7th APRIL 2015 - Vol.XXXVIII No.018
Local News

First oil hope for 75 years

BAHRAIN yesterday signed an agreement with a Thai company which it is hoped will lead to the first commercial discovery of oil off the country's shores for 75 years.

Oil and Gas Affairs Minister Dr Abdulhussain Mirza described the deal as a historic milestone in the development of the sector and said it could potentially be worth billions of dollars.

The country's Exploration and Production Sharing Agreement (EPSA) with PTTEP involves the company drilling two wells in the Khuff formation.

The total exploration period will be six years and in case of a discovery will be extended to 24 years.

The agreement was signed at a Press conference at the National Oil and Gas Authority (NOGA) headquarters in Hoora.

"Since the first discovery of oil in Bahrain some 75 years ago and despite a number of previous attempts, no new discoveries were made and we are hopeful that PTTEP will make history by a new discovery in Block 2 that will bring prosperity to both PTTEP and Bahrain," said Dr Mirza, who is also Noga chairman.

He said the agreement had been endorsed by His Majesty King Hamad and Prime Minister Shaikh Khalifa bin Salman Al Khalifa, as well as the Cabinet, Tender Board, Parliament and Shura Council.

Dr Mirza, who is also Tender Board chairman, said the soaring cost of oil, which this year hit $100 (BD37.8) per barrel, meant even a small or medium sized discovery will make the project economically viable.

"Earlier, the major international oil companies dominated the upstream scene and in particular the grass root exploration ventures," he said.

"Companies like PTTEP have contributed to reshape the world energy map by being active on this front and by its undertaking of many challenging projects.

"More projects are being assigned to small and medium size companies than ever before."

Dr Mirza is confident the project will be successful and pointed to PTTEP's track record in establishing international ventures in Iran, Algeria, Egypt and Oman.

The minister told the GDN the government would not bear any drilling expenses and said if oil was discovered Bahrain would split its production with the company. He said PTTEP would also be taxed on its share of the oil at a rate of 46 per cent.

PTTEP president Khun Mrigadat said the company was unlikely to start drilling until next year, when it has completed a comprehensive geological study and seismic survey of the area, at a cost of $13 million (BD4.9m).

Parliament this year approved two tenders for the exploration of oil and gas off Bahrain's shores for the first time in history. US firm Occidental will carry out exploration in Blocks Three and Four, in the south-east, while PTTEP will work in Block Two in the north-east.

Dr Mirza said companies from China, India and the US had also expressed an interest in Block One and officials are considering allowing bids.

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