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Highlights

Offshore tight oil find struggling to achieve FID

Minister says appeal remains despite investment climate

Discovery in 2018 was Bahrain's largest since 1930s

Bahrain remains on pace to bring online its offshore shale reserves by around 2023, despite not having moved beyond the test drilling phase, oil and gas minister Sheikh Mohammed bin Khalifa al-Khalifa said Oct. 19.

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The island nation in the Persian Gulf made waves in 2018 when it first revealed the extensive Khalij al-Bahrain reservoir off its west coast, which it said could contain some 80 billion barrels of tight oil -- its largest oil discovery since the 1930s.

But since then, not much progress has been made to develop the resources, with a final investment decision still pending, and outside investor interest has been slow to materialize.

Khalifa said test results are still too preliminary to determine a potential maximum production rate.

"Initially when we started in 2018, we said five years, so we should be ready by then," he said on a webinar hosted by the Arab Gulf States Institute in Washington. "What we need to prove first is the geological and technical viability. Once we get there, hopefully we will have investors."

The ministry has said it is targeting producing up to 200,000 b/d, though the resources are likely technically challenging to develop. If achieved, that would roughly double Bahrain's current crude output, which averaged 180,000 b/d in September, according to S&P Global Platts' survey of OPEC+ production.

The country has sought a strategic investor -- either an international oil company or a services company, particularly with expertise in US shale -- for further exploration and development of the field, having previously contracted with Halliburton to drill two appraisal wells.

Bahrain also in 2019 signed a memorandum of understanding with Chevron to conduct an assessment of unconventional offshore oil and gas potential in the Gulf of Bahrain.

Reducing crude imports

Industry investment appetite for challenging reservoirs has been significantly impaired by the coronavirus pandemic and faces further headwinds with the growing push from regulators and shareholders of western IOCs to green their energy portfolios.

But Khalifa said the current squeeze in oil and gas prices shows that upstream development is still necessary, with renewables yet to scale up to meet growing global energy demand, and that he remained confident that the project would eventually gain the outside investment that Bahrain seeks.

"With these oil prices, the chances of it going full-scale are better," he said.

He also said the resources should be attractive for investors, as its production will be consumed locally by the Bapco refinery, with no need to build additional infrastructure for exports or processing.

The 267,000 b/d refinery, which imports the bulk of its feedstock from neighboring Saudi Arabia, is in the middle of a $6 billion modernization program that will see its capacity expand to 380,000 b/d.

Production from the new fields will displace the Saudi imports, allowing Bahrain to reduce its import bill, Khalifa said.