Fast Market Research recommends "Bahrain Oil & Gas Report Q3 2013" from Business Monitor International, now available
[USPRwire, Wed Jul 31 2013] Bahrain has a slowly declining and small oil production base, though, according to a recent report by the Bahrain Economic Development board, the country plans to invest US$15bn in the oil and gas sector over the next 30 years as it plans to increase its oil production to 100,000 barrels per day (b/d) before the end of 2020. However, the biggest attention in terms of investment is firmly on the downstream, where Bahrain Petroleum Company (BAPCO) is planning to increase the capacity of the Kingdom's centrepiece Sitra refinery by approximately 100,000b/d - from 262,000b/d to around 362,000b/d. Other plans envisage the construction of a liquefied natural gas (LNG) receiving terminal, although this is still a long way from realisation. For the moment, the government will focus its efforts on upgrading its main refining units - the low hanging fruit in its oil and gas infrastructure portfolio.
We highlight the following trends and developments in Bahrain's oil and gas sector:
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* Bahrain's high breakeven oil price - estimated at approximately US$115 per barrel - is one of the reasons that led to an increase in the country's deficit to 2% of GDP in 2012, up from 0.3% in 2011. The IMF estimated that the price of oil needed by Bahrain to cover production costs is even higher that the country's estimate at $118.70 per barrel. As a result, Moody's has warned of a possible downgrade due to the weak oil price outlook, but also due to the undermining of confidence and growth prospects that political and social tensions could cause. The IMF has predicted that the country's budget deficit will increase to up to 8.6% of GDP by 2018 from the projected 4.2% in 2013.
* State-run firms Bahrain Petroleum (BAPCO) and Saudi Aramco will be implementing a scheme to replace, upgrade and redirect a pipeline that links Saudi oil fields to Bahrain's only refinery - the Sitra refinery. The pipeline, likely to be completed by 2015, will entail an estimated investment of US$350mn and connect Bapco's refinery with the Eastern Province in Saudi Arabia. The two companies finished studies for a new pipeline between Bahrain and Saudi Arabia in March 2013 and, once the project is completed, the pipeline is likely to have a capacity of 450,000 barrels per day (b/d) of oil, indicating a rise in oil exports from Saudi Aramco to Bahrain. A tender for the project is to be launched within 2013.
* BAPCO is planning a major overhaul and expansion of its refinery at Sitra, with the aim of adding some 100,000b/d of capacity and additional petrochemicals production. The project is expected to cost at least US$6bn, but accessing financing could be a challenge. In January 2013 BAPCO appointed the UK's HSBC and France's BNP Paribas as financial advisers to support the national petroleum company's bid to raise the necessary funding for the US$6bn expansion.
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