Restructured ministry, renewed energy, renewable future
12
COVER STORY
Restructured ministry, renewed energy, renewable future The Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority spoke exclusively to Energy World, about the reform of Bahrain’s oil and gas industry
A
lthough Bahrain was the first country in the GCC to discover oil, some seven decades ago; little development has been made since that first well was drilled, but a resurgence
March 2010
and restructuring of the oil and gas industry is now well underway. The reform of the oil and gas industry in Bahrain was initiated by His Majesty King Hamad bin Isa Al Khalifa, who, since his accession, has
implemented many social, political and economical reforms. Dr Abdul-Hussain Ali Mirza, Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority (NOGA), told Energy World, “On the political front His Excellency has reactivated the constitution and democracy in Bahrain by establishing two chambers – an elected chamber of 40 members and an appointed chamber of 40 members. “He freed all political prisoners and we now have freedom of expression and freedom of press and civil rights, and NGOs are flourishing now. “On the social side he empowered women to take a more active role in the affairs of the country by forming the supreme woman’s council and since then many women have taken senior positions throughout the Bahrain economy. “On the economic front, there were many reforms, and the Crown Prince was asked to head an economic development board.” In September 2005, the King restructured the oil and gas industry to create one entity – called the National Oil and Gas Authority (NOGA), replacing the Supreme Oil Council, the National Committee for Gas and the Ministry of Oil. The idea of NOGA is to fuel the economic growth of Bahrain. Prior to this reform there were only four oil and gas companies in Bahrain – Bapco, BANAGAS, GPIC, and BAFCO. Following the reform, in 2008, NOGA established the Bahrain National Gas Expansion Company (BNGEC), the Bahrain Lube Oil Company (BLOC) and most recently, for the development of the Bahrain Field, Tatweer Petroleum. Dr Ali Mirza explains: “NOGA is designed to employ private sector thinking as opposed to public sector thinking – to think outside of the box – to be creative and innovative and to take faster decisions. “There are five objectives to NOGA. The first is to sustain the natural wealth of Bahrain, like oil and gas. Second is to increase revenue from
13
natural wealth. Third is to look for alternative sources of energy. Fourth is to ensure that the environment, health and safety are paramount in the oil and gas industry. Then, fifth is to develop the human resources side of oil and gas with new leadership. “Today, we have a board of
have been awarded – three to Occidental and one to PTT. Each company will drill two exploration wells in their respective blocks, over two phases, and if successful they will have a 24-year off take agreement. Another important project for
The technology to be used will include CO2 injection, gas injection, water flooding and steam injection. The off take will increase three fold from 32,000 barrels per day to 100,000 bpd within seven years and stay at that peak until 2028. The gas production capacity will
“The technology to be used will include CO2 injection, gas injection, water flooding and steam injection” technocrats. Nobody is there because of their connections. This has allowed us to make a great many changes in a very short time.” The first achievement of NOGA was to offer all of Bahrain’s offshore blocks to International Oil Companies to bid for exploration work. Since the first all discovery in the GCC was made in Bahrain in 1932 there have been no new discoveries in the country. There have been a number of unsuccessful attempts, though, so the challenge now was how NOGA could attract the right calibre of IOCs to bid for the work. NOGA set up a website to attract bidders, so as to provide each with all of the necessary background information. Over 80 IOCs applied with bids, and now all four blocks
NOGA was to increase the production of the original Bahrain Field using new technology to enhance the oil recovery. Eleven companies bid for this work, and the best three were shortlisted – being ExxonMobil, Mersk and Occidental with Mubadala. The joint venture of Occidental Petroleum Corporation (Oxy) and Mubadala Development Company (Mubadala) was chosen. They were awarded a 20-year Development Production Sharing Agreement (DPSA), and during this 20-year period the JV will invest a combined US$15 billion. NOGA decided to launch a new company to manage the EOR work, and so Tatweer Petroleum was inaugurated by the Crown Prince on 20 January, 2010.
March 2010
14
COVER STORY
also increase from 1.7 billion cubic feet/day to 2.7bn cubic feet/day, which will meet domestic gas demands for the next 15 years. The third major project NOGA has undertaken is to explore for deep-gas onshore within Bahrain. “Over the years we have drilled to a depth of 16,000 feet ,but we have been advised that there is a new layer below where we have drilled, at around 20,000 feet. We believe there is a good reserve, but we cannot announce it until the agreements are completed,” added Dr Ali Mirza. When NOGA was first formed, in 2006, a projection of the future energy demands of Bahrain over the next 20 years was undertaken. The result highlighted a potential shortage in energy supplies as early as 2010. “We have addressed this shortfall by drilling for more gas and employing EOR – giving us enough energy for the next 15 years,” said Dr Ali Mirza. In 2006, the country established a Gas Conservation Committee, to look at more efficient electricity generation facilities, in a bid to save on gas consumption. Dr Ali Mirza added: “We are also looking at increasing our gas supplies with imports possible from Iran or Qatar, and we have also signed a letter of understanding with the chairman of Gazprom. “If the gas comes from Iran or Qatar it will be piped, but if it comes from further afield it will come as NGL. For that reason, the country is currently installing NGL storage and transportation facilities.” In terms of downstream, the first refinery in the country was built in
March 2010
1936, and recently it has undergone a US$1.2 billion refurbishment. Within this refinery, NOGA is currently undertaking a low sulphur diesel project, with specifications to match the best in the world. Also, Foster Wheeler recently completed a US$140m refinery gas desulphurisation project. Most recently, NAGO and BAPCO jointly completed a ten-year master plan, which requires an investment of US$5bn. This will see refinery capacity rise from 260,000 bpd to between 350,000 and 400,000 bpd by combining the current five crude units into two or three and deploying new technology. Dr Ali Mirza said: “The oil and gas industry has been rejuvenated in Bahrain, and it has a much more positive outlook. His Majesty wanted a paradigm shift and in just four years we have achieved what would usually take over 10 years.”
The New Energy Management Lab In terms of renewable energy, Bahrain is also keen to look for additional energy sources aside from hydrocarbons. Not, stresses Dr Ali Mirza, as replacements but as complimentary sources. He added: “Bahrain is keen on promoting the concept of renewable energy – using solar or wind energy.” For this purpose Bapco is developing a unique recreational and educational community project in Awali. The town of Awali was built in 1934 for the expatriate community when oil was first discovered. Today, the town is being developed into a research and knowledge hub, with the New Energy Management Lab, which was inaugurated last month, at its centre. Dr Ali Mirza said: “The lab has been installed in the park to make the centre educational for all visitors. The idea is to raise awareness about the need for renewable energy and to set the pace.” The New Energy Management Lab was manufactured in Germany by Berlin-based Heliocentric Energiesysteme, and installed in the
park in February. It will be the first facility of its kind in Bahrain, using fuel cells, wind mills and photo electric cells to generate 5kW of electricity, which will power lighting and equipment in Dar Al-Nakheel at Awali Park. In terms of wind generated power, NOGA has employed a Japanese firm, called Interdomain, to install a 50-metre-tall mast upon the refinery, in order to measure the wind on a daily basis for one year. Interdomain will establish whether there is enough wind velocity to warrant investment in wind electricity generation. Despite all of its green, renewable and sustainable solutions and initiatives, Bahrain is also actively developing a nuclear power contingence. Dr Ali Mirza said: “Generally, in the Middle East, there is a common question being asked, that is what will follow after oil? As the safety measures increase in nuclear energy, year-on-year, it will become the next focus in the area.” Dr Ali Mirza said that NOGA had not looked into biofuels because as a small country it was felt there was insufficient space for the necessary crops. “There are also negative comments emerging around biofuel, such as their demand on feedstuffs,” he added. Dr Ali Mirza said: “OPEC countries are keen to keep the price of crude not low and not high because if it’s too low it will not warrant development and investment in hydrocarbon processing and if it’s too high it will open the door to alternatives, like biofuels, making them viable.” The current structure underneath NOGA will be further expanded with the addition of a services company, to offer the full range of oil and gas support services. A tender has been sent out, and NOGA will appoint a consultant shortly to advise on establishing this business. “Following the successful launch of BLOC, the lube oil company, we will continue to look for further diversification,” said Dr Ali Mirza. “We are calling on the International Oil Companies to come and have alliance or partnerships with us.”
COVER STORY
Restructured ministry, renewed energy, renewable future The Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority spoke exclusively to Energy World, about the reform of Bahrain’s oil and gas industry
A
lthough Bahrain was the first country in the GCC to discover oil, some seven decades ago; little development has been made since that first well was drilled, but a resurgence
March 2010
and restructuring of the oil and gas industry is now well underway. The reform of the oil and gas industry in Bahrain was initiated by His Majesty King Hamad bin Isa Al Khalifa, who, since his accession, has
implemented many social, political and economical reforms. Dr Abdul-Hussain Ali Mirza, Minister of Oil and Gas Affairs and Chairman of the National Oil and Gas Authority (NOGA), told Energy World, “On the political front His Excellency has reactivated the constitution and democracy in Bahrain by establishing two chambers – an elected chamber of 40 members and an appointed chamber of 40 members. “He freed all political prisoners and we now have freedom of expression and freedom of press and civil rights, and NGOs are flourishing now. “On the social side he empowered women to take a more active role in the affairs of the country by forming the supreme woman’s council and since then many women have taken senior positions throughout the Bahrain economy. “On the economic front, there were many reforms, and the Crown Prince was asked to head an economic development board.” In September 2005, the King restructured the oil and gas industry to create one entity – called the National Oil and Gas Authority (NOGA), replacing the Supreme Oil Council, the National Committee for Gas and the Ministry of Oil. The idea of NOGA is to fuel the economic growth of Bahrain. Prior to this reform there were only four oil and gas companies in Bahrain – Bapco, BANAGAS, GPIC, and BAFCO. Following the reform, in 2008, NOGA established the Bahrain National Gas Expansion Company (BNGEC), the Bahrain Lube Oil Company (BLOC) and most recently, for the development of the Bahrain Field, Tatweer Petroleum. Dr Ali Mirza explains: “NOGA is designed to employ private sector thinking as opposed to public sector thinking – to think outside of the box – to be creative and innovative and to take faster decisions. “There are five objectives to NOGA. The first is to sustain the natural wealth of Bahrain, like oil and gas. Second is to increase revenue from
13
natural wealth. Third is to look for alternative sources of energy. Fourth is to ensure that the environment, health and safety are paramount in the oil and gas industry. Then, fifth is to develop the human resources side of oil and gas with new leadership. “Today, we have a board of
have been awarded – three to Occidental and one to PTT. Each company will drill two exploration wells in their respective blocks, over two phases, and if successful they will have a 24-year off take agreement. Another important project for
The technology to be used will include CO2 injection, gas injection, water flooding and steam injection. The off take will increase three fold from 32,000 barrels per day to 100,000 bpd within seven years and stay at that peak until 2028. The gas production capacity will
“The technology to be used will include CO2 injection, gas injection, water flooding and steam injection” technocrats. Nobody is there because of their connections. This has allowed us to make a great many changes in a very short time.” The first achievement of NOGA was to offer all of Bahrain’s offshore blocks to International Oil Companies to bid for exploration work. Since the first all discovery in the GCC was made in Bahrain in 1932 there have been no new discoveries in the country. There have been a number of unsuccessful attempts, though, so the challenge now was how NOGA could attract the right calibre of IOCs to bid for the work. NOGA set up a website to attract bidders, so as to provide each with all of the necessary background information. Over 80 IOCs applied with bids, and now all four blocks
NOGA was to increase the production of the original Bahrain Field using new technology to enhance the oil recovery. Eleven companies bid for this work, and the best three were shortlisted – being ExxonMobil, Mersk and Occidental with Mubadala. The joint venture of Occidental Petroleum Corporation (Oxy) and Mubadala Development Company (Mubadala) was chosen. They were awarded a 20-year Development Production Sharing Agreement (DPSA), and during this 20-year period the JV will invest a combined US$15 billion. NOGA decided to launch a new company to manage the EOR work, and so Tatweer Petroleum was inaugurated by the Crown Prince on 20 January, 2010.
March 2010
14
COVER STORY
also increase from 1.7 billion cubic feet/day to 2.7bn cubic feet/day, which will meet domestic gas demands for the next 15 years. The third major project NOGA has undertaken is to explore for deep-gas onshore within Bahrain. “Over the years we have drilled to a depth of 16,000 feet ,but we have been advised that there is a new layer below where we have drilled, at around 20,000 feet. We believe there is a good reserve, but we cannot announce it until the agreements are completed,” added Dr Ali Mirza. When NOGA was first formed, in 2006, a projection of the future energy demands of Bahrain over the next 20 years was undertaken. The result highlighted a potential shortage in energy supplies as early as 2010. “We have addressed this shortfall by drilling for more gas and employing EOR – giving us enough energy for the next 15 years,” said Dr Ali Mirza. In 2006, the country established a Gas Conservation Committee, to look at more efficient electricity generation facilities, in a bid to save on gas consumption. Dr Ali Mirza added: “We are also looking at increasing our gas supplies with imports possible from Iran or Qatar, and we have also signed a letter of understanding with the chairman of Gazprom. “If the gas comes from Iran or Qatar it will be piped, but if it comes from further afield it will come as NGL. For that reason, the country is currently installing NGL storage and transportation facilities.” In terms of downstream, the first refinery in the country was built in
March 2010
1936, and recently it has undergone a US$1.2 billion refurbishment. Within this refinery, NOGA is currently undertaking a low sulphur diesel project, with specifications to match the best in the world. Also, Foster Wheeler recently completed a US$140m refinery gas desulphurisation project. Most recently, NAGO and BAPCO jointly completed a ten-year master plan, which requires an investment of US$5bn. This will see refinery capacity rise from 260,000 bpd to between 350,000 and 400,000 bpd by combining the current five crude units into two or three and deploying new technology. Dr Ali Mirza said: “The oil and gas industry has been rejuvenated in Bahrain, and it has a much more positive outlook. His Majesty wanted a paradigm shift and in just four years we have achieved what would usually take over 10 years.”
The New Energy Management Lab In terms of renewable energy, Bahrain is also keen to look for additional energy sources aside from hydrocarbons. Not, stresses Dr Ali Mirza, as replacements but as complimentary sources. He added: “Bahrain is keen on promoting the concept of renewable energy – using solar or wind energy.” For this purpose Bapco is developing a unique recreational and educational community project in Awali. The town of Awali was built in 1934 for the expatriate community when oil was first discovered. Today, the town is being developed into a research and knowledge hub, with the New Energy Management Lab, which was inaugurated last month, at its centre. Dr Ali Mirza said: “The lab has been installed in the park to make the centre educational for all visitors. The idea is to raise awareness about the need for renewable energy and to set the pace.” The New Energy Management Lab was manufactured in Germany by Berlin-based Heliocentric Energiesysteme, and installed in the
park in February. It will be the first facility of its kind in Bahrain, using fuel cells, wind mills and photo electric cells to generate 5kW of electricity, which will power lighting and equipment in Dar Al-Nakheel at Awali Park. In terms of wind generated power, NOGA has employed a Japanese firm, called Interdomain, to install a 50-metre-tall mast upon the refinery, in order to measure the wind on a daily basis for one year. Interdomain will establish whether there is enough wind velocity to warrant investment in wind electricity generation. Despite all of its green, renewable and sustainable solutions and initiatives, Bahrain is also actively developing a nuclear power contingence. Dr Ali Mirza said: “Generally, in the Middle East, there is a common question being asked, that is what will follow after oil? As the safety measures increase in nuclear energy, year-on-year, it will become the next focus in the area.” Dr Ali Mirza said that NOGA had not looked into biofuels because as a small country it was felt there was insufficient space for the necessary crops. “There are also negative comments emerging around biofuel, such as their demand on feedstuffs,” he added. Dr Ali Mirza said: “OPEC countries are keen to keep the price of crude not low and not high because if it’s too low it will not warrant development and investment in hydrocarbon processing and if it’s too high it will open the door to alternatives, like biofuels, making them viable.” The current structure underneath NOGA will be further expanded with the addition of a services company, to offer the full range of oil and gas support services. A tender has been sent out, and NOGA will appoint a consultant shortly to advise on establishing this business. “Following the successful launch of BLOC, the lube oil company, we will continue to look for further diversification,” said Dr Ali Mirza. “We are calling on the International Oil Companies to come and have alliance or partnerships with us.”
