Amidst Beijing’s diplomatic balancing act in region, Chinese company s…

On 17 May, a Chinese oilfield services company, Anton Oilfield Services (Anton), signed what is described in a press release on its website as a “non-legal” memorandum of understanding (MOU) to pursue oilfield development in Yemen. It was earlier reported that the MOU was with the National Salvation Government (NSG) aligned with Ansar Allah (also known as the Houthis),  the non-state armed group (NSAG) which has waged an eight-year war against the internationally recognised government of Yemen, backed by a Saudi Arabian-led military coalition. Six days after the deal was signed and several days after it was internationally publicised through media outlets, the Chinese company nullified the deal, reporting via its website that: “After verifying the relevant information, Anton hereby solemnly announces the nullification of the MOU and sincerely apologises to the parties involved.”

The sudden reversal and apology come in a window of time when Beijing has received significant attention for leveraging its neutrality to navigate the region’s delicate rivalries to broker the March 2023 breakthrough in the normalisation of diplomatic relations between Saudi Arabia and Iran for the first time since 2016. Riyadh’s subsequent meetings with the Ansar Allah leadership in Sana’a in April 2023 has been seen as an extension of this breakthrough, as Iran’s and Saudi Arabia’s support for the opposing sides of this conflict has been a major ingredient for the breach between them.

For all of these reasons, news of a Chinese company signing an MOU with the NSG for oil exploration was noteworthy. The subsequent nullification and apology are equally notable, although the parties to whom the company is apologising and the backstory of the reversal remain unclear. Chinese companies have not been active in Yemen’s energy sector, in large part due to the ongoing turmoil in the country. However, Yemen sits on an estimated 3 billion barrels of oil reserves and, prior to the outbreak of civil war in 2014, produced 127,000 barrels of oil per day. Since then, Yemen’s oilfields and reserves have been attacked and depleted as violence has impacted pipelines, reserves, and field conditions. Production has since declined significantly.

Yemen’s two longest crude oil pipelines run from the country’s largest oil and gas field in Marib to Ras Isa and Bir Ali on the Red Sea and Arabian Sea. There is also a smaller oil field east of Marib called Masilah, with an accompanying crude oil pipeline. Marib has been contested territory between Ansar Allah and the Republic of Yemen, while Masilah is solely under the control of the Republic of Yemen. Ras Isa, however, is controlled by Ansar Allah. 

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