Noga shortlists oil majors for Awali deal

19 September 2008
Occidental Petroleum, ExxonMobil and Maersk vie to more than double production at ailing oil field.

Bahrain is seeking greater international investment in its energy sector as part of renewed efforts to boost production from its ailing oil and gas fields.

The National Oil & Gas Authority (Noga) has shortlisted three international oil companies for a lucrative contract to more than double production from the country's Awali oil field and will launch a bid round for exploration of deep gas in October.

ExxonMobil Corporation and Occidental Petroleum, both of the US, along with Denmark's Maersk Oil, are in the race for the award after five other groups were cut from the initial bid list.

Verenex Energy and Bankers Petroleum, both of Canada, along with Vitol Bahrain, Delta Hydrocarbons of The Netherlands and Thailand's PTT Exploration & Production had all expressed interest.

Occidental is already carrying out offshore exploration work on existing blocks in the southeast of Bahrain.

Bahrain's Oil & Gas Affairs Minister Abdul Hussain Mirza tells MEED that bids from the three international firms will be assessed on expected production increases and the oil majors' own stakes in a future joint venture firm.

"Whichever company gives the highest percentage stake to the government will of course score highly in the government's view," says Mirza.

Oil majors have previously pledged to more than double the capacity of the onshore Awali field to 70,000 barrels a day (b/d), from 33,000 b/d currently, and boost gas production to 2,000 million cubic feet a day (cf/d), from 500 cf/d (MEED 9:11:07).

Mirza says Noga will form a joint venture company with the winning bidder to run and manage the operation of the field over an expected 20-year term.

"We need international expertise to get the most out of this field and expect strong production estimates from these oil firms," says Mirza.

Rising domestic demand has increased the urgency for fresh production in the country. Noga estimates that domestic demand for oil will increase by at least 3 per cent annually over the next few years, reaching 45,000 b/d by 2011, while there has been a gradual decline in local crude output to 33,000 b/d, from 70,000 b/d in the 1970s.

Manama is also in talks with energy majors ahead of the launch of a new deep gas exploration round by the end of October.

"We are expecting companies to drill down to 20,000 feet, which is deeper than we have done so far, and we have many companies with experience in this sort of deep gas work that are interested in bidding," says Mirza.

Noga estimates that Bahrain's natural gas reserves will fall to about 75 billion cubic metres by 2011, from 84 billion cubic metres currently, making further investment essential.

In November 2007, it signed a memorandum of understanding with Iran to import up to 1 billion cf/d of gas by 2012.

Key facts

  • 70,000b/d: Capacity to which oil majors have pledged to increase Awali output

  • 33,000b/d: Current oil production at Awali

  • 3 per cent: Increase in domestic demand for oil forecast by Noga

b/d=barrels a day.
Source: MEED

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