The Gulf’s smallest oil and gas projects market received two significant boosts in the past year. In December, state-owned Bahrain Petroleum Company (Bapco) awarded a $4.2bn contract to a joint venture of France’s Technip and South Korea’s Samsung Engineering for the long-planned expansion and modernisation of its 267,000 barrel-a-day (b/d) Sitra refinery.

Bapco also announced a major new unconventional oil and gas find in May, its first major discovery for decades. The government hopes the find will dramatically change the island kingdom’s fortunes.

The Sitra refinery expansion is slated for completion in 2022, taking the refinery’s total capacity to 360,000 b/d. It includes a new residue hydrocracking unit, hydrocracker, hydro-desulfurisation unit, crude distillation unit and vacuum distillation unit, among others.

The project has been planned for years, with Bapco finally issuing tenders for the engineering, procurement and construction of the project in May 2016. Bids were submitted in October. The expanded refinery will be supplied by a new 350,000 b/d crude oil pipeline from Saudi Arabia, which the government hopes will be completed at the end of 2018. It will replace the ageing 240,000 b/d line connecting Sitra with Saudi crude sources.

New discovery

While the refinery is being expanded, Bahrain will focus on plans to develop its new tight oil and deep gas discovery, which could hold more than 80 billion barrels of shale oil along with 20 trillion cubic feet of gas.

The discovery, in the 2,000 square-kilometre Khaleej al-Bahrain basin off the western coast, is the largest in the kingdom since 1932, dwarfing the Gulf state’s current reserves, according to its Higher Committee for Natural Resources & Economic Security.

The Oil Ministry hopes to bring the gas onstream within five years with the help of oil field services giants Schlumberger and Halliburton. Bapco has started early talks with international oil companies to partner on the development, with a target of producing up to 200,000 b/d.

Analysts warn, however, that despite the attention-grabbing capacity estimates, actual production from the discovery could be considerably less. Realistic reserves could be in the 1-7 billion barrel range, according to consultants Wood Mackenzie. This would still be a significant boost to Bahrain, which is one of the oldest oil producers in the region, but also one of the smallest. At 200,000 b/d, the new field would almost match Bahrain’s current output. It would also support extensive, long-term downstream activities, such as the Sitra refinery expansion.

This article is extracted from a report produced by MEED and Mashreq entitled The Future of Middle East Energy. Click here to download the report