Bahrain waits for natural gas with a brand new gas policy

Bahrain has a new gas policy with a hope to stimulate investments and motivate investors in the Kingdom by defining and regulating the roles of all parties in the gas sector and by ensuring clear guidelines that will boost their confidence in commercial and industrial activities.

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By  Jyotsna Ravishankar Published  June 27, 2005

Bahrain has launched a new policy that aims to ensure an adequate storage of natural gas and a steady supply for gas-based energy and will use various sources in neighbouring countries to import the needed quantity. The policy seeks to achieve favourable negotiation deals for the price of imported gas and more professional purchasing rapports between consumers and suppliers based on market criteria. The natural gas policy was drafted following thorough studies of international accords that regulate relations between natural gas consumers and suppliers, say officials. The committee hopes that the new policy will stimulate investments and motivate investors in the Kingdom by defining and regulating the roles of all parties in the gas sector and by ensuring clear guidelines that will boost their confidence in commercial and industrial activities. Bahrain has natural gas reserves of about 3.25 trillion cubic feet (tcf), much of it associated gas from the Awali oil field. It produced 327 billion cubic feet (bcf) of natural gas in 2002, all of which was consumed locally. The largest domestic consumer was Aluminium Bahrain (Alba), which uses it in its power plant. In January 2002, Qatar and Bahrain signed a Memorandum of Agreement indicating Bahrain’s intentions to purchase natural gas from Qatar’s North Field Enhanced Gas Utilisation Project. Natural gas is the obvious solution, and Qatar has 25.6 trillion cu metres of it. The idea for a gas pipeline to Bahrain has met with great difficulty. Central to this has been a dispute between Qatar and neighbouring Saudi Arabia. This is because the pipeline is part of a longer planned pipeline through to Kuwait, which would pass through Saudi territorial waters. As early as 2000, Qatar Petroleum (QP) signed a letter of intent with the Kuwait Petroleum Corporation (KPC) to supply gas along such a route. Both companies signed a memorandum of understanding (MoU) with ExxonMobil, which then conducted a feasibility study for the construction of a 1000km underwater pipeline linking the two states. The pipeline was first of all delayed due to a continued power struggle between Qatar and Bahrain over the disputed Hawar Islands. Now this territorial issue has been resolved, the Saudi objection was the last obstacle to the project going ahead. However, last month, Qatar’s Energy and Industry Minister, Abdullah bin Hamad Al Attiyah, said that his country would supply Bahrain with natural gas. The decision was then welcomed by Bahrain’s leadership as instrumental to the growth of gas-based industries. Sheikh Salman reiterated the decision, while announcing the new policy and described it as a testimony to the close ties between the two leaders and the countries.

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