Bahrain Oil & Gas Report Q3 2016 - New Market Research Report
New Energy research report from Business Monitor International is now available from Fast Market Research
[ClickPress, Tue Jul 19 2016] Despite limited success in boosting oil and gas production from the Bahrain field, the key development for the country will be the refining capacity expansion at the k ingdom's centrepiece Sitra refinery. However, delays to the expansion will result in a continuation of fuel export declines and a widening of the country's fiscal defic it until 2020. This marks a two- year delay to our previous forecast which saw increasing fuel exports from 2 018 . We also note downside risk to our crude oil and gas production forecasts on the back of Mubadala and Occidental's withdrawal from the Tatweer joint venture (JV) currently redeveloping the Bahrain field.
Latest Updates and Key Forecasts
We highlight the following trends and developments in Bahrain's oil and gas sector:
Redevelopment work (new wells, enhanced oil recovery and improved oil recovery) undertaken at the Bahrain field are boosting oil production at the mature field. While we expect some success, the low permeability of the heavy oil reservoirs, among other issues, have led us to anticipate delays. We have not yet included all volumes projected by the project.
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Redevelopment work at the Bahrain field could slow or stagnate altogether over the coming years. It was reported in May 2016 that Mubadala Petroleum and Occidental Petroleum have agreed with Nogaholding to pull out of the 20 year JV Tatweer Petroleum. We will wait to see whether the government manages to find a replacement before deciding on how these changes will impact redevelopment and exploration works at the field, and before changing our forecast as a result.
In early 2015, the chief executive of Bahrain Petroleum Company (BAPCO) said a plan on whether to proceed with a final investment decision on the refinery expansion would only be presented in 2016. As of March 2016, the company has yet to decide on its expansion. Should it proceed, completion of the refinery would be targeted by 2020. A 2020 completion date is a two-year delay to the original upgrade timeline, which targeted completion by 2018. We have modified our Bahrain forecast to reflect this delay, pushing back a ramp-up in refined fuels production to 2020.
In reaction to the low oil prices and its unsustainable fiscal dynamics, Bahrain has finally increased refined fuel prices late 2015/early 2016, and notably for gasoline prices, a first in the past 33 years. We slightly adjusted out refined fuels consumption forecast in reaction. We expect further such moves can be expected over the coming quarters and years, although changes will be implemented slowly and incrementally.
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