LNG ship, shared grid on way

Bahrain is all set to tap into the growing market of Liquefied National Gas from as far as the US or Australia by launching a specially built LNG ship by the end of this year. The report by Financial Times, quoting oil minister, Shaikh Mohammed bin Khalifa al-Khalifa, said that the Kingdom is discussing long-term plans, most importantly, with Kuwait and Saudi Arabia, about the development of an interconnected shared gas grid.

“It is ultimately about the security of supply,” Sheikh Mohammed was quoted as saying by FT. He also explained how optimistic is the Kingdom on the potential of an 80 billion-barrel oilfield, its biggest find since the 1930s, in transforming the state’s fortunes. “What we have is extremely encouraging,” the report quoted Minister as he said that the Kingdom is working to prepare the right fiscal regime “to attract companies to come and co-invest with us.”

Bahrain, he said, is aiming to drill two to four wells to test the flow from the field, with the first results expected around the turn of the year. He told that the key criteria in this development is making this “attractive” for companies to invest. “It should give investors the returns they require while still being fair to the government here.”

Besides offering concessions, the Minister also revealed that the Kingdom will most likely go with production-sharing agreements, where revenues are divided in a percentage split with partners. “Where we end up exactly remains to be seen,” he said expressed his confidence in the development saying, “It will be win-win.” As he also revealed the country’s interest in working with companies in the US shale sector, the minister said that Italy’s ENI is already working on further exploration in the Kingdom. Interests, he said, have also been shown by Chinese companies.

“The good news is it is very shallow offshore. It’s a bathtub area. So we are looking at ways to optimise costs of development,” the minister was quoted as saying. When he was asked about the transition the world is now witnessing from the carbon-based fuel, he told FT that there is “little concern in the region — yet — about so-called peak demand being imminent.” Citing to the recovery in oil prices that now stands at around $85 a barrel, he explained that the demand is still growing strongly, with supply struggling to keep up.

“There is no real evidence of peak demand being achievable in the next few decades,” the minister said. “Even if electric vehicles and renewable energy take off, we still see hydrocarbons remaining the dominant part of the fuel mix. Supply risks far outweigh demand destruction.” Ultimately, Bahrain is banking on the development of its new oil reserves to support the entire country, with energy sales accounting for the vast majority of government income. “It’s difficult to see it not having an impact, given the size of the resource,” he said.