BMI: Bahrain Oil and Gas Report (Nov-11)

Business Monitor International Limited
BMI View: Bahrain has a far smaller oil and gas resource base than its neighbours, but is a leading regional refined products exporter. Over the coming decade, the country may begin importing LNG, but will also boost both oil and gas production. Bahrain will continue to generate revenue from the Abu Saafa field, which is shared with Saudi Arabia, but will also continue importing Saudi crude oil to feed the Sitra refinery, which may be expanded. Despite the political unrest in the first half of 2011, Bahrain has not fallen in our risk-reward ratings as the country remains open to foreign investment.
We highlight the following trends and developments in Bahrain’s oil and gas sector:
BMI sees Bahraini oil production rising to as much as 90,000 barrels per day (b/d) by 2021, in
line with efforts to boost output at the mature Bahrain field. We expect oil consumption to grow
to as much as 60,000b/d.
We expect both oil and gas reserves to decline in the period 2011-2021, pending new
discoveries. Oil reserves are expected to fall to 111mn bbl by 2021, with gas reserves falling to around 80bcm.
Gas production and consumption are likely to grow in tandem to just under 20bcm by 2021.
Risks to our forecasts hinge on final approval being granted for the expansion of the Sitra
refinery and a proposed liquefied natural gas (LNG) import terminal to feed growing gas
Bahrain’s dependence on oil prices leads to high volatility in the country’s export revenues. Our
assumptions of slower growth in China, a faltering recovery in the US and a worsening eurozone debt crisis, clearly pose a threat to global oil demand. We assume OPEC basket oil prices will fall from $101.90 per barrel (bbl) in 2011 to US$97.50/bbl in 2012, thus creating downside risk to Bahrain’s macroeconomic outlook.