Bahrain Oil and Gas Report Q3 2011
Business Monitor International, July 2011, Pages: 73
The Bahrain Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bahrain's oil and gas industry.
We forecast that Bahrain will account for just 0.6% of Middle East regional oil demand by 2015, while contributing negligibly to supply. Middle East regional oil use rose to an estimated 7.6mn b/d in 2010. It should average 7.9mn barrels per day (b/d) in 2011 and then climb to around 8.9mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and averaged an estimated 24.5mn b/d in 2010. After an estimated 25.7mn b/d in 2011, it is set to rise to 30.5mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 17.85mn b/d. This total will have eased to an estimated 16.88mn b/d in 2010 and is forecast to reach 21.54mn b/d by 2015. Iraq has the greatest export growth potential, followed by Qatar.
In terms of natural gas, the region consumed an estimated 391bn cubic metres (bcm) in 2010, with demand of 487bcm targeted for 2015, representing 25% growth. Production of an estimated 455bcm in 2010 should reach 642bcm in 2015 (+41%), which implies net exports rising to 154bcm by the end of the period. Bahrain's estimated share of gas consumption in 2010 will have been 3.2%, while its share of production is put at 2.8%. By 2015, its share of gas consumption is forecast to be 3.4%, with the country accounting for 2.6% of supply.
The 2010 full-year outturn was US$77.45/bbl for OPEC crude, which delivered an average for North Sea Brent of US$80.34/bbl and for West Texas Intermediate (WTI) of US$79.61/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year.
We set our 2011 supply, demand and price forecasts in early January, targeting global oil demand growth of 1.53% and supply growth of 1.91%. With OECD inventories at the top of their five-year average range, we set a price forecast of US$80/bbl average for the OPEC basket in 2011. The unprecedented wave of popular uprisings in the Middle East and North Africa (MENA) that followed the removal of Tunisian President Ben Ali on January 14 has obviously fundamentally altered our outlook, particularly since the unrest spread to Libya in mid-February.
Taking into account the risk premium that has been added to crude prices in response to actual and perceived threats to supply, we have now raised our benchmark OPEC basket price forecast from US$80 to US$101.9/bbl for 2011 and from US$85 to US$95/bbl for 2012. Based on our expectations for differentials, this gives a forecast for Brent at US$106/bbl in 2011 and US$97.60/bbl in 2012. We have kept our long-term price assumption of US$90/bbl (OPEC basket) in place for the time being while we wait to see what path events in the MENA region take.
Bahrain’s real GDP rose by an estimated 4.5% in 2010, with average annual growth of 4.1% forecast in 2010-2015. Consumption of oil is set to contract slightly in 2011 due to civil unrest before resuming its upward trend along with moderate growth of the economy, reaching a maximum of 50,000b/d by 2015. The state accounts for all domestic oil and gas production, as well as the refining and distribution segment. International oil company (IOC) involvement is somewhat limited. Thanks to modest resource potential and few large-scale IOC upstream ventures, crude output is now averaging about 46,000b/d, with potential to reach 90,000b/d by 2015. Gas output is set to increase from 12.57bcm in 2010 to 16.7bcm by 2015, implying an import requirement of 0.5bcm by the end of the forecast period.
Between 2010 and 2020, we are forecasting Bahrain oil production to rise from 46,000b/d in 2010 to 100,000b/d before the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by about 38%, with growth at an assumed 3% per annum towards the end of the period and the country using 58,000b/d by 2020. Gas production is expected to climb towards 18bcm by 2019/20 and with no plans to build gas import infrastructure we forecast consumption to rise to the same level. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Bahrain now shares sixth place with Oman in BMI’s composite Business Environment (BE) ratings table, which combines upstream and downstream scores. The country this quarter retains fifth place in BMI’s updated upstream Business Environment ratings, and is five points above Iran. It has held this position in spite of its very modest oil and gas reserves, but thanks to an improving production growth outlook. There are low reserves-to-production ratios (RPR) and modest non-state involvement in the upstream segment. The country’s risk environment is very sound, but this may prove insufficient to help Bahrain move further up the league table. Bahrain now shares sixth place with Qatar in BMI’s updated downstream Business Environment ratings, with few high scores and no further progress up the rankings likely. It scores 46 points, above Kuwait, thanks to modest refining capacity, oil and gas demand, population and the privatisation trend. The growth prospects for oil/gas consumption and refining capacity are reasonable, offsetting the pedestrian increase in GDP per capita.
Executive Summary
SWOT Analysis
- Bahrain Political SWOT
- Bahrain Economic SWOT
- Bahrain Business Environment SWOT
Bahrain Energy Market Overview
- Regional Energy Market Overview
Oil Supply And Demand
- Table: Middle East Oil Consumption (000b/d)
- Table: Middle East Oil Production (000b/d)
Oil: Downstream
- Table: Middle East Oil Refining Capacity (000b/d)
- Gas Supply And Demand
- Table: Middle East Gas Consumption (bcm)
- Table: Middle East Gas Production (bcm)
Liquefied Natural Gas
- Table: Middle East LNG Exports/(Imports) (bcm)
- Business Environment Ratings
- Middle East Region
- Composite Scores
- Table: Regional Composite Business Environment Rating
Upstream Scores
- Table: Regional Upstream Business Environment Rating
- Bahrain Upstream Rating – Overview
- Bahrain Upstream Rating – Rewards
- Bahrain Upstream Rating – Risks
Downstream Scores
- Table: Regional Downstream Business Environment Rating
- Bahrain Downstream Rating – Overview
- Bahrain Downstream Rating – Rewards
- Bahrain Downstream Rating – Risks
Business Environment
- Legal Framework
- Infrastructure
- Labour Force
- Foreign Investment Policy
- Tax Regime
- Security Risk
Industry Forecast Scenario
- Oil And Gas Reserves
- Oil Supply And Demand
- Gas Supply And Demand
- LNG
- Refining And Oil Products Trade
- Revenues/Import Costs
- Table: Bahrain Oil And Gas – Historical Data And Forecasts
- Other Energy
- Table: Bahrain Other Energy – Historical Data And Forecasts
- Key Risks To BMI’s Forecast Scenario
Long-Term Oil And Gas Outlook
- Oil And Gas Infrastructure
- Oil Refineries
- Table: Refineries In Bahrain
- Oil Storage Facilities
- Service Stations
- Oil Pipelines
- Gas Pipelines
- Macroeconomic Outlook
- Table: Bahrain – Economic Activity, 2006-2015
Competitive Landscape
Executive Summary
- Table: Key Domestic And Foreign Companies In The Bahrain Oil And Gas Sector
- Overview/State Role
- Licensing And Regulation
- Government Policy
- Licensing Rounds
- International Energy Relations
- Table: Key Upstream Players
- Table: Key Downstream Players
Company Monitor
- Bahrain Petroleum Company (Bapco)
- Bahrain National Gas Company (Banagas)
- Chevron Bahrain
- Occidental Petroleum
- Gulf Petrochemical Industries – Summary
- Others – Summary
Oil And Gas Outlook: Long-Term Forecasts
- Regional Oil Demand
- Table: Middle East Oil Consumption (000b/d)
- Regional Oil Supply
- Table: Middle East Oil Production (000b/d)
- Regional Refining Capacity
- Table: Middle East Oil Refining Capacity (000b/d)
- Regional Gas Demand
- Table: Middle East Gas Consumption (bcm)
Regional Gas Supply
- Table: Middle East Gas Production (bcm)
- Bahrain Country Overview
- Methodology And Risks To Forecasts
Glossary Of Terms
- Oil And Gas Ratings: Revised Methodology
- Introduction
- Ratings Overview
- Table: BMI Oil And Gas Business Environment Ratings: Structure
- Indicators
- Table: BMI Oil And Gas Business Environment Upstream Ratings: Methodology
- Table: BMI Oil And Gas Business Environment Downstream Ratings: Methodology
BMI Methodology
- How We Generate Our Industry Forecasts
- Energy Industry
- Cross checks
- Sources
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