they are unable to leave because they do not have money for transportation to bring them here. "
Mr. Hayel is a citizen with a disability in his leg from Taiz. He cannot go to the artificial limbs center in Marib because he does not have the money he needs to travel from Taiz to Marib.
The fuel crisis is not limited to gasoline cars, but the biggest crisis is the household fuel which most families are not able to afford to buy, so, most families cannot afford for the gas "cylinder". Mamina Mohammed from Sanaa says: “we are no more able to buy gas for home, because we have to stand in a big line for hours. We paid for 400 riyals for card and 250 for guarding the gas tank in the line and 3000 for the gas. So, we resorted to using plastic and wood materials in the stoves instead of the gas, the children can be hungry and I feed them only bread because I cannot cook without gas.”
“We all started to search for firewood since Houthis came, we collect plastic and firewood which is sold now and has market. Even those who can pay for gas, have to wait for days and sometimes weeks," adds Aisha Mohammadi from Taiz.
Ous Al-Oud, Yemeni Minister of Petroleum, spoke to us on theHouthis trade oil and its derivatives on the black market.
We are working to close the port of Hodeidah for oil derivatives in cooperation with the United Nations and the Arab Alliance .. And supply all the derivatives of oil through the refineries of Aden .. And we have developed a new strategy to resolve fuel crises and have break in 3 months. Companies are reluctant to invest under unstable conditions. We brought the fuel crises and tried to transfer the suffering of the Yemenis to the Minister of Oil and Minerals, Ous Al-Oud, to inform us of the real reasons behind the fuel crises and the legitimate government's plans to confront the greed of traders in the liberated areas and the greed of the Houthis in the not liberated areas.
The Minister assured us that there are several provinces that contain oil fields, including Marib Jouf, Hadramout and Shabwa, and until now only 25% of the oil fields in Yemen have been discovered, which is considered as one of the richest oil countries in the world. There are undiscovered marine fields and the Houthi war stopped exploration and production. Before the war there were 30 exploration companies and 11 producing companies, including famous international companies and 3 national companies. The main reason for the crisis is that the country did not restore the same amount of previous production in all the oil fields. It also revealed the government's plan to solve the oil crisis.
Now to the text of the dialogue.
At first we would like to know the oil-rich provinces in Yemen?
There are several provinces with oil fields, including Marib Jouf, Hadramout and Shabwa, and until now only 25% of them are discovered in Yemen, which is one of the richest countries in the world with oil, as there are undiscovered marine fields and the war has stopped the exploration and production. Before the war there were 30 companies working in exploration and 11 producing companies, including many international famous companies and 3 national companies.
What are the reasons behind the severe fuel crisis, whether cars or homes?
There is already a big crisis since the Houthi coup and the main reason for the crisis is that the country did not restore the same amount of previous production in all the oil fields. Aden’s main refinery had a capacity of 120 thousand barrels per day, stopped production due to war and the second one is in Marib with the capacity of 10 thousand barrels per day.
After the Houthi’ coup The entire business of oil companies stopped, after the extension of Houthi to the oil regions, the companies announced a freeze of their work until further notice due to the unstable security situation. We found it very difficult to provide oil derivatives, and resorted to liberalize the price of oil derivatives to eliminate the black market, and import from abroad to cover the requirements of local market. We have created a mechanism to control the black market and prevent manipulation between the local price subsidized by the government, which is 3700 riyals for 20 liters of gasoline, and the world price which is 5200 or 5300 riyals for the tank. But unfortunately it has created a black market and thus is sold with more than 6500 or 7000 riyals in Yemen, so the President of the Republic recently decided to stop his support and liberalize the price of petroleum derivatives to eliminate the black market.
When we went to markets we did not see any working gas stations… why?
Companies have been reluctant to invest in Yemen under unstable conditions. We used to buy oil at the subsidized price and gave it to the stations, then the traders gathered and stored it and the citizen did not benefit. Therefore, the republican decision was recently issued to liberalize the price of petroleum derivatives. I think this is a partial solution to the crisis.
But the crisis is not only an outcome of war.
Yes, it existed before but after war it was doubled. In the events of the Arab Spring in 2011, the oil pipeline in Shabwa, which pumped to the Aden refinery and closed 750 days after the Arab Spring, was hit. Production fell to 1110 thousand barrels per day for the export pipeline, and fell further during sabotage of extraneous parties In Marib, as part of the sabotage of the economy. The price of the bear was 9 thousand riyals in Sanaa, but before 2011 was stable and the production reached 170 thousand barrels per day, and was working in 12 oil fields, Aden refinery and Marib, and 13 productive companies.
Between 2015 and 2017, the oil markets witnessed a significant change in crude oil prices of $ 37 per barrel, with a high production cost of $ 274 per barrel in Yemen. These companies did not find it useful to invest in Yemen. Norwegian companies withdrew before the end of the employment contract because the cost of production is high. So, the number of producing companies is 4 companies and almost 12 explored companies. Now we rely on imports
What is size of the monthly import?
We rely on the import of about 35 thousand tons of diesel and 35 thousand tons of gasoline covering Aden, Lahj, Abyan and Dhalia. As for the rest of the provinces, we have implementers for the import as Aden refinery and the port of Hadramout, where there are tanks in the oil company in Hadramaut imports quantities covering the needs of Hadramout and also import from the private sector According to the bids submitted.
You did not mention Taiz and Sanaa .. from where their needs are covered?
As for the Taiz sometimes covered from Aden, and Marib covers Aljuf and Al-Baidaa while in Sanaa, traders buy quantities and supply them through the port of Hodeidah, a large quantities which reached in 2017 to two million tons, and traded on the black market and the price reached 9000 riyals per barrel of oil.
Are there recent solutions to the crisis?
We will work soon to try to reproduce from the fields of Shabwa and Marib and restart Aden refinery to reduce the import bill for these derivatives, because the Yemeni market needs up to 230 thousand tons of these derivatives monthly. The implementation of the Republican decision to liberalize the price of oil derivatives will solve a lot of crises but there are quantities remaining in the market which must be withdrawn first so as not to speculate. We also set conditions for companies wishing to work in this field to register with the National Oil Company to obtain the necessary permits after providing all the necessary guarantees to comply with the standards and specifications, the most important of which is financial resources and commitment to technical specifications required in the petroleum materials and adherence to timeline of supply. We officially announce, through Aden’s strainers, about tenders for the private sector and international companies, and there is a committee for tenders to decide the best price and the strongest offer and I expect there will be high demand from companies.
Will this strategy include areas under the control of the Houthis, which are more affected?
The Houthis will continue to trade oil derivatives, because they no longer have any source of income. So, the solution is to close the port of Hodeidah for oil derivatives in those areas in cooperation with the United Nations and the Arab Alliance, and to supply oil derivatives through the refineries of Aden which have a large storage capacity. We are in the process of studying this strategy.
Is there a communication between you and the Houthi side?
No, there is no communication, only though the UN.
This article is part of a series of articles on Yemen by Eman Hannah. Hannah has taken a 30-day trip to monitor Houthi crimes, the suffering of the people and the role of the coalition forces in restoring the Arab country from the hands of Iran's allies, documents revealing Houthi plan to spread the Shiite ideology, the mandate of the Faqih, and change the curriculum.