Bahrain still evaluating giant shale oil discovery despite high oil prices: minister

Bahrain has yet to take a decision on its 80-billion-barrel offshore shale oil discovery in spite of higher oil prices, the country's oil minister told reporters on May 16.

"We are still working on the technical side of things, understanding the resource play, all of the above. Ultimately, it's what's the cost of the production? Well, then once you have that, yes, you can start getting into this part," Sheikh Mohammed bin Khalifa al-Khalifa said on the sidelines of the Middle East Petroleum and Gas Conference in Manama.

Bahrain announced the discovery of 80 billion barrels of shale oil and 20 Tcf of gas offshore in 2018. The oil ministry planned to develop the discoveries within a period of five years with the support of international oil companies, but progress has been slow.

It had reached an agreement with oil services company Halliburton to start drilling two wells in 2018 to evaluate the potential of the reserves.

The discovery at the time eclipsed Bahrain's proven reserves, which stood at 3 Tcf. The island's production in 2020 averaged 579 Bcf/d, according to the BP Statistical Review of World Energy 2021.

Oil prices are currently around 66% higher than when the discovery was announced. Dated Brent closed at $111.55/b on May 13.

"With these prices, we have a much better chance than we did back in 2020," Sheikh Mohammed said referring to the crash in crude prices due to the onset of the COVID-19 pandemic.

Production plans

Bahrain's crude oil production has averaged 200,000 b/d in recent months, compared to 180,000- 190,000 b/d late last year, according to estimates from S&P Global Commodity Insights.

The country gets the majority of its oil, or about 150,000 b/d, from the offshore Abu Safah field it jointly owns with Saudi Arabia. Bahrain also produces more than 40,000 b/d from its onshore Bahrain field.

The country also plans to raise capacity at its maturing onshore Bahrain Field, which was the first in the Gulf Cooperation Council to produce oil, in 1932.

"We've been working on multiple asset recovery projects. We'll pilot first and once we move up the pilot, then we move on to the development side," Khalifa said.

Bahrain's Nogaholding operates the field through Tatweer Petroleum. The field had an average crude and condensate production of 43,200 barrels of oil equivalent per day in 2020. It also had 1,699 MMcf/d average production of non-associated gas.

Nogaholding assumed full ownership of Tatweer Petroleum in 2016 when Abu Dhabi's Mubadala and Occidental exited the field.

Much of Bahrain's production comes from the Abu Safah oil field, which it shares with Saudi Arabia, where output averages 300,000 b/d.

The minister declined to comment on whether Bahrain could collaborate with Saudi Arabia to explore and develop its shale discoveries.

Bahrain could also raise debt and equity to finance its various projects as part of a planned divestment program that could take five years.

"Aramco did the IPO, so everything is on the table as a means of increasing your capital sources, but obviously it is a tool for fiscal balance," Shaikh Mohammed said.

"We haven't decided as a government yet to do any of that but it's on the table and it's an important source of capital, typically ... debt. It may also include equity," he added.