Bahrain struck oil in 1932. The first refinery was built in 1936, allowing the kingdom to benefit from oil wealth before most of its neighbours. Although Bahrain never reached the levels of production enjoyed by other GCC countries, it was successful in diversifying its economy. According to the Ministry of Finance’s 2015/16 budget, crude oil production and the export of refined products accounted for two-thirds of government revenues. Oil and natural gas contribute just 22 per cent of Bahrain’s GDP, followed by financial services and manufacturing.

The Bahrain oil refinery imports about 230,000 barrels a day (b/d) of crude via a pipeline from Saudi Arabia. The Bahrain Field, meanwhile, produces about 48,000 b/d.

The kingdom also shares with Saudi Arabia half of the oil production from the Abu Saafa offshore field (about 150,000 b/d).

Modernisation plans

The Bahrain Field, which has been producing since 1932, has been meeting domestic demand for energy (mainly gas), primarily in the power generation and desalination sectors, and secondly for the expansion of existing industries.

Under its long-term energy policy, the National Oil & Gas Authority (Noga) has introduced several measures to maximise oil and gas production in the kingdom. These include a substantial investment in the redevelopment of the Bahrain Field, exploration for commercial gas resources in the pre-Khuff reservoirs, exploration and development of the offshore blocks, replacement and capacity expansion of the A/B pipeline, and plans to modernise and increase the capacity of the refinery.

Bahrain LNG Company was established in December 2015 to develop a liquefied natural gas (LNG) import terminal, owned by a consortium of Nogaholding, Canada’s Teekay LNG Partners, South Korea’s Samsung C&T and Kuwait’s Gulf Investment Corporation. The terminal will comprise a floating storage unit, an offshore LNG receiving jetty and breakwater, an adjacent regasification platform, subsea gas pipelines from platform to shore and an onshore gas receiving facility. It will have a capacity of 400 million cubic feet a day (cf/d), expandable to 800 million cf/d, and will be owned and operated by the consortium under a 20-year agreement starting on 15 July 2018.

Bahrain’s first refinery was built in 1936

Bahrain’s first refinery was built in 1936

Bahrain’s first refinery was built in 1936

Other energy projects being carried out include the modernisation of the Bahrain Petroleum Company (Bapco) refinery, and the expansion of its Sitra refinery from 267,000 b/d to 360,000 b/d. This is critical for increasing efficiency and profitability while expanding the hydrocarbons era in Bahrain. The modernisation has been split into three packages: conversion units; primary distillation units; and offsites and utilities.

Jets of oil first spurted from this well, situated below Jebel Dukhan, on the morning of 2 June 1932

Jets of oil first spurted from this well, situated below Jebel Dukhan, on the morning of 2 June 1932

Jets of oil first spurted from this well, situated below Jebel Dukhan, on the morning of 2 June 1932

The residue conversion unit is the most important facility as it will process heavier crude types into lighter grade products. The project will substantially increase the output of kerosene and diesel (60 per cent of total volume) and create new downstream opportunities.

A new crude oil pipeline between Saudi Arabia and Bahrain is expected to be commissioned in 2018, with a capacity to carry 350,000 b/d and the potential to transport 400,000 b/d. The 115-kilometre pipeline from Saudi Aramco’s Abqaiq plant will replace an ageing 235,000-b/d pipeline.

Main driver

Due to the shale oil and gas revolution and drop in the cost of developing renewables, there will be a significant change in the structure of the oil industry. Nevertheless, oil and gas will remain the main driver for the country’s economic development.

Building on the success of new extraction technologies will be considered a priority in order to optimise production.

Succession planning of the energy and industrial sectors will provide long-term advantages for the country’s future economy

The Bahrain Field’s recoverable oil and gas reserves could be further increased by adopting advanced enhanced oil recovery technologies.

Succession planning of the energy and industrial sectors will provide long-term advantages for the country’s future economy. A large pool of local energy and industry experts represents the backbone for the planning and implementation of new projects in Bahrain. Therefore, intensifying training efforts, including promoting, advancing and eliminating barriers to progression in the sector, is an important factor in creating a prosperous future. Developing human resources, improving education and empowering women to take leadership positions in the various sectors are also considered priorities.

Energy efficiency

Bahrain has recognised the need for energy conservation initiatives, and approval was granted to establish a renewable and energy efficiency unit in collaboration with the UN Development Programme (UNDP). The Bahrain Sustainable Energy Unit (SEU) will lead and promote energy efficiency practices, facilitate the use of renewable energy technologies, and draft related policies and regulatory frameworks in close coordination with stakeholders.

The SEU has proposed the National Energy Efficiency Action Plan and National Renewable Energy Action Plan, both national policy documents produced through a consultative process by the SEU in partnership with UNDP. The documents set overall targets, and detail initiatives to meet those targets. An implementation follow-up committee, under the chairmanship of the minster of electricity and water affairs and comprising all relevant stakeholders, has been established to oversee the execution of the plans.

Abdulhussain Ali Mirza was the first Bahraini chief executive of Bahrain Petroleum Company. He was minister of energy and chairman of the National Oil & Gas Authority, before being appointed minister of electricity and water affairs in June 2016.