Bahrain still assessing onshore gas discovery, seeks investors for shale oil project

Dubai — Bahrain is finalizing development plans for its onshore Pre-Unayzah gas field and is also still searching for strategic investors for its offshore unconventional oil discovery Khalij al-Bahrain, according to an investor presentation seen Wednesday by S&P Global Platts.

The island nation in the Persian Gulf announced the discoveries of the Pre-Unayzah and Khalij al-Bahrain fields in April 2018 but has provided no material updates about their reserves size or possible recovery rates since.

Bahrain says the Pre-Unayzah discovery could hold 10-20 Tcf of gas, located underneath the producing Awali field, which is the country's main producing asset.

"The re-entry of the Bahrain Deep-1 well is ongoing and the drilling of a number of Pre-Unayzah wells are expected to provide an updated insight on the size and viability of the reservoirs," stated a Ministry of Finance presentation to prospective investors for an upcoming bond issuance.

"A notional development plan is being finalized for two reservoirs, together with an exploration program to evaluate the potential of deeper reservoirs."

Over the next two years, efforts will focus on optimizing completion design to maximize production and commercial efficiency, the presentation said.

Khalij al-Bahrain has 80 billion barrels of shale oil in place, according to the oil ministry's P50 estimates. Bahrain is still looking for a strategic investor —- either an international oil company or a services company -— for the further exploration and development of the project, said the presentation.

The ministry has said it is targeting producing up to 200,000 b/d. However, offshore unconventionals resources are notoriously difficult and expensive to develop, with analysts estimating the recovery rate could be as low as 5%.

Bahrain is gearing up to launch a two-tranche bond that could total about $1 billion and be used by the small oil producer to stymie its ever-growing budget deficit, which has been exacerbated by the oil price crash.

Bahrain, which has junk status sovereign credit ratings by the major agencies, received a $10 billion bailout in 2018 from neighboring Saudi Arabia, Kuwait and the UAE.

The country produces about 200,000 b/d of crude oil, according to Platts estimates.