Bahrain's declining oil reserves
Bahrain is facing significant challenges due to its declining oil reserves, impacting its economy and energy consumption. As one of the highest energy consumers per capita globally, Bahrain's reliance on fossil fuels has necessitated efforts to enhance energy efficiency and explore renewable energy sources. Despite these initiatives, the country's economy remains heavily dependent on oil, with the state-owned Bahrain Petroleum Company managing its production and refining. The primary oil-producing field, Awali, has seen a drastic reduction in output, declining from 75,000 barrels per day in the 1970s to approximately 33,000 barrels per day currently, prompting increased reliance on Saudi Arabia's Abu Safah field.
Bahrain produced around 189,000 barrels per day in 2023 but still imports crude oil to meet its refining capacity. The government has announced significant offshore shale and gas discoveries, aiming to revitalize production through enhanced recovery methods. Despite these developments, the growing domestic demand for energy, particularly in heavy industries, raises concerns about future shortages. Consequently, Bahrain is pursuing partnerships within the Gulf Cooperation Council to ensure a stable energy supply while exploring potential imports of natural gas from neighboring countries. This delicate balance illustrates Bahrain's ongoing effort to adapt its energy landscape in response to diminishing oil resources.
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Bahrain's declining oil reserves
Summary: A relatively prosperous and liberal state, Bahrain has one of the highest rates of energy consumption in the world. This has led the country to face new challenges in administering its declining oil and natural gas reserves, calling for a considerable restructuring of both sectors.
Located in the Persian Gulf, Bahrain has enjoyed a leading position within the Gulf Cooperation Council (a political and economic union that includes the United Arab Emirates, Oman, Saudi Arabia, Kuwait, and Qatar) in key sectors such as industry, finance, banking, and education. Although the country’s economy remains largely dependent on crude oil, Bahrain has started to diversify its economic structure to face the possibility of declining oil reserves. This has led to more investments in the sector of petroleum processing and refining, which has expanded to make up a third of the nation’s gross domestic product and two-thirds of government revenues. International organizations such as the World Bank and the World Economic Forum have given high rankings to the country, a fact that has helped attract foreign investments. In spite of the country’s reaching these positive goals and of the programs to introduce liberal reforms in the economy and politics at the beginning of the twenty-first century, Bahrain, together with Tunisia, Egypt, Libya, and Syria, was swept by demonstrations against political totalitarianism in the early months of 2011.
Bahrain has one of the largest rates of energy consumption in the world, with a per capita figure estimated at 514.3 million British thermal units (Btu) in 2022. This has led authorities to call for a more efficient use of energy to avoid a likely crisis that would endanger Bahrain’s economic competitiveness on the global stage. To continue to guarantee the necessary amounts of energy to industries and the other sectors of the Bahraini community, the Energy Conservation Committee (ECC) is trying to maximize the country’s energy efficiency as well as the implementation of renewable energy programs, particularly as far as wind power is concerned. As of 2022, all its energy was produced using fossil fuels. The ECC and the Bahraini government have made energy conservation a top priority.
For all its efforts to diversify its economy and make it less dependent on hydrocarbons, oil and gas still remain the key sources of government revenues. The Bahrain (or Awali) field is the country’s single oil-producing resource, and the local pipeline network is restricted to the delivery of the crude oil from Awali to the Sitra refinery. As the reserves are progressively diminishing, the output of barrels was limited to 33,000 per day, a radical reduction from the 75,000 barrels produced during the period of peak production in the 1970s. Because the output from the Bahrain field has been more than halved since then, the country has become increasingly dependent on the supply of crude oil coming from the Abu Safah field in Saudi Arabia, an asset that the two countries share in equal measure. Bahrain produced about 189,000 barrels per day of petroleum in 2023. In addition, Bahrain imports crude oil from Saudi Arabia to supplement its own production, which is inferior to its refining capacity. Because the production has remained stable since the beginning of the twenty-first century, while the domestic demand has increased (as has the consumption of energy in petrochemical and aluminum production), the exports of refined petroleum products are destined to decrease in future years. Bahrain exports its refined products mostly to India and other Asian countries.
The oil sector is controlled by the state-owned BAPCo, or Bahrain Petroleum Company, which is in charge of all the different operations connected with this field, including production, refining, marketing, and distribution for the local and export markets, as well as exploration and the establishment of new wells. These two tasks are set to become particularly significant in the future, as the National Oil and Gas Authority (NOGA), which controls BAPCo and other companies operating in the hydrocarbon industry, has chosen to revitalize the Bahrain field with enhanced oil-recovery methods. This new direction could improve the production of oil and natural gas, as they can allow most reserves to go beyond the primary or secondary extraction stage, which currently characterizes the operations. Compared to traditional methods, the enhanced oil recovery techniques enable extraction of 20 to 40 percent more oil.
Bahrain announced it had discovered an 80-billion-barrel offshore shale reserve in 2018. The government soon reached an agreement with Halliburton to drill wells to further evaluate the shale oil reserve, as well as a newly discovered offshore gas reserve.
Natural gas accounts for the majority of the country’s total energy consumption, and hydrocarbons also constitute the basis for Bahrain’s two major industries: refining and aluminum smelting. The country has limited gas reserves and, as it uses all the gas it produces, scientists predicted that it would experience shortages starting in the early 2020s. However, Bahrain announced new natural gas discoveries in two reservoirs in 2022, extending its production capacity.
The majority of Bahrain’s gas is used in its heavy industry, and the largest local consumer is Aluminum Bahrain (ALBA), one of the leading aluminum smelters in the world. About a third of gas consumption is employed to generate electricity and in the process to desalinate; about 10 percent is spent to keep pressure in the oil wells. Because the demand for gas is predicted to grow, the National Oil and Gas Authority has launched four offshore exploration blocks and has started a large-scale deep gas program. This has led to a 5 percent increase in the production of natural gas, a result that, however, will not keep up with rising demand.
To meet the increasing consumption of electricity and the consequent demand for natural gas used in the conventional thermal process, the country has negotiated for possible imports of gas from Qatar, Iran, and Russia. However, as the costs of pipeline infrastructure for gas deliveries are extremely high, the country has entered in partnership with the other Gulf Cooperation Council (GCC) countries to ensure a suitable electricity supply even in emergencies. To this end, Bahrain entered the Gulf Cooperation Power Grid in 2009, linking its own grid with those of Saudi Arabia, Qatar, and Kuwait. In the same year, the generation of electric power totaled 11.2 terawatt-hours. The UAE followed in 2011 and Oman in 2012. Linking the grids of the different GCC countries allows reductions in the cost of electricity generation.
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