Bahrain: Bahrain Oil Profile

All of Bahrain's 125 million barrels of onshore proven oil reserves are located in the Awali field, the first oil field to be developed in the Persian Gulf. Discovered in 1932, Awali's crude oil production peaked at more than 75,000 barrels per day (bbl/d) in the 1970s, but has declined since then. As of early 2006, Awali is producing around 35,000 bbl/d of crude oil.

In addition to Awali, Bahrain might have undiscovered oil reserves offshore in the Gulf of Bahrain. These areas became available for exploration and potential exploitation following the International Court of Justice's March 2001 resolution of a territorial dispute between Bahrain and Qatar over islands located between the two countries. The court awarded sovereignty over the Hawar Islands to Bahrain. Bahrain has since offered concessions to foreign investors. In November 2001, Bahrain awarded two blocks off the country's southeastern coast to Petronas (Malaysia) and another similarly located block to ChevronTexaco. Both companies have since begun to explore their concessions. Since then, the Calgary-based EnCana Corporation has become involved in offshore exploration. Thailand’s PTT Exploration and Production Company also received exploration acreage, offshore from Bahrain’s northwest coast, in May 2005. To date, no new discoveries of oil in commercial quantities have been reported.

In addition to what is produced in its territory, Bahrain purchases Arab Light crude oil via a subsea pipeline from Saudi Arabia, which it refines for export at its Sitra refinery. To support the Bahraini economy, Saudi Arabia gives Bahrain the right to market and sell 150,000 bbl/d of Arab Medium crude oil from the Abu Saafa offshore field. This oil is exported through the Saudi terminal at Ras Tannurah, but sales are handled by the Bahrain Petroleum Company (Bapco), and Bahrain receives the revenue.

Unlike other Gulf states, Bahrain exports refined petroleum products rather than crude oil. The country's only refinery, Sitra, is located south of Manama and has a current capacity of 248,900 bbl/d. Bahrain exports most of the Sitra refinery's products to India. The Sitra refinery was built in 1936, and has been modernized several times. The Bahrain Petroleum Company (Bapco) recently completed a $900 million modernization project, which increased overall capacity, and kept its product up-to-date with current Indian fuel standards. It also introduced hydrocracking facilities to allow production of 40,000 bbl/d of low-sulfur diesel. In September 2002, the government authorized Bapco to initiate a study of the feasibility of building a $1.3 billion petrochemical complex at Sitra. The Bahraini government has not made a final decision on the project.

Consolidation of Bahrain's state-owned petroleum sector began in January 2000, when the upstream Bahrain National Oil Company (Banoco) began merging into Bapco. The merger was completed on June 1, 2002, and the new business unit is know as Bapco Upstream. The new parent corporation, the Bahrain Petroleum Company BSC, is charged with the exploration, production, refining, marketing and distribution of Bahraini oil for domestic use and the international market. The Ministry of Petroleum has been eliminated as part of this process, and replaced with a regulatory body, the National Oil and Gas Authority.

In 2010, Bahrain produced an estimated 46,000 bbl/d of total oil liquids, of which 35,000 bbl/d was crude oil. This amount excludes joint production from the Abu Safah field, of which Bahrain's share is about 150,000 bbl/d. During 2010, Bahrain consumed an estimated 45,000 bbl/d of oil.

Bahrain is one of the oldest oil-producing countries in the Persian Gulf. Current crude oil production is entirely from the Awali field and is well below the country's peak production of 75,000 bbl/d in the 1970s. To help offset continuing declines in oil output, Bapco announced that it will drill numerous new wells at the Awali field in 2011. In October 2009, Bapco formed a joint operating company with Occidental, Tatweer Petroleum Company, which has commenced drilling for oil in 2010 in the Awali field.

Sector Organization

Bahrain's oil sector is dominated by state-owned Bahrain Petroleum Company (Bapco), which is charged with the exploration, production, refining, marketing, and distribution of Bahraini oil for domestic use and the international market. The National Oil and Gas Authority (NOGA) is the primary body with regulatory and oversight authority as well as policymaking functions for the oil sector. A NOGA holding company administers the government's stakes in various energy companies, including the government's 100 percent stake in Bapco, 75 percent in Banagas, 60 percent stake in Bafco (the aviation fuel company) and its one-third share of Gulf Petrochemical Industries Company.

Refining

Bahrain has 262,000 bbl/d of refining capacity at the Bapco-owned Sitra facility, according to Oil and Gas Journal. Plans for the expansion of the Refinery include laying new pipelines to import crude from Saudi Arabia and increasing refining capacity at the facility. About one-sixth of the crude used by the refinery originates from the Bahrain oilfield and the rest is pumped from Saudi Arabia via a 33-mile pipeline. This aging pipeline will be decommissioned after the construction of the “New Arabia” pipeline, a 71-mile, 350,000-450,000-bbl/d capacity feed running between Saudi Arabia's Abqaiq oil processing center and Bahrain's refinery at Sitra.