When Manama called in May for the creation of a GCC-wide gas pipeline network, it was a strong indication of the state’s pressing need to find more energy supplies.

Bahrain said it wanted to allow member states to pool gas supplies for industrial users and power generation, a critical move for a country with little of its own resources.

Pressure on Bahrain Petroleum Company (Bapco) to innovate and exploit its own resources has never been higher.

Company Bahrain Petroleum Company
Oil Reserves 125 million barrels
Oil Production2007 196,000 barrels a day*
Gas Reserves 3 trillion cubic feet
Gas Production 2007 11.5 billion cubic metres
*includes NGLs. Source: Bapco

A lack of energy and gas feedstock has postponed expansion plans at Aluminium Bahrain (Alba) and the Gulf Petrochemical Industries Company (Gpic) fertiliser complex.

Bahrain currently produces about 1.2 billion cubic feet a day (cf/d) of gas but needs to find an additional 1.5 billion cf/d in the next decade alone.

To its credit, Bapco is facing up to the challenge by launching exploration rounds for new offshore and onshore acreage. It has also begun negotiations with Doha and Tehran to import gas directly via sub-sea pipelines, although Qatar appears to be off the agenda given its current export moratorium.

Exploration results have been mixed. Bahrain was forced to withdraw one of its four offshore packages last year, after receiving no bids for the block from any of the three shortlisted companies.

A bid round in 2001 that awarded two blocks off the country’s southeast coast to Malaysia’s Petronas and another to ChevronPhillips has also achieved little.

However, the progress of onshore exploration has been encouraging, and Bahrain recently announced plans to expand capacity at its refinery from 260,000 b/d to 360,000 b/d as part of a $2bn, eight-year investment programme.

Labour issues remain a problem, however. More than 1,500 Bapco employees threatened to strike earlier this year over demands for a 15 per cent pay rise, larger bonuses, and health and other benefits.

The National Oil & Gas Authority (Noga) eventually agreed to give workers a bonus payment, which equalled about two months of workers’ salaries, only after the personal intervention of Oil & Gas Affairs Minister Abdul Hussain bin Ali Mirza.

While Bahrain should be applauded for taking a transparent, progressive approach to the development of its energy sector, much of its success ultimately depends on Mirza’s ability to forge closer ties with its energy-rich neighbours.