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Home > Industrial Markets > Energy > Oil/Gas
Bahrain Oil and Gas Report Q4 2008
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In this report, we forecast that Bahrain will account for 0.39% of Middle East regional oil demand by2012, while providing just 0.10% of supply. Regional oil use of 8.24mn barrels per day (b/d) in 2001 roseto 10.61mn b/d in 2007. It should average 10.86mn b/d in 2008 and then rise to around 11.81mn b/d by2012. Regional oil production was 22.87mn b/d in 2001, and in 2007 averaged 25.24mn b/d. It is set torise to 28.94mn b/d by 2012. In terms of natural gas, the region in 2007 consumed 370bn cubic metres(bcm), with demand of 541bcm targeted for 2012; this represents 46% growth. Production of an estimated363bcm in 2007 should reach 575bcm in 2012 (+58%), which implies net exports rising to 34bcm by theend of the period. Bahrain's share of gas consumption in 2007 was 2.43%, while its share of production isput at 3.17%. By 2012 its share of gas consumption is forecast to be 2.81%, with the country accountingfor just 1.91% of supply.
In Q208 we estimate that the OPEC basket price averaged just under US$115 per barrel (bbl), up around24% from the Q108 level. The OPEC basket price had exceeded US$127/bbl on the May 22, but slippedback towards US$121/bbl later in the month. In June we assumed an average of around US$120/bbl todeliver our quarterly estimate of US$114.98/bbl. The estimated Q208 average prices for the main markerblends are now US$118.63/bbl for Brent, US$119.61/bbl for WTI and US$115.89/bbl for Russian Urals(Mediterranean delivery). Our projections for 2008 as a whole have been revised upwards from the lastquarterly report. We are now assuming an OPEC basket price average of US$106/bbl for 2008, comparedwith the US$81/bbl estimate provided by our last quarterly report. Based on recent price differentials, thisimplies Brent at US$109.71/bbl, WTI averaging US$110.64/bbl and Urals at US$106.88/bbl.
Bahrain’s real GDP growth is forecast by BMI at 5.2% for 2008, following 7.0% in 2007. We areassuming 4.3% growth in 2008, 4.4% in 2009, 4.3% in 2011 and 4.2% in 2012. Consumption of oil is setto rise with the growth of the economy, increasing by at least 3% per annum over the forecast period andreaching an estimated 46,000b/d by 2012. The state accounts for all domestic oil and gas production, aswell as the refining and distribution segment. International oil company (IOC) involvement is verylimited. Thanks to a lack of resources potential and the absence of large-scale IOC upstream ventures,crude output is now averaging just 35,000b/d; however, no further significant near-term decline isexpected. We are assuming liquids volumes will remain near this level until the end of the decade, withsome risk of slippage due to asset maturity and a lack of investment options. Gas output is set to fall from11.5bcm to 11.0bcm over the period, implying imports of around 4.2bcm by 2012.
Between 2007 and 2018 we are forecasting a decrease in Bahrain oil production of 8.6%, with crudevolumes peaking in 2015/2016 at 40,000b/d before falling to 32,000b/d by the end of the 10-year forecastperiod. Oil consumption between 2007 and 2018 is set to increase by 38.4%, with growth slowing to anassumed 3.0% per annum towards the end of the period and the country using 55,000 b/d by 2018. Gasproduction is expected to climb towards 15bcm by 2014, then decline to just 6bcm by the end of theperiod. With 2007-2018 demand growth of 126%, this provides an import requirement rising to 14.4bcmby 2018. Details of the new BMI 10-year forecasts can be found in the appendix of this report, whichprovides global, regional and country-specific projections.
Bahrain still occupies ninth place in BMI’s updated Upstream Business Environment rating, above onlySaudi Arabia. It stands second from last because of its very modest oil and gas reserves, poor productiongrowth outlook, low reserves to production ratios (RPR) and modest non-state involvement in theupstream segment. The country’s risk environment is very sound, but this may prove insufficient to helpBahrain tackle Kuwait above it in the league table. It should, however, be able to keep Saudi Arabia atbay and avoid slipping to last place. The state is now ranked third from last in the league table in BMI’supdated Downstream Business Environment rating, with few high scores and progress further up therankings unlikely. It is ranked eighth, thanks to low scores for refining capacity, oil and gas demand,population and the privatisation trend. The growth outlooks for oil/gas consumption and refining capacityalso represent relatively weak suits, along with the pedestrian increase in GDP per capita. Iraq isimmediately behind it in the regional rankings, and there is some risk of it challenging Bahrain’s eighthplace.
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