Growing Bahrain

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Bahrain’s economy at a glance

According to the UN Economic and Social Commission for Western Asia, Bahrain had the fasted growing economy in the Arab world in 2006, with the country benefitting from its oil reserves and a burgeoning financial industry.

In 2008, Bahrain was named the world’s fastest growing financial center by the City of London’s Global Financial Services Index. Petroleum production and processing account for around 60 percent of export receipts, and 30 percent of gross domestic product.

Business Monitor International estimates that the country’s nominal GDP stood at US$19.20bn in 2008. Bahrain was attested to be the freest economy in the Middle East in the 2006 Index of Economic Freedom.

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Upstream Energy Projects

It is no exaggeration to say that Bahrain is currently going through its most exciting E&P phase in more than seven decades. Four offshore exploration and production sharing blocks have been allocated, and drilling commenced this year.

Onshore, new depths are being plumbed to discover natural gas, and a host of enhanced oil recovery techniques are to be deployed to stem decline and increase production at the country’s 77-year old Bahrain Field.

The shift from a sedate, almost forgotten upstream hamlet, into a thriving hotbed of activity has been expedited and made possible by a dramatic overhaul of the energy business in Bahrain.

The National Oil and Gas Authority was born when three ministries with overlapping and blurred boundaries were streamlined into one body by Royal Decree in 2005, a sea change which the current flurry of activity can be attributed to.

Bahrain shares an offshore field called Abu Saafa with Saudi Arabia. It is estimated that this produces some 300 000 barrels per day, which is split 50:50. The product from Abu Saafa is sold directly as crude on international spot markets, and does not come to Bahrain.

Occidental Petroleum Corporation and Mubadala Oil & Gas, are working jointly on a development and production sharing agreement with the National Oil and Gas Authority of Bahrain (NOGA) for the further development of the Bahrain Field.

Under this agreement, a Joint Operating Company was formed to serve as operator for the project under the DPSA.

Oil production from the Bahrain field is expected to more than double to approximately 75 000 barrels per day within five years, and grow to a peak level of more than 100 000 barrels per day thereafter. Gas production capacity is expected to grow from the current level of 1.7 billion cubic feet per day to over 2.5 billion cubic feet per day under the Field development plan.

Oxy’s net share of production is expected to be approximately 28,000 barrels of oil equivalent per day (BOEPD) in 2010 growing to 56 000 BOEPD within five years. Mubadala’s net share of production is expected to be 18 500 BOEPD and 37 000 BOEPD for the same time periods. Net reserve additions over the life of the project for Oxy are said to be 450 million barrels of oil equivalent.