Bahrain is taking a significant step forward in bolstering its energy security and attracting crucial investment, with the recent unanimous approval by the Shura Council of a decree-law endorsing a vital concession agreement. This pact paves the way for advanced natural gas exploration in the historic Bahrain Field, specifically targeting the Juba and pre-Tawil reservoirs.
The Bahrain gas exploration agreement, originally signed on August 6th of last year between the government, Bapco Energies, and EOG Resources Bahrain Awali, signifies a substantial commitment from the foreign partner. Dr. Mohammed Bin Daina, the Oil and Environment Minister and Special Envoy for Climate Affairs, highlighted that this venture carries a considerable investment pledge of $200 million. This substantial financial backing underscores a strong confidence in Bahrain’s dynamic investment environment.
“About $100m has been allocated for drilling wells. Three of the four planned gas wells have already been completed, and the results and production indicators are promising,” he said.
“A further $100m investment will be dedicated to drilling four additional wells in the next phase.”
This Bahrain gas exploration concession is viewed as instrumental in securing gas supplies by leveraging cutting-edge global technology. It is also poised to attract fully financed foreign investment while fostering the development of Bahraini expertise. This project is expected to generate valuable opportunities for young Bahraini professionals, offering them training and technical experience. The minister emphasized that Bahrain now possesses distinguished competencies in this sector at a regional level, a testament to the growing national skills development.
The next phase of this strategic undertaking will require attracting more international companies and reinforcing investor confidence, essential elements for supporting ongoing economic development plans and ensuring long-term energy sustainability.
The Shura Council’s financial and economic affairs committee thoroughly reviewed the decree. First Vice Chairman Jamal Fakhro sought clear assurances regarding the long-term prospects of oil and gas recovery under the 40-year concession. He stressed the importance of transparent data on future oil and gas availability to support the state budget, especially considering its continued reliance on oil revenues.
Under the terms of the agreement, the foreign partner will bear the exploration costs in the initial phase without any financial burden on the state. This exploration will involve drilling wells to assess the commercial viability of unconventional onshore reservoirs. Should exploration prove successful, production will proceed under a joint operational framework.
Bahrain will benefit from a 10% royalty on net profits, in addition to income taxation managed by the National Bureau for Revenue. The Bahrain gas exploration agreement also incorporates stringent environmental, audit, anti-corruption, and local-content provisions. Furthermore, the concession is anticipated to significantly facilitate technology transfer. In a concrete step, nine Bahraini employees have already undertaken training in the United States to observe the latest gas extraction techniques, with further development planned for Bapco Upstream staff.
The unwavering support from both legislative chambers underscores the perceived strategic importance of this project in enhancing energy security, attracting foreign investment, and nurturing national skills within Bahrain’s most historically significant oilfield.
