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A June article in the Cairo newspaper Al Alam Alyoum was headlined "Petroleum, Concessions, Bribes, Notoriety, Sabotage and Corruption: Yemengate Threatens Biggest Officials." It presented a gloomy assessment of Hunt Oil's reputation in Yemen. "Sources assure us that Hunt is facing a big crisis in the Yemeni street, which is bursting with anger," the newspaper wrote.

Yemen's road to riches has turned into a bog, and the Hunt Oil Company is caught in the muck.

About 60 miles east of San'a, the Yemeni capital, lies the little village of Ma'rib. Under the desert near Ma'rib lies the Safir Basin, a sedimentary formation capped by a salt dome. It is the classic geology of an oil source, and it is the source that Ray Hunt's company has been pumping since the mid-1980s.

Hatem El-Khalidi, a geologist, first surmised the presence of the underground basin in 1957, when he was sent to map the region for an ambitious U.S. company called the Yemen Development Corporation. El-Khalidi thought there might be oil, but Yemen was too untamed for an outside company to risk undertaking an expensive drilling venture. Strife between various tribes made the area around Ma'rib particularly chaotic.

The Yemen Development Corporation ran into financial problems, and decided not to pursue prospects in Yemen. El-Khalidi went on to other things. Born in Jerusalem in 1924, he had come to the United States as a student in 1946, and earned his master's degree in geology from Michigan State University in 1950. Three years later, he became a naturalized U.S. citizen. He has spent a large part of his life scouring the Middle East for oil and minerals on behalf of companies large and small.

In 1967, 10 years after he first mapped the Ma'rib area, El-Khalidi and other investors formed Arabian Shield Development Company, a small concern, based in Dallas, that counts members of the Saudi Arabian royal family among its shareholders.

The company's stated goal was to find minerals--copper, zinc, gold, and silver. But 28 years later, it still has little to show for its efforts. Arabian Shield, according to its 1994 annual stockholders' report, holds a mineral lease on 44 acres in Saudi Arabia, but doesn't have the money to begin full-scale exploration or development.

Virtually all of the company's $17 million in 1994 revenues came from a refinery ArabiR>an Shield owns in Texas. The company also owns a coal company that has no coal mines, and a passel of inactive mining claims in Nevada. The company boasts $41 million in assets in its stockholders' report, but three-quarters of that is the presumed value of the Saudi Arabian mineral lease.

Arabian Shield is making little money and carrying a load of debt, its annual report shows. Its stock trades at less than $2 a share on NASDAQ, and it has never paid its shareholders a dividend. The company's 1994 report is able to make only lukewarm predictions that the future will look any better.

El-Khalidi certainly hoped that Arabian Shield would have done better by now. What he hoped, specifically, is that the company would be rolling in profits from Yemeni oil.

For the past 38 years, ever since he first mapped the Safir salt dome, El-Khalidi has watched Yemen, yearning for the time when he could return and help tap into the rich basin of oil that he believed lay under the Ma'rib desert.

When that day finally came--El-Khalidi would allege in court--the Hunt Oil Company cheated him out of the chance.

Sitting at a conference table in a small office building on Central Expressway, surrounded by boxes and boxes of documents, he spins out a tale of intrigue and deceit. The conference room is part of the modest offices of Arabian Shield, of which El-Khalidi remains president. The boxes are jammed with documents he has accumulated in his efforts to prove that Hunt Oil stole his dream.

El-Khalidi has some circumstantial evidence to bolster his allegations, mostly documents unearthed during a lawsuit his company filed against Hunt Oil in a Dallas district court in 1987. Arabian Shield and its partner claimed that Hunt Oil fraudulently obtained the oil concession in Yemen, and illegally interfered with Arabian Shield's efforts to win the drilling rights.

The claims were never fully aired in court. Arabian Shield's case was lost when a judge ruled that the company waited too long before filing the suit, a ruling that was eventually upheld by the Texas Supreme Court.

But El-Khalidi waited too long for a shot at the riches of the Safir Basin to easily forget the events of 1980, when Hunt Oil beat out Arabian Shield in a race for the oil concession.

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David Pasztor

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