Bahrain will “stick to the course” of its plans for economic diversification despite the recent discovery of the country’s largest oil field to date, according to the country’s Minister of Industry, Commerce and Tourism Zayed Alzayani, Arabian Business reported.
Alzayani stated that the country will “need to use the additional revenue from [the oil field] to boost other sectors of the economy.”
“What we found in the recent discovery is something additional, and it will no doubt have a positive impact on growing our GDP, and there will no doubt be more contribution from the oil and gas,” he added.
“But I think we should act wisely to use the revenues generated by this find to develop our economy and diversify it even further, by reducing national debt, by investing in human capital, health services and education.”
A recent report from Moody’s Analytics stated that the new find “could stimulate private investment in the country’s energy sector in the near term, and in the medium-term could increase government and oil and gas related revenue and reduce the country’s fiscal and current account deficit.”
Hydrocarbon-related revenue in 2017 made up 75% of total government revenue, compared to the 87% it accounted for in 2016.
On April 4, the head of the financial and economic committee in Bahrain’s parliament, Abdulrahman Bu Ali said that the field has an estimated production capacity of 200,000 barrels per day (b/d), equivalent to 81.5 billion barrels of oil, as well as 13.7 trillion cubic feet (tcf) of natural gas, News of Bahrain reported.
Tom Quinn, senior analyst for Middle East upstream at Wood Mackenzie, said that a tight reservoir similar to the one in the Bahrain find would mean “a low recovery factor,” according to Energy Voice.
“A tight reservoir means a low recovery factor and only a fraction of the 80 plus billion barrels is likely to be recoverable. The oil will also be technically challenging and potentially high cost to develop,” Quinn added.
Reaching the shale formation will require hydraulic fracturing (fracking). Sadad Al-Husseini, a former executive vice president at Saudi Arabian Oil Co, affirmed that this makes the development an “economic and technical” challenge.
Al-Husseini estimates that a well in the new offshore field will cost “no less than $20 million”, compared to the cost of a single onshore shale well which is around $7 million according to a 2017 Citigroup estimate.
The new field is significantly larger that the Bahrain Field, which produces roughly 45,000 b/d.