09 December 2013

Bahrain Petroleum Company (Bapco) was founded in 1929 as a subsidiary of the US’ Standard Oil to explore for oil in Bahrain. In 1932, it discovered the Awali oil field, also known as the Bahrain Field and still the country’s most important oil resource

During a period of widespread nationalisation in the region, the government of Bahrain acquired a 60 per cent shareholding in the company and, in 1980, completely nationalised the firm. Today, Bapco oversees all oil exploration, production, refining and distribution in Bahrain, including a 250,000-barrel-a-day (b/d) refinery. It operates a horizontal management model and does not have any major subsidiaries. However, it is working on a pilot solar power project with the National Oil & Gas Authority (Noga) and the US’ Petra Solar.

Bahrain is the smallest oil producer in the Gulf, with an output of 170,000 b/d of oil in 2012, according to the Washington-based IMF. The Bapco refinery relies on oil imported from Saudi Arabia to maintain production, which peaked at just over 270,000 b/d in late 2011. Average rates today are more like 260,000 b/d. This imported oil arrives via a 61.5-kilometre pipeline from Saudi Arabia’s Eastern Province under an agreement that stretches back more than 60 years. Riyadh and Manama also cooperate and share profits from the Abu Safah oil field, the operation of which is overseen by Saudi Aramco.

Oil revenues account for about a quarter of gross domestic product and, in 2012, represented 87 per cent of government revenues, equivalent to BD2.65bn ($7bn), an increase on previous years. Bahrain depended on Bapco for 77 per cent of its foreign currency raised through oil exports in 2012, much of which was used to fund a $13.2bn import bill. However, last year was not without its challenges for Bapco. A protracted disruption in the Abu Safah offshore field reduced production during the year, and only 46,726,000 barrels were produced, compared with 53,936,000 in 2011. According to Bahrain’s Economic Development Board, the problems were overcome in early 2013 and the field is expected to operate at full capacity during the remainder of the year. Figures from the Central Bank confirm that production at Abu Safah has again accelerated, with the field producing 13,054,000 barrels in the first quarter of 2013, compared with 11,615,000 during the same period in 2012.

Gradual increases in Bahrain’s onshore Awali field are also expected to raise production to 47,000 b/d in 2013, up from about 45,000 b/d last year. Bapco is using enhanced oil recovery techniques to reverse the slide in output at the field, which is overseen by Tatweer Petroleum, a joint venture of Noga, Mubadala Development Company of Abu Dhabi and the US’ Occidental Petroleum. Gradual progress is expected to continue in the coming years, with output tending towards the 60,000 b/d mark by 2017. Most of the increment is due to come from medium and heavy oil. A rate of 100,000 b/d is seen as a long-term goal.

Today, Bapco is focused on finding partners to help develop new reserves and is planning an ambitious $9bn expansion of its Sitra refining facility to bring the fuel it produces up to international standards. It is also planning a major refurbishment of the refinery. This has led to plans to build a new pipeline adjacent to the original in order to increase crude supply from Saudi Arabia to the plant. Bahrain currently imports 260,000 b/d of oil from Saudi Arabia, a figure that is expected to rise to 450,000 b/d. Bids for a project manager are still being assessed; only two firms made offers, with consultant Engineers India submitting an aggressively low price.

Bahrain was also this year expected to select a contractor for a $500m liquefied natural gas import terminal with a capacity of up to 500 million cubic feet by 2016. However, the invitation to bid has not yet gone out, pushing the award date back to 2014. Bapco currently produces 1.5 million cubic feet a day of gas from its Bahrain Field, but capacity increases are seen as possible with deep gas exploration set to commence next year.

Key details

Bahrain Petroleum Company (Bapco)

Founded: 1929

Chairman/CEO: Adel Khalil al-Moayyed

Tel: (+973) 1 775 5000


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