Bahrain's Oil Reserves: A Strategic Resource Overview

Bahrain's economy is heavily dependent on oil and gas, with petroleum being the country's most exported product, accounting for 60% of export receipts, 70-85% of government revenues, and 11% of GDP. Bahrain has proven oil reserves of 124,560,000 barrels as of 2016, ranking 67th in the world. In 2018, Bahrain announced a significant discovery of an estimated 80 billion barrels of shale oil, which could boost the country's economic and fiscal strength. The country's oil production and consumption, as well as its efforts to diversify its economy beyond oil, are also notable aspects of Bahrain's oil landscape.

Bahrain's oil reserves

Bahrain is a small non-OPEC Gulf oil producer with approximately 124.6 million barrels of proven oil reserves as of 2016, ranking 67th in the world. This accounts for about 0.0% of the world's total oil reserves. Bahrain has proven reserves equivalent to 5.5 times its annual consumption. This means that, without imports, there would be about 6 years of oil left (at current consumption levels and excluding unproven reserves).

Bahrain receives its oil revenues from two fields: the onshore Bahrain field and the offshore Abu Safah field, which it shares with Saudi Arabia. In April 2018, the Bahraini government announced its biggest oil and gas discovery since the 1930s. The extensive reservoir discovered off Bahrain’s west coast is estimated to contain about 80 billion barrels of tight oil in place, although further study is required. This discovery has not yet been developed, despite optimism that it could help Bahrain's economy.

Bahrain's onshore oil reserves are estimated to be around 125 million barrels, which, at the current rate of production, would last less than seven years. This makes the new discovery of as much as 80 billion barrels very important. If the latest discovery of oil proves viable and leads to a large increase in Bahrain's oil production, and associated fiscal revenue, it could materially reduce the kingdom's budget deficit and improve its balance of trade.

Bahrain's crude oil production has averaged 200,000 barrels per day in recent months, compared to 180,000-190,000 barrels per day late last year. 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.

Oil consumption in Bahrain

Oil and gas play a dominant role in Bahrain's economy. Oil revenues come from two fields: the onshore Bahrain field and the offshore Abu Safah field, which it shares with Saudi Arabia. In 2016, Bahrain consumed 62,000 barrels per day (B/d) of oil, ranking 91st in the world for oil consumption. This accounted for about 0.1% of the world's total consumption.

Bahrain's oil consumption breaks down to 1.82 gallons of oil per capita every day, or 665 gallons per capita per year (16 barrels). In 2016, Bahrain produced 63,886 barrels of oil per day, ranking 59th in the world. However, the country imports 93% of its oil consumption (57,726 barrels per day in 2016).

Bahrain's oil reserves are relatively small compared to other countries in the region. As of 2016, the country held 124,560,000 barrels of proven oil reserves, ranking 67th in the world and accounting for about 0.0% of the world's total oil reserves. At the current rate of consumption, Bahrain's onshore oil reserves are expected to last less than seven years.

In April 2018, Bahrain announced its biggest oil and gas discovery since the 1930s, with an estimated 80 billion barrels of tight oil and 10-20 trillion cubic feet of deep natural gas found off the west coast of the country. This discovery could significantly improve Bahrain's economic and fiscal strength, allowing the country to boost its hydrocarbon production and reduce its budget deficit.

Oil production in Bahrain

Oil production is a key component of Bahrain's economy, although the country is also seeking to diversify its income sources. Bahrain has been producing oil since 1932 when its onshore field, the Bahrain Field, became the first in the Gulf Cooperation Council to produce oil.

In 2016, Bahrain produced 63,886 barrels of oil per day, ranking 59th in the world. This amount is equivalent to 18.7% of its total proven reserves. However, the country consumes more than it produces, importing 93% of its oil consumption (57,726 barrels per day in 2016). Bahrain's oil revenues come from two fields: the Bahrain Field and the offshore Abu Safah field, which it shares with Saudi Arabia. The Abu Safah field provides the majority of the country's oil, with output averaging 300,000 barrels per day. The Bahrain Field, meanwhile, produces more than 40,000 barrels per day.

In April 2018, Bahrain announced the discovery of an extensive reservoir off its west coast, which is estimated to contain around 80 billion barrels of tight oil. This discovery is significantly larger than Bahrain's proven reserves, which stood at 3 trillion cubic feet in 2018. The country is still evaluating the viability of this find, with technical work being carried out to understand production costs. If this discovery proves viable, it could significantly boost Bahrain's oil production and associated fiscal revenue, helping to reduce the country's budget deficit.

Bahrain's oil exports

Bahrain's economy is heavily dependent on oil and gas, with petroleum being the country's most exported product. Oil exports account for 60% of export receipts, 70% of government revenues, and 11% of GDP. Bahrain's oil exports, combined with its successful banking and tourism sectors, have contributed to its status as a high-income economy.

In April 2018, Bahrain announced its biggest oil discovery in decades, with an estimated 80 billion barrels of tight oil and 10-20 trillion cubic feet of natural gas found off the west coast. This discovery is expected to boost Bahrain's economic and fiscal strength by increasing its rate of hydrocarbon production and reducing its budget deficit. Despite this significant discovery, Bahrain continues to diversify its economy away from oil, with the non-oil sector showing robust growth in recent years.

Oil and Bahrain's economy

Oil and natural gas play a dominant role in Bahrain's economy. Bahrain's finance industry is very successful, and the country has been investing in the banking and tourism sectors since the late 20th century. Bahrain was named the world's fastest-growing financial centre by the City of London's Global Financial Centres Index in 2008. The country's banking and financial services sector, particularly Islamic banking, has benefited from the regional boom driven by demand for oil.

Petroleum is Bahrain's most exported product, accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Bahrain's crude oil production has averaged 200,000 barrels per day (bpd) in recent months, with about 150,000 bpd coming from the offshore Abu Safah field it jointly owns with Saudi Arabia. Bahrain also produces over 40,000 bpd from its onshore Bahrain field.

In April 2018, Bahrain announced its biggest oil and gas discovery since the 1930s, with an estimated 80 billion barrels of tight oil and 10-20 trillion cubic feet of deep natural gas off the west coast. This discovery could help the country improve its economic and fiscal strength, stimulate private investment in the energy sector, and increase government revenue from oil and gas.

Bahrain has been working to diversify its economy away from oil, with revenues from oil exports accounting for over 70% of government income since 2007. The government is targeting other sectors, such as plastics, fiberglass, chemicals, petrochemicals, and food processing. Bahrain is also exploring Carbon Capture and Storage (CCS) technology to deploy across its oil and gas and industrial sectors.

Despite diversification efforts, oil prices still significantly impact Bahrain's economy. Low oil prices since 2014, combined with domestic and regional political risks, have impacted the country's credit risk and liquidity situation. Bahrain's fiscal deficit has been rising, and its foreign reserves have been shrinking, leading to downgraded credit ratings in 2016 and 2017. The country's economic stability is closely connected to oil prices, Saudi transfers, diversification efforts, and economic reforms.

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