Situation of Natural Gas in the Kingdom of Bahrain

Presentation prepared by

National Oil & Gas Authority (NOGA) for International Gas Union (IGU)

13 August 2014, Kingdom of Bahrain

Background • NOGA was established in Dec 2005 (replacing Ministry of Oil/ Oil Supreme Council/ Gas

Committee) to oversee the Kingdom’s oil and gas sector.

• NOGA is headed by H.E. Shaikh Ahmed bin Mohamed Al Khalifa, the Minster of Finance, Minister in charge of Oil and Gas Affairs and Chairman of NOGA.

• NOGA’s Vision: To be the oil and gas recognized leader fueling economic growth and improving living standards.

• NOGA’s Mission: To regulate, oversee and develop oil and gas and related industries in the Kingdom of Bahrain with the aim of:

– Providing general policies and strategic direction – Securing sustained supply of oil and gas to meet existing and future requirements – Maximizing return and contribution for the growth of the national economy – Effectively optimizing utilization of resources – Promoting private investment – Encouraging research and development – Sustaining ‘World Class’ safety, health and environmental standards – Ensuring compliance with corporate governance – Developing leadership and human resources – Promoting and supporting ‘Best Practices’

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Oil & Gas Sector

The major events are being held every two years under the patronage of HRH the Prime Minster and they include:

– Middle East Oil & Gas Show and Conference (MEOS). – Middle East Geosciences Conferences and Exhibition (GEO). – Middle East Refining & Petrochemicals Conference & Exhibition

(PETROTEC): – Middle East Process Engineering Conference & Exhibition (MEPEC).

Major Oil & Gas Events Hosted in Bahrain

Last Events

Period Comments

MEOS 2013

10-13 March 2013

• More than 2000 attended the conference. • More than 300 international companies from 30 countries

participated in exhibition. • More than 6000 visited the exhibition from the Gulf region and get

introduced to technological advances in the oil and gas sector. GEO 2014 9 to 12 March

2014 • More than 1700 attended the conference. • More than 130 international specialized companies representing

more than 21 countries participated. PETROTECH 2014

18 to 21 May 2014

• More than 1800 participants from all over the world. • 23 specialized companies from 21 countries participated in the

exhibition. • More than 100 technical papers were presented and discussed.

MEPEC 2013

29 September to 2 October 2013

• More than 850 attended the conference • More than 3000 visitors in the event where latest technologies

displayed by 150 international companies from 30 countries.

Gas Roles of NOGA & nogaholding

• NOGA:

– A governmental body responsible for adopting policies to regulate the gas sector and manage the utilization of the available gas resources.

– allocates gas to customers by evaluating gas requests to ensure efficient use of gas and high value added to the Kingdom.

• nogaholding:

– An investment and business development arm of NOGA.

– nogaholding will develop and build LNG Import Terminal.

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Bahrain’s Gas Supply Stakeholders

• TATWEER PETROLEUM: – a joint venture company formed in December 2009 for developing and

maximizing oil and gas recovery from Bahrain field as specified in the DPSA. – Tatweer Petroleum manages and produces gas from the Khuff gas reservoir.

• BAPCO : – It is responsible for distributing natural gas and arranging gas supply

agreement with customers. – Bapco is also responsible for Onshore and Offshore Gas Exploration (e.g.

deep gas exploration).

• Bahrain National Gas Company (BANAGAS) and Bahrain National Gas Expansion Company (BNGEC): – Both are responsible for the processing of associated gas, where propane,

butane and naphtha are extracted from the gas and exported. BANAGAS also processes refinery-off gas from the BAPCO refinery.

– Part of the residual low-pressure natural gas is used as fuel for BANAGAS and BNGEC’s furnaces and gas turbines, and the rest is supplied some gas customers.

Bahrain Field

• Bahrain Field is Bahrain’s main source of indigenous natural gas production.

• Field Discovered: 1932; Khuff Reservoir Discovered: 1948; First Khuff Gas Production: 1970

Average natural gas production: Non-assocaited ≈ 1.3 bcfd Associated ≈ 542 mmscfd

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Gas Production & Utilization

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ARAB

MAUDDUD

KHUFF

INJ.

G/L

LPG PLANT

RESIDUE GAS

NGL

GDU

INJ.

NGL NAPHTHA

PETROCHEMICAL

SMALL INDUSTRIES

POWER GENERATION

WELL

REFINERY

REFINERY OFF GAS

ALUMINUM

REFINERY

STEEL

LPG Exports

Natural gas remains the

primary source of energy in Bahrain.

The growth rate for total gas demand was about 4.9% for the past 5 years.

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Gas Production & Utilization in 2013

Aluminum 27 %

Power 42 %

Refinery 10 %

Petrochemicals 9 %

LPG 3 %

Steel 4 %

Small Industries

5 %

Gas Sector Major Challenges

Bahrain’s indigenous proven gas reserves are limited, and meeting long-term future growth in domestic gas demand represents a major challenge due to the following reasons: High demand from the power and water desalination sector

Impact of on-going industrial developments and potential expansion of oil

refining, aluminum, steel and petrochemicals capacities.

Prevailing low gas and electricity prices that provide little incentives to avoid wasteful energy consumption and encourage efficient use of gas resource.

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Production Enhancement of Bahrain Field • NOGA signed a Development and Production Sharing Agreement (DPSA) with OXY

/ Mubadala companies in 2009 and formed a Joint Operating Company “Tatweer Petroleum”.

• Significant investments ($ 15 billion) over the 20 years contracted period to develop the onshore Bahrain Oil Field through application of state-of-art Enhanced Oil Recovery (EOR) technologies.

• Gas production capacity is planned to be almost doubled from current level, with installation of new facilities and new well completion techniques.

• The plan is to: – Drill 18 new gas wells and provide centralized gas processing – Modify and expand existing gas facilities.

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Exploration in Offshore Areas

• To explore for oil and gas resources

in 4 offshore blocks.

• Exploration and Production Sharing Agreement (EPSA) for Blocks 1, 3, 4 were signed with OXY AND EPSA for Block 2 was signed with PTTP .(Block 1, 3 & 4: Oct. 2007 and Block 1: July 2008).

• EPSA involved seismic surveys and exploratory wells drilled in 2011/2012.

• Encouraging results identifying a number of potential prospects.

• New exploration cycle is planned to be initiated in 2014

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Exploration for Deep Unconventional Gas

• Deep Gas Exploration and Production Sharing Agreement (EPSA) signed with OXY in Feb. 2011.

• To explore for commercial gas resources in pre‐Khuff reservoirs at depth of about 15‐20 thousand feet.

• The geological, geophysical, and engineering studies are ongoing. The purpose of studies is to select locations for planned three exploratory well, and the drilling campaign started in July 2014.

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LNG Import

– The LNG Import terminal is strategically required for the country to supplement domestic & ensure gas demand is met.

– The site of the terminal has been allocated in Northeastern side of the Kingdom based on a Master Planning Study and a Quantitative Risk Assessment.

– A project consultant has been appointed to advise and manage execution of the commercial, financial and technical elements of the project.

– The plan is that the terminal be in-service by 2017 with initial capacity of 400 mmscfd expandable later to 800mmscfd, and it is intended that the project will be developed, owned, financed and operated by a joint venture project company.

– The best configuration that have been selected as a design concept is FSU and regasification in jetty.

– The feed study has been completed for the construction and operation of the terminal, assessing among other things the terminal location and plant configuration.

– Currently, nogaholding is in the process of selecting strategic JV partner(s) for LNG supply, logistics, terminal O&M, PM and technical services.

NOGA Efforts to Address Gas Challenges

In order to address significant challenges to meet the country’s future gas demand growth, NOGA have undertaken the following efforts:

Increase oil and gas production from Bahrain Field by using enhanced oil

recovery technologies.

Offshore and onshore exploration and development of new indigenous sources of natural gas supplies , including deep gas exploration.

Imports of gas, including construction of LNG receiving terminal to import LNG to supplement domestic and ensure gas demand is met.

Managing gas demand and improving energy efficiency of power plants and industries.

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