Bahrain Signs Major Deal to Bolster Output
April 27, 2009
Manama, Bahrain
A massive expansion of Bahrain's onshore oilfield, which could more than double its oil and gas production, is now closer than ever after a development production sharing agreement (DPSA) was signed yesterday. The deal was sealed between the Bahrain government, US oil giant Occidental Petroleum and Abu Dhabi-based Mubadala Development Company at the Ritz-Carlton Bahrain Hotel and Spa.
"This is a historic day for Bahrain," said Oil and Gas Affairs Minister and National Oil and Gas Authority (Noga) chairman Dr Abdulhussain Mirza.
"This will result in significantly increasing our daily oil and gas production levels and add many hundreds of millions of oil barrels and trillions of cubic feet of natural gas to the reserves of the Bahrain Field."
Dr Mirza signed the deal with Occidental Petroleum deputy chief executive for international business development Rolf Monjo and Mubadala chief executive and managing director Khaldoun Khalifa Al Mubarak.
Sources, however said the oil output would increase to 100,000 barrels per day (bpd) from the about 35,000 bpd now.
He said all that is needed now is the endorsement of the deal by the two houses of Parliament - the Shura Council and the Chamber of Deputies.
"The project will be well and truly on track after that and the final endorsement of His Majesty King Hamad."
He said he expected the project to start by the end of the year after all formalities had been completed.
He said the core concept behind the DPSA is centred on having complete alignment between the contractor consortium and the host government represented by Bapco and Noga.
"We are from now on, all sailing in the same ship and therefore our prime interest is to keep it above water."
The agreement signing comes a little more than a month after the three signed an interim agreement for the further development of the Bahrain Field.
Under this agreement, Occidental, Mubadala and Noga would complete work on the formation of a new joint operating company (JOC) that would implement a development plan to dramatically increase the Bahrain Field's production of both oil and gas.
"The new development will initially cost absolutely nothing to Bahrain but "it would be billions of dollars," the minister said.
Three companies - ExxonMobil, Occidental and Maersk - had earlier been shortlisted for the project.
He said Bahrain is increasingly looking at new digital technology to drill deeper in its search for oil and gas than they had ever done before.
"Bahrain is also stepping up its efforts to find new energy resources to help our planners budget for the future, particularly after the announcement of Vision 2030 - which includes an economic plan for the next 22 years."
He said the agreement is intended to maximise production and ultimately generate additional revenue.
"It is a unique initiative since the discovery of petroleum in Bahrain nearly 77 years ago, when the oldest oilfield in the GCC region began production in 1932."
He said the agreement provides that Occidental, together with Mubadala, will incur the costs of the development project and, while endeavouring to increase the field's output; they will maintain the current production level.
"On behalf of the government of Bahrain, the Bahrain Oil and Gas Holding Company will have a 20 per cent stake in the consortium."
Source: Gulf Daily News For more information, please contact the Office of the Economic Representative via e-mail info@bahraingateway.org or by telephone at (202) 537-7810.
