Oil was first discovered in Bahrain in 1932, making it the oldest oil-producing market in the Gulf region. After several years of stasis due to the Covid-19 pandemic, the kingdom’s energy industry is seeing a renewed pace of activity. Though Bahrain does not produce as much oil as its larger neighbours, the energy industry remains a vital part of the national economy. This has been helped by a large-scale oil and gas discovery in 2018 and the upgrade of the country’s main refinery in Sitra.

Bahrain is also beginning to ramp up investment in renewables as it works towards its goal of reaching net-zero carbon emissions by 2060. The spike in oil prices in early 2022 could offer further incentive for Bahrain to expand its green energy capabilities.

Regulatory Changes

In September 2021 Bahrain announced plans to restructure its oil and gas industry. A royal decree was issued abolishing the National Oil and Gas Authority (NOGA), the regulatory body previously responsible for the hydrocarbons sector, and its functions were transferred to what was then the Ministry of Oil. As part of this process, the investment and development arm of NOGA, known as nogaholding, was spun off from its now-defunct parent and is transitioning to become more focused on clean energy as the kingdom seeks to reduce its dependence on fossil fuels.

Efforts were made to minimise any disruption caused by the restructuring. Sheikh Mohammed bin Khalifa bin Ahmed Al Khalifa was named minister of oil, and all of NOGA’s former employees were transferred to the Ministry of Oil. The ministry’s mandate also stayed the same. It remained committed to increasing oil and gas revenue for the benefit of the national economy; regulating companies and establishments operating in the sector; developing associated industries; supporting research and development activities; formulating policies for the sector; ensuring sustainable supply of oil and gas; and encouraging investment in the sector. In June 2022 Mohammed bin Mubarak bin Daina, the kingdom’s former envoy for climate affairs, was named minister of oil and environment in the largest reshuffle in the country’s history – underscoring Bahrain’s current sustainability push.

Structure & Oversight 

The kingdom’s oil and gas assets are fully owned by nogaholding, but the company is widely expected to follow the example of Gulf neighbours such as Saudi Arabia and Abu Dhabi and begin selling certain assets to foreign investors. In February 2022 nogaholding announced it was in the process of hiring advisers to develop a new national energy strategy, which would include a potential sale of stakes in its assets, either to private investors or through an initial public offering (IPO) process. nogaholding’s portfolio includes firms operating across the entire spectrum of the oil and gas industry. It wholly owns the Bahrain Petroleum Company (Bapco), the GCC’s oldest oil firm, which owns and manages the refinery at Sitra. It also holds a 100% stake in Tatweer Petroleum, which manages the Bahrain Field, the kingdom’s main onshore oil field and the source of most of its energy supply. nogaholding owns a 75% stake in the Bahrain National Gas Company (Banagas) and is a major stakeholder in several other key industry players, including the Bahrain Jet Fuel Company and the Gulf Petrochemical Industries Company.

In the utilities segment, the Electricity and Water Authority (EWA) is responsible for the kingdom’s electricity and water supply, as well as setting tariffs. Under the EWA’s strategy map for 2018-22, the authority aims to increase revenue collection and reduce the unit cost of water and electricity to bridge the historic funding gap. As the kingdom moves ahead with its clean energy ambitions, the Sustainable Energy Authority (SEA) is playing an increasingly important role in the energy sector. The organisation is responsible for developing the country’s renewable energy and promoting investment in the industry, and is led by Abdulhussain bin Ali Mirza, former minister for electricity and water affairs.

Size & Performance

According to the US International Trade Administration, as of September 2021 Bahrain had 124.6m barrels of proven oil reserves. It has two principal oilfields: the onshore Bahrain Field and the offshore Abu Safah Field, which is shared with Saudi Arabia and operated by its national oil company, Saudi Aramco.

In 2018 Bahrain announced its largest oil discovery since the 1930s, located at the Khaleej Al Bahrain reservoir near the country’s western coast, which will significantly increase its reserves moving forwards. Though there had been limited progress as of May 2022, the kingdom is hoping to commercialise the discovery by 2023.

Under the Bahrain Economic Vision 2030 plan, the kingdom is striving to transition its economy away from a dependence on hydrocarbons. According to the Ministry of Finance and National Economy (MFNE), crude petroleum and natural gas accounted for 17.4% of Bahrain’s GDP in the fourth quarter of 2021. Although the oil and gas sector is still one of the largest contributors to GDP, its share has more than halved since 2008.

The outlook for the sector is improving after the recent turbulence of the pandemic. MFNE’s most recent quarterly report revealed that the oil sector grew by 4.7% year-on-year (y-o-y) in the final quarter of 2021, which it attributed to increased production at both of the country’s oilfields and the recovery of global crude prices. According to industry players, Bahrain’s oil and gas industry is slowly returning to pre-pandemic conditions as the pandemic subsides and oil prices rise.

Prior to Russia’s invasion of Ukraine in February 2022, MFNE had forecast in the national budget that revenue from oil and gas would reach BD1.55bn ($4.1bn) in 2022, based on an oil price of $50 per barrel. However, with oil prices sitting at around $115 in early May 2022, government revenue could increase as much as 140% over the year, and an average price of $106 per barrel could be sufficient to balance Bahrain’s budget.

Between 2010 and 2020 natural gas production increased at a compound annual growth rate of 2.8%, according to BP’s “Statistical Review of World Energy 2021”. In 2010 the kingdom’s natural gas production totalled 12.4bn cu metres, a figure that had risen to 16.4bn cu metres by the end of the decade. At the end of 2020 BP estimated the country’s total gas reserves at 2.3trn cu feet.


The kingdom’s upstream oil activities are limited to the onshore Bahrain Field and the offshore Abu Safah Field. The latter reached its full capacity of 300,000 barrels per day (bpd) in 2004, of which Bahrain receives half. According to MFNE data, crude extraction from the Abu Safah Field averaged 148,347 bpd, up 7.4% y-o-y but down 1.8% from the previous quarter. Output from the onshore Bahrain field averaged 41,114 bpd as of the final three months of 2021, down 5.8% y-o-y.

New Discoveries

The 2018 discovery of the offshore Khaleej Al Bahrain shale field was a significant milestone for the kingdom’s oil and gas industry. Mark Thomas, CEO of nogaholding, compared the discovery to that of the US Permian basin, a vast shale oil reserve in West Texas and New Mexico. The government’s initial estimates suggest the reservoir contains P50 reserves of 80m barrels of light oil and 20trn cu feet of tight gas. P50 refers to the 50% certainty that the site will be commercially viable.

Bahrain has engaged US firm Halliburton to drill two offshore appraisal wells to evaluate the commercial viability of the field, and the kingdom maintains a memorandum of understanding with Chevron to serve as a knowledge partner. In June 2022 Thomas told international media that additional technical feasibility work had been complete, although exploration activity would be paused at least through the end of the year.

The kingdom has demonstrated its desire to involve global oil firms in the development and production process, with particular interest in working with US firms due to their shale experience. In November 2021 Standard & Poor’s Global reported that Bahrain was in talks with international partners to help develop the new site. However, Thomas warned that material developments would likely only begin in the latter half of the decade.

In 2018 Bahrain also announced the discovery of the onshore Pre-Unayzah gas field, located under the Bahrain Field, which it said could hold 10trn20trn cu feet of gas. Work to commercialise the field was still in the early stages as of May 2022. In June 2020 UK-based engineering contractor Petrofac was awarded a multimillion-dollar contract by Tatweer Petroleum to drill 24 wells on the field, while in November 2021 Halliburton submitted a $305m bid to carry out an appraisal of the site.

In terms of exploration, Bahrain had drilled 70 out of 700 planned wells as of mid-2022, with the country’s largely unexplored southern waters the main focus of attention. Exploration and production-sharing contracts for Blocks 1 to 4 have already been signed, and drilling commenced at Block 1 in June 2021 as part of an agreement with Italian energy company Eni.


In 2018 Aramco and Bapco announced the commissioning of a new pipeline to connect Saudi Arabia’s Abqaiq oil field with the refinery at Sitra in 2018. The 115-km pipeline is capable of carrying up to 350,000 bpd and is intended to serve the expanded refinery.

After some delays, the construction of Bahrain’s first liquefied natural gas (LNG) terminal was finalised in January 2020. The $741m project has an initial capacity of 400m cu feet per day, with the potential to expand to 800m. The terminal is located 4.3 km away from Khalifa Bin Salman Port and includes a floating storage unit, offshore LNG-receiving jetty and regasification platform. However, the country has yet to use the terminal for commercial reasons and has subchartered its facilities to generate revenue. nogaholding is following in the footsteps of Abu Dhabi National Oil Company (ADNOC) and Aramco in considering selling non-strategic oil and gas assets, such as pipelines, to foreign investors. ADNOC was the first company in the Gulf region to do so in 2019, when it sold a stake in its oil pipelines, a model that followed by Aramco in 2021.


Bahrain’s principal refinery is Bapco’s Sitra plant, located on an island off the east coast of the country. The site has a refining capacity of up to 280,000 bpd but is currently undergoing an upgrade and expansion that will raise capacity to as much as 380,000 bpd. The $7bn modernisation plan is set to be completed in 2024 and is the largest capital investment in Bapco’s history, as well as one of the largest projects ever undertaken by a public or private company in Bahrain.

As of September 2021 it was estimated that the project was 60% complete. In addition to increasing throughput at the refinery, the upgrade will allow the facility to handle heavier crudes, which could be vital for the commercialisation of the offshore Khaleej Al Bahrain shale field, which is predicted to produce heavy-grade petroleum products.

The project, which will span an area of 565,631 sq metres, is expected to create more than 24,000 contractor jobs, 1500 jobs during its construction phase and 150 permanent, high-skill jobs. It will require 65,000 tonnes of structural steel and more than 2700 km of electrical cabling, both of which are produced locally in Bahrain.

Imports & Exports

Since 2000 oil has accounted for around one-third of Bahrain’s total export revenue. The kingdom exports both raw crude oil and refined petroleum products, some of which is managed by the Gulf Petrochemical Industries Company. Refined petroleum products made up the largest share of export revenue, with an estimated value of $3.2bn in 2020.

The country’s import-export balance largely rests on its trading relationship with Saudi Arabia, from which it imports the crude oil that it then refines into petroleum products and exports, adding to its value. As a result, the kingdom technically imports more crude oil than it exports. NOGA data from 2020 showed that oil imported from Saudi Aramco was worth $2.7bn, but the value of products exported was $3.4bn. Aside from Saudi Arabia, Bahrain’s other main trade partners are the UAE, Turkey, India, Japan and the US.

Having collapsed in 2020 amid the first wave of the pandemic, international oil prices spiked in March 2022 due to volatility created by Russia’s invasion of Ukraine. The need for European countries to diversify their energy supplies after years of dependence on Russian gas could translate into higher demand for oil, gas and related downstream products from Gulf nations.

Although initial overtures from Western governments on the issue of energy diversification have mainly focused on Qatar, the UAE and Saudi Arabia, Bahrain could also benefit from this shift in energy policy – particularly if the kingdom is able to commercialise its recent discoveries.


Alongside several other GCC countries, Bahrain is attempting to transition its energy mix away from fossil fuels and towards renewable sources. In line with this, in 2021 the kingdom committed to reaching net-zero carbon emissions by 2060. Under its National Renewable Energy Action Plan (NREAP), Bahrain has set a target of meeting 5% of its energy needs with renewables by 2025. In November 2021 international media reported that the country had already achieved 95% of this target. In order to achieve these objectives, Bahrain will need 280 MW of electricity generation capacity from renewables by 2025, increasing to 710 MW by 2035.

According to the Sustainable Energy Authority (SEA), the country is targeting solar, wind and energy from waste to hit these targets. Given Bahrain’s climate, solar energy is a vital part of the kingdom’s clean energy mix, accounting for 93% of its renewable capacity in 2020.

In November 2021 the government inaugurated the Batelco solar plant, which can produce some 1600 MW of power and is expected to reduce the country’s carbon emissions by around 900 tonnes. There is also a project under way to develop a solar plant at Askar on the country’s south-eastern coast, which would provide 100 MW of capacity.

To offset the kingdom’s relative scarcity in terms of available land, Bahrain is considering constructing floating solar panels in order to support the ongoing transition to green energy. Domestic private sector firms are also targeting the sector, with panel manufacturer Solar One contributing 2 MW of generation capacity to the grid as of February 2022, a figure expected to grow in the future.

In March 2022 the kingdom announced that it had successfully completed a project to develop a solar plant at the Bahrain International Circuit, which hosts the annual Bahrain Grand Prix Formula 1 race. In seven months 7125 solar panels covering 18,000 sq metres were installed, meaning that the energy requirements of the race weekend can now be fully supplied by green energy. Further phases of the project will allow the circuit’s energy needs to be met entirely from renewables, with a focus on improving energy and water efficiency, as well as plans for more solar deployment.

Offshore wind is also a promising sector due to of Bahrain’s favourable wind conditions and its shallow waters, which are conducive to the installation of wind farms. Other options being touted include connecting Bahrain and its GCC neighbours through a network of infrastructure facilities with renewable energy capabilities, such as causeways and railway systems. One existing example of this brings together different renewable assets: on the 25-km-long King Hamad Causeway, which will link Bahrain to Saudi Arabia, the SEA is planning to integrate both solar panels and wind turbines.


Between 2011 and 2021 Bahrain invested more than $1.53bn in strategic water and electricity projects designed to increase the sustainability and security of its energy systems. Across a raft of ongoing projects, the kingdom had achieved a completion rate of 78% as of June 2021. Like many of its neighbouring countries in the GCC, the resulting windfall from the spike in oil and gas prices in 2022 could be a strategic asset for Bahrain, enabling it to increase its investment in renewable energy sources.

Opening up the sector to foreign investors, as policymakers in Bahrain have indicated they are considering, would further enable the country to boost its capacity to spend on developing renewable assets. At the same time, the recent oil and gas discoveries present major investment opportunities for global players, as recently signed deals with Eni, Petrofac and Halliburton demonstrate. The kingdom is seeking further partners to work on the commercialisation of its oil and gas fields.

In late 2021 the kingdom announced a $30bn post-pandemic investment plan, which includes 22 infrastructure projects and seeks to build five new cities on artificial islands, expanding the country’s landmass by 60%. Investment will also go towards the construction of a major new motorway connecting Bahrain with neighbouring Saudi Arabia.

Alongside the opportunities being created by these projects, the strategy outlines upgrades to the industrial sector, which is a significant consumer of the country’s energy output. According to industry research firm Enerdata, Bahrain’s aluminium and petrochemical industry alone is responsible for 60% of energy consumption, and is the main reason why Bahrain’s per capita energy usage is the highest in the world. In order to improve the carbon footprint of these industries, the kingdom is actively looking at ways to transition projects to different energy sources. The Bapco modernisation programme is a key aspect of this investment plan, which comprises four main elements: the building of a residual hydrocracking unit, a new crude and vacuum unit, a second hydrocracker and a sulphur plant.

Waste Management

Bahrain generates approximately 2.6 kg of waste per person per day, making waste management a significant challenge for the country. To this end, the Ministry of Works is overseeing a project implemented by an international consultancy to analyse and determine waste materials available for recycling, conversion to agricultural products or electricity production through incineration at the Askar landfill site.

The SEA is also planning a waste heat recovery pilot programme, wherein excess heat generated by Aluminium Bahrain (Alba), the world’s largest single-site smelter outside of mainland China, can be captured and converted to electricity. Like other GCC countries, around half of the country’s annual electricity consumption stems from the extensive use of air conditioning due to the warm Gulf climate. As a result, Bahrain is looking to utilise the practice of district cooling to increase the efficiency of air conditioning by as much as 50%.

Hydrogen Power

An area of potential growth is hydrogen, which is widely touted as a potential replacement for fossil fuels. Analysts have suggested that the GCC could be a perfect location for the development of this fledgling industry as it has the ideal geological conditions to allow for large-scale underground storage facilities inside rock formations, which could serve as a buffer for varying seasonal demand. According to estimates in international media, the industry could be worth up to $200bn across the GCC by 2050, creating 900,000 jobs in the process.

Bahrain has taken its first steps to develop a domestic hydrogen industry. In November 2020 the kingdom signed an agreement with hydrogen producer Air Products to assess the potential development of a hydrogen economy in the country. The SEA unveiled plans for a 4-MW green hydrogen plant in December 2021, which would be a first for the region. The first stage of the project is expected to cover 20,000 sq metres of land at an estimated cost of $150m.


Despite a challenging couple of years for the sector as a result of the pandemic, Bahrain’s energy industry is well poised for medium- and long-term growth as the kingdom takes further strides towards the transition to renewable energy. A combination of the spike in oil prices in early 2022 and the kingdom’s willingness to open up its oil and gas assets to international partners will be vital in creating the funding reserves required to expand green energy capacity. Meanwhile, the extensive investment programme that has been announced as part of Bahrain’s attempts to boost its economy after the pandemic will also likely create new opportunities as the kingdom seeks to build sustainable infrastructure.

At the same time, the Bapco modernisation project and the development of the kingdom’s recent oil and gas discoveries mean that fossil fuel production and refining will continue to underpin the sector for years to come, offering attractive opportunities for both domestic and foreign businesses.