Overview
Despite the success of economic diversification, the oil and gas sector remains a strong component of Bahrain’s economy. As a small non-OPEC Gulf oil producer with approximately 124.6 million barrels of proven reserves, Bahrain receives its oil revenues from two fields: the onshore Bahrain field and the offshore Abu Safah field, which is shared with Saudi Arabia. Since April 2018, the Bahraini government announced its biggest oil and gas discovery since the 1930s. The extensive reservoir discovered off Bahrain’s west coast is estimated to contain some 80 billion barrels of tight oil in place, although the find requires more study. At the same time, Bahrain also announced the discovery of 10-20 trillion cubic feet in onshore “Pre-Unayzah” deep gas reserves beneath the legacy Bahrain field.
Leading Sub-Sectors
With revenues from oil exports accounting for over 70 percent of government income since 2007, the Bahraini government is seeking to diversify the economy and income sources from other sectors. Targeted areas for manufacturing include plastics, fiberglass, chemicals, petrochemicals, and food processing. The Bahraini government is placing particular emphasis on developing the petrochemical industry. Five petrochemical sub-sectors have grown rapidly in recent years: construction chemicals, water treatment chemicals, polymer and plastic additives, paints and coating additives, and oil field chemicals.
Opportunities
After a series of 2021 reforms restructuring the oil and gas sector, including consolidating the National Oil and Gas Authority into the Ministry of Oil, the Government of Bahrain plans to release a National Energy Strategy by the end of the year that will outline changes to oil and gas state-owned enterprises and highlight strategic priorities in the energy sector.
With a concentrated industrial footprint and abundance of spent oil and gas reservoirs, Bahrain is actively exploring Carbon Capture and Storage (CCS) technology to deploy across its oil and gas and industrial sectors.
Efforts to delineate and de-risk the Khaleej Al-Bahrain (KAB) find and the Pre-Unayzah deep gas reservoir are ongoing, providing opportunities for international oil companies (IOCs) and oil field services companies alike. Bahrain engaged U.S. firm Halliburton to drill two offshore appraisal wells to evaluate the commercial viability of the KAB and maintains an MoU with Chevron to serve as a knowledge partner. The government invites companies to formally register their interest in order to gain access to the find’s virtual data room. In 2021, Italian IOC Eni renewed its Exploration and Production Sharing Agreement to develop Northern Block 1, separate offshore conventional resources located in Bahrain’s northern territorial waters. Eni announced the first Block 1 exploratory well in June 2021.
Bahrain is carrying out a $7 billion upgrade of the BAPCO refinery by leveraging $482 million in U.S. goods and services. Initially slated to be completed in 2022, the project was delayed by the pandemic but, according to government announcements, is 80 percent complete. The expansion will boost BAPCO’s processing capacity to 400,000 barrels per day (bpd) from 267,000 bpd once finalized and also improve energy efficiency and emissions. In August 2021 BAPCO awarded Advanced Refining Technologies (a Chevron – Grace joint venture) a $250 million catalyst management contract in connection to the modernization project.
Bahrain LNG, jointly owned by Bahrain’s National Oil and Gas Holding Company (Noga Holding) and a consortium consisting of Teekay LNG Partners, Gulf Investment Corporation (GIC), and Samsung C&T (Samsung), completed the construction of Bahrain’s first LNG import terminal. The terminal is located offshore approximately four kilometers east of the onshore receiving facility at the Khalifa Bin Salman port. The terminal, which was commissioned in February 2020 but remains idle, is seen as a strategic asset that could be leveraged to supplement local gas production in Bahrain and ensure capacity to meet peak seasonal gas demand and industrial growth in the future, if needed. The project has a capacity of 800 million standard cubic feet per day.
Resources
Bahrain Tender Board - www.tenderboard.gov.bh
Bahrain Economic Development Board - www.bahrainedb.com
Bahrain’s National Oil and Gas Holding Company – www.noga.gov.bh