-Caveat Lector-

"...Since arriving 12 years ago to explore an area with no known oil
reserves, CanOxy has created a geyser of black gold that, at 208,000 barrels
a day, contributes nearly half the Yemeni government's revenue...


"...Small wonder that Occidental Petroleum of Los Angeles, which
holds a 29% stake in CanOxy, is trying to wrangle the Yemeni
assets away from the Calgary-based company; and equally small
wonder that CanOxy is resisting these advances.

"...Oil production began in 1993.  Civil war broke out in 1994.
CanOxy evacuated its ***Aden complex*** just before the North
shelled the port... CanOxy and the state are deeply dependent on
one another. Oil sales -- more than half from the CanOxy project
-- will bring in $900-million this year, more than two-thirds the
nation's budget. Still, many complain the money does not flow
back from the government to the people. The prime minister
himself admits that corruption is rife in the public service."



http://www.nationalpost.com/content/features/oilboom/111599oil1.html


A Calgary firm finds wealth for a poor Middle Eastern nation
CanOxy's blue army helps a desert bloom (November 1999)


- Canadian Occidental

In the village of Ressib, dozens of barefoot boys and girls --
the girls in brightly embroidered black dresses, the boys in
futas (skirts) -- come running down the rocky trail to the three
Toyota Land Cruisers. The bedouin of the Al-Jabbry tribe, whose
tall houses of mud-plastered rocks crowd this desert valley,
don't get much traffic.

>From the shiniest truck steps Kevin Tracy, the Calgarian who is
operations manager of Canadian Occidental Petroleum Yemen, the
wholly owned subsidiary of Canadian Occidental Petroleum Ltd.
Accompanying him is a four-man military escort armed with
Kalashnikov machine guns.

The children stare as Mr. Tracy, dressed in bright blue overalls,
pulls off his work boots. He and the others sit cross-legged on
the floor of their host's mufraj, a big living room empty but for
some blankets and lots of flies. A boy passes out tiny glasses of
sweet red tea.

"I should slaughter a goat," Mohammed Omar Al-Jabbry, the host,
mutters in Arabic. He is unprepared for such guests. "We are
losing our customs."

His guests are here to check on CanOxy's work in bringing running
water and electricity to Ressib. The projects, financed by the
firm, make the Canadians very popular. Since arriving 12 years
ago to explore an area with no known oil reserves, CanOxy has
created a geyser of black gold that, at 208,000 barrels a day,
contributes nearly half the Yemeni government's revenue.

Small wonder that Occidental Petroleum of Los Angeles, which
holds a 29% stake in CanOxy, is trying to wrangle the Yemeni
assets away from the Calgary-based company; and equally small
wonder that CanOxy is resisting these advances.

Today the "blue army," CanOxy's operations group in blue
overalls, is perhaps the the most powerful tribe in all of Yemen.

It's not always easy. CanOxy's staff have weathered two
evacuations by warships, a civil war, and a 2 a.m. blast in
August. The explosion killed a guard when it levelled a
supermarket across the street from the firm's head office in
Sana'a, the capital.

The blast blew out most of CanOxy's windows and many heavy wooden
doors. The company says it was not the target. While U.S. and
other firms face repeated kidnappings and sabotage, no CanOxy
staffer has been kidnapped. The firm's oil flow has never
stopped.

CanOxy ascribes its success to negotiating skill, good geological
work and experienced staff. But most of all, the mild-mannered
Canadians just seem good at getting along. They train Yemenis
then give them top operating jobs. They have a special centre in
Sana'a with a luxurious mufraj. Here, CanOxy executives smoke
scented tobacco in hookah-type pipes and chew qat -- the mildly
narcotic plant on which much of Yemen is hooked -- while
negotiating with government officials.

CanOxy builds water and power lines, and roads. Sure, some locals
complain the company does not do enough. But most acknowledge it
does more for them than just about anybody else.

"The role of CanOxy in social development is the best of any
company. That gives them good public relations," says Dr. Abdul
Kareem Al-Iryani, the Yale-educated prime minister, in an
interview at the government house in Sana'a. He says the
Canadians' strength is their calm manner. To get along here, "you
have to be flexible, you have to be modest."

Walid Abdulaziz Al-Saqqaf, editor of the Yemen Times that often
criticizes the government, also praises CanOxy. "CanOxy is the
biggest factor in helping the economy grow and they offer
scholarships to study in Canada [10 a year]. They help people in
the region where they work."

Yemen is a mountainous country, about the size of Alberta, on the
southern tip of the Arabian peninsula surrounded by the Indian
Ocean and Red Sea. It has a rich trading history. The biblical
kingdom of the Queen of Sheba, it was here that traders assembled
caravans of camels laden with frankincense and myrrh, plus
Chinese silk and Indian spices, for the two-month trip to Egypt,
Greece and Rome. Yemen is the birthplace of coffee, exported from
the Renaissance through Victorian times via its Red Sea port of
Al-Mokha (from which the word mocha is derived).

Turmoil is also a constant. Over the millennia, Yemen has been
repeatedly torn up and put back together, first by powerful local
sheiks and kings, then by Ethiopia, Turkey and Britain.
Iron-fisted imams maintained feudalism until 1962, keeping out
engineers, doctors, banks, electricity and industry. North Yemen,
which was pro-Western, and South Yemen, a Soviet client state,
united peacefully in 1990. Four years later, the South started a
civil war that it lost.

Today in this poor nation of 16 million, unregistered automatic
weapons are commonplace and tribes sometimes use force to
pressure the authorities.

"Canadians are advised against travel to Yemen," reads last
month's travel advisory from Canada's Department of Foreign
Affairs. "The level of risk to foreigners in Yemen is very high."

There have been more than 100 kidnappings since 1991. Some
victims were associated with the Dallas-based Hunt Oil Co., which
has poor relations with the tribes in the Ma'rib region. "There's
been two people with the company I work for kidnapped and held
for ransom and I don't know how many vehicles have been stolen,"
says a Texan who works with a Hunt contractor. "They blow up our
pipelines and we get shot at."

Tourism has all but disappeared since last December's rescue of
16 kidnapped tourists. Four captives died in the shootout.

The lack of visitors leaves Yemen cloaked in the mystery of the
Thousand and One Nights. Most men wear wraparounds and Arab
headdress, and carry jambias, knifes in curved sheaths, in their
belts. Women, when seen, are cloaked in black. Cities are spiked
with minarets, from which, at 4 a.m., issue Islam's call to
prayer.

Enter CanOxy. In 1987, company lawyers signed an oil-production
sharing agreement with South Yemen, then hurriedly evacuated the
port of Aden on a British warship when trouble arose. The
Canadians returned, shrewdly hiring Ali Mohamed Sohaiki, then
deputy governor of Aden, to handle government relations. He is
now CanOxy Yemen's executive director. Oil production began in
1993. Civil war broke out in 1994. CanOxy evacuated its Aden
complex just before the North shelled the port. In the desert,
oil production continued with a core staff.

"We produced more oil than ever, because we didn't have engineers
around shutting down this or that well for testing or
maintenance," boasts Benjamin Velasco, a CanOxy materials
superintendent.

To reach CanOxy's Masila Block oil-producing region, a patch
about the size of greater Calgary, one boards a Twin Otter for a
rattling two-hour flight from Sana'a. The sun is setting as the
plane lands. The air is soothingly warm and almost fragrant. The
call to prayer wafts across from the CanOxy mosque in the centre
of the sprawling camp.

At any one time, about 225 CanOxy staff live in trailers
clustered on the barren soil. Another 700 contract staff -- some
locals, some expats -- live in camps outside the gates. It's a
tough grind, with breakfast served from 4 a.m. to 6 a.m.
Canadians and other expats work a 35-day "hitch" -- 12 hours a
day, seven days a week -- then fly home for 35 days while their
"cross-shift" comes in to replace them. For the first week, jet
lag pounds their brains. Yemeni employees, who outnumber expats
about two to one, work the same hours on 28-day "hitches."

"The expats that work January and February, with the warm
weather, aren't complaining," says Mr. Tracy. "But Christmas is
another story." He will miss spending the holidays with his wife
and two sons in Calgary and will celebrate the new millennium at
the Central Processing Facility.

Still, the pay's good and 80% of income is tax-exempt. "Anybody
who says they're not here for the money, there's something wrong
with them," says Eamonn O'Brien, the health and safety manager
whose home is in British Columbia. Yemenis get paid a lot less
than expats who do the same jobs; those who work for CanOxy
directly aren't complaining, but the camp's bedouin security
guards, who work for Yemen Contracting Service, want staff jobs.

"What's this policy CanOxy has?" asks Omar Hassan, who says he
makes about $125 (all figures in U.S. dollars) for a 42-day
shift, then goes back to spend his 21 days off with his wife and
child, tending his camels and goats. "The bedouin are learning
English, we do our jobs very well, so why are we on contract?"

CanOxy says it hires only for its core business, oil production,
and contracts the rest to foster Yemeni businesses. Wages are
what the market will bear.

For the expats and Yemenis, learning to work together under high
pressure requires adjustments. Nasser Baghaith, a materials
supervisor, says some Western habits throw the locals, like feet
propped on the desk. "He's putting the worst part of his body in
your face," he says. The foul mouths of the oil workers surprised
the locals as well. (They don't learn those words in English
classes.)

CanOxy Yemen is increasingly staffed by Yemenis and training will
cost $1.4-million this year. Manpower is plentiful: about one
million Yemeni workers were expelled from neighbouring Persian
Gulf states in 1991 after Yemen refused to support the U.S.-led
attack on Iraq. CanOxy employed 218 Yemenis and 285 expats in
1995; it will have 431 Yemenis and 243 expats by the end of the
year.

Cultural adjustments are tough for Canadians too. Rick Jensen,
vice-president of operations, who lives in Sana'a, craves the CBC
and Peter's Drive-In on the Trans-Canada in Calgary. It
frustrates him that he can never take the wheel of his 4x4. With
the chaotic traffic, the company prefers to hire skilled Yemenis
as drivers. Security is also tight: CanOxy vehicles are tailed by
cars of soldiers. All told, the firm has contracts for more than
700 enlisted men.

The workers look out for one another in the desert. As one group
bounces along rutted roads to a camp, the radio crackles to life.
"Ken is missing," says a voice from base. "He left this morning
in Charlie one-six-zero [truck number C160]. Ken's vehicle has
been found but he's not in it."

After a flurry of chatter, Ken gets on the air. "I'm here, I'm
okay, I'm at Heijah 19, I walked here, I've just got a dead
battery."

And the oil keeps flowing. Some wells are prodigious: Tawila 6,
drilled in February, 1994, has produced 21 million barrels and
still gives 6,000 a day. All over the desert, riggers have
punctured the Earth's crust with long straws, that stretch down
2,000 metres to suck out a liquid that is two-thirds water,
one-third oil. After separating out the water, CanOxy sends it in
a two-foot-diameter pipeline along 140 rugged kilometres to the
coast, where supertankers wait to haul the crude to Asia.

One Saturday, the massive Astro Beta floats in the Indian Ocean
at CanOxy's Ash Shihr terminal taking on crude. Loading 1.8
million barrels of oil, via a hose hooked to storage tanks, will
take two days.

There is more oil to come: CanOxy estimates another 500 million
barrels from Masila. Last year, it signed deals for exploration
rights on 20 million acres in Yemen's Empty Quarter on the
disputed border with Saudi Arabia. The challenges of the
forbidding desert, where summer temperatures rise to 50 degrees
Celsius, are compounded by the threat of nearby Saudi air bases.
Still, the company exudes confidence.

"We have land to explore on," says Waleed Jazwari, the Iraqi-born
Canadian who completes a three-year stint as president of CanOxy
Yemen in January. "The profit-sharing agreements are good
compared to other countries. We have an outstanding organization
with 12 years experience. And we have an outstanding relationship
with the people and government."

Those close ties are exemplified by large photographs of Ali
Abdullah Saleh, the president of Yemen, that are prominently
displayed in the company's offices. Mr. Jazwari and other CanOxy
top brass sat behind the president at an election rally for
50,000 in Al-Mukalla, in eastern Yemen, in October.

CanOxy and the state are deeply dependent on one another. Oil
sales -- more than half from the CanOxy project -- will bring in
$900-million this year, more than two-thirds the nation's budget.
Still, many complain the money does not flow back from the
government to the people. The prime minister himself admits that
corruption is rife in the public service.

"Let's take the example of cement," says Mr. Al-Iryani. "There
are two types of cement. Local cement, produced by a state-owned
factory, and imported cement, which is more expensive. Officials
were selling local cement at the imported price; on 100,000 bags
of cement [the corrupt bureaucrat] makes 300 million rials [about
$2-million] from the scratch of a pen." Today, he says, there is
just one price for cement.

He says in Persian Gulf countries a portion of the oil wealth
goes to the ruling families. In Yemen, all the money is spent for
the public good. He knows his country's success rides largely on
the success of its biggest foreign investor.

"This partnership with CanOxy is very fruitful and productive and
I hope it will be very long-lasting."

CanOxy hopes so too.

- Financial Post


--------


A Canadian Occidental rig drills a new well in Yemen's Hadramaut
region. The company has pumped 400 million barrels from the
project.


Deals end on a high note "No chewing gat during working hours,"
reads a sign in the security office at Canadian Occidental
Petroleum Yemen in Sana'a, the capital city. Would that it were
so.

In fact, chewing gat, more often spelled qat, is key to CanOxy's
success in building relationships with the Yemeni government.

Qat is a bush that grows up to seven metres high in the
highlands. By lunchtime every man in Sana'a is clutching a baggie
of qat, the price of which ranges from $3 to $50 a bag, depending
on the quality. At 1 p.m. all businesses shut as the locals
settle down to chew qat until about 5 p.m. By then, everyone has
a bulge of qat in their left cheeks, some the size of baseballs.

CanOxy workers may not chew until the workday ends. Often, at 4
p.m., the executives head to "qat chews" at offices or people's
homes, or at the firm's own business centre. It has been
outfitted with a mufraj, or living room, for that purpose.

Brian McNamara, the vice-president of human resources and
administration, a Calgarian nicknamed "Sheik Brian," has mastered
the art. He arrives at the mufraj in a floor-length silver silk
camise, or Arab robe, and a headdress. A jambia, a dagger with a
curved sheath, is in his belt. He nestles into one of the low
couches that ring the room. A server hands out plastic qat bags
stamped with the CanOxy logo.

"This is nice stuff," Mr. McNamara says. "Pick off the smallest
leaves, give them a couple of chews, then park them in the corner
of your mouth. Then repeat. There's your qat lesson. The effect
is like drinking 10 cappuccinos, only you don't have to go to the
bathroom as often."

The key is to build a bulge while the qat resin slowly seeps down
your throat. It tastes bitter and dries out quickly -- you have
to add more qat to keep your wad moist. Each guest gets a bottle
of water and a can of Pepsi, and everyone puffs apple-scented
tobacco from a metre-high hookah.

But my hopes for a relaxing chat are dashed. It's all business.
Mr. McNamara pulls out a binder and starts going over employment
contracts with Ali Mohamed Sohaiki, the executive director.
Cellphones ring continuously as employees sit, cheeks bulging,
chewing and talking shop.

Mr. McNamara says qat chews have helped him build a bond with Dr.
Mohammed Saleh Moqbil, the Yemen oil ministry official in charge
of ensuring CanOxy hits targets for replacing its expatriate
workers with trained nationals.

"We can talk for four-plus hours, and discuss anything on a
without-prejudice basis," he says. "You always leave on a good
note."

=================================================================
             Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT

  FROM THE DESK OF:
                     *Michael Spitzer*  <[EMAIL PROTECTED]>
                      ~~~~~~~~~~~~~~~
  The Best Way To Destroy Enemies Is To Change Them To Friends
=================================================================

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